Sat, Dec 13, 2014 - Page 13 News List

Proposed property tax a top concern for buyers

By Crystal Hsu  /  Staff reporter

Government plans to tax property gains based on real transaction prices topped the list of concerns among potential buyers this year, with housing transactions forecast to drop to a 13-year low, a recent survey by Taiwan Realty Co (台灣房屋) showed.

About 35 percent of respondents cited plans by the Ministry of Finance to tax income on property gains separately as the biggest concern in the market, the survey showed.

“The year 2014 is an ominous year for the property market as government agencies join efforts to cool property transactions and prices,” Taiwan Realty spokeswoman Charlene Chang (張旭嵐) said.

On Monday, Minister of Finance Chang Sheng-ford (張盛和) reiterated plans to introduce an income tax of 5 to 45 percent on capital gains from property transactions whose value exceeds a set amount.

The minister said he needed more time to finalize the details after lawmakers questioned its feasibility and desirability.

The government has said that the proposed income tax aims to discourage property speculation and promote a more equitable distribution of wealth.

Existing house and land taxes have failed to achieve the intended effect because they are based on government-assessed values, which are much lower than actual market rates, experts have said.

The proposed income tax on property gains is likely to go into effect in early 2016 after clearing the legislature.

The five petitions by protesters against “unaffordable housing” ranked second in property-related news this year, garnering a vote of 31 percent, the survey showed.

On Oct. 4, protesters camped on the pavement of Renai Road — the nation’s most expensive residential location — to demand that the government come up with more regulations and measures to make housing more affordable.

“Policymakers will take action in coming years to address this grievance,” Charlene Chang said.

The increase in house taxes, from 1.2 percent to between 1.5 and 3.6 percent, ranked as the third most noteworthy development in the sector, the survey showed. The tax rates range from 3 percent to 5 percent for business establishments.

The tax increases, intended to raise holding costs for property owners, are yet another measured move by the government to moderate the housing market without much resistance or backlash.

Home transactions are likely to hover at about 320,000 units this year, the lowest level since 2001 when transfers plunged to 260,000 units when the technology bubble burst, said Sinyi Realty Inc (信義房屋), the nation’s only listed broker.

As of October, the aggregate figure was 266,000 and it could end the year at a little above 320,000, Sinyi researcher Tseng Chin-der (曾進德) said by telephone.

House prices appear to be holding relatively firm so far, especially in popular locations, but correction pressures could intensify as the government pushes more market-dampening measures, Tseng said.

Meanwhile, commercial property transaction values in the first 11 months of the year fell to a near three-year low, with Evertrust Rehouse Co (永慶房屋) attributing the decline to a move by many local life insurance companies to focus on overseas property markets.

Jeffery Huang (黃增福), a manager at Evertrust’s asset management division, said that as the Financial Supervisory Commission has barred local life insurers from buying commercial property with an investment return of less than 2.875 percent, they were faced with a limited choice of suitable shops and offices in the local market, forcing many to look for investment targets with higher returns abroad.

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