The proposed housing tax increase might not deter speculation, given the mild increase in holding costs, but unfavorable policy talks might deepen cautious sentiment, analysts said yesterday.
Prospective buyers might delay action as the tax hike plan unfolds, though the increase would not affect first-time home purchases and owner occupancy, Taiwan Realty Co (台灣房屋) vice executive Sarah Liu (劉怡蓉) said.
In the latest bid to curb housing prices, the Ministry of Finance and the Taipei City Government on Tuesday jointly proposed raising the housing tax to a range of 1.5 to 3.6 percent, from the current range of 1.2 to 2 percent.
The tax increase, which cleared the legislature’s Finance Committee on Wednesday, still needs second and third readings before it can go into practice next year.
“It is premature to measure the impact of the tax hikes, which might increase house taxes by NT$1,200 on luxury apartment owners,” Liu said by telephone.
The extra burden is bearable for high-income earners, the analyst said, thanks to the gap between actual home prices and their government-assessed value upon which the tax is levied.
Home owners have to pay separate housing and land taxes, with amounts based on values set by authorities significantly lower than market rates.
On average, housing levies amount to NT$4,929 for an apartment of 31.8 ping (104.94m2) among the capital’s 781,896 residential units, according to the city government’s statistics.
The planned hike in tax rates from the current 1.2 percent to 1.5 percent would increase the burden by between NT$1,232 and NT$6,161.
Sinyi Realty Inc (信義房屋), the nation’s only listed broker, said the increase is tolerable.
The tax hike would apply only to houses not occupied by owners or family, further limiting its market impact, Sinyi researcher Tseng Chin-der (曾進德) said.
However, houses built this year are subject to higher base rates, as the government is seeking gradually, but steadily, to raise holding costs and deter speculation, Tseng said.
The analysts voiced concern over a slowdown in home transactions after just emerging from holiday disruptions last month.
“While the tax increase is not across-the-board, some might delay purchase decisions until uncertainty settles,” Liu said.
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