It took longer to close property deals in the nation’s major municipalities over the past three months because of a planned reform on how gains on the sale of some types of property are taxed, H&B Realty Co (住商不動產) said.
The nation’s largest real-estate broker by number of franchises said that it took 9.53 more days on average to close a property deal in the six major metropolitan areas in the third quarter than in the second quarter.
It took 14.67 more days to close a deal in Taoyuan County during the July to this month period, the highest among the six areas, followed by 8.33 more days in Greater Kaohsiung and 7.33 more days in New Taipei City, the broker said.
However, the time needed to close a property transaction in Greater Tainan fell by 1.33 days sequentially in the third quarter.
H&B head researcher Jessica Hsu (徐佳馨) said that buyers have become more conservative in bidding for houses because of concerns over a government plan to change the way capital gains on property sales are taxed.
That has led buyers and sellers to take longer to negotiate deals in recent months, Hsu said.
Premier Jiang Yi-huah (江宜樺) proposed the idea of changing the tax system in July this year and asked the Ministry of Finance to draft a reform plan by the end of this year.
Several groups earlier this month protested in front of the Ministry of Finance against what they said was the government’s insufficient reform of the property tax, calling for fair policies which would truly tax the rich and reduce speculative property transactions.
At present, when a house is sold, a “land value increment tax” is imposed based on the difference between the government-assessed value of the land when it was bought and sold.
Yet because the government-assessed values are just a fraction of the actual market value, the tax burden is extremely low relative to the actual gains.
The reform proposed by Jiang would tax the gains based on the actual amount earned by the seller rather than an amount estimated by the government, which will increase sellers’ tax burden.
The plan, which the market believes will likely take effect in 2016, would likely apply only to homes not used by the owners themselves, which is why it is more likely to hurt the purchase of homes for investment purposes.
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