Taiwanese regained interest in real estate investment this quarter, but prefer to stay on the sidelines until property tax plans are settled, a survey by Chinatrust Real Estate Co (中信房屋) showed yesterday.
The survey was released after the Ministry of Finance yesterday morning suggested plans were in place to hold more hearings in support of property taxes.
“This wait-and-see attitude is the biggest downside risk for the property market this year until policy uncertainty clears,” Chinatrust Real Estate vice chairman Richard Liu (劉天仁) told a news conference.
Minister of Finance Chang Sheng-ford (張盛和) told lawmakers that he is confident the tax plan will pass the legislature this year and take effect next year.
The ministry is to hold a public hearing today in Taichung and another in Kaohsiung next week to address resistance to the tax plans, Chang said. He restated the aim to impose a separate income tax of a flat 17 percent on property gains and raise the rate to 30 percent on short-term speculators.
“The tax plan is not intended to chill the property market, but to help the nation’s taxation system become more reasonable,” Chang told the legislature’s Finance Committee.
Only property that is sold for more than NT$40 million (US$1.27 million) is subject to the flat tax, and self-occupancy and long-term ownership might qualify for tax rebates, Chang said.
The ministry would adjust the property tax plans, if necessary, before introducing the draft to the Cabinet and the legislature, Chang added.
Chang welcomed reports of moderate home price corrections in Taipei, saying a soft landing is healthy for the market, which has seen more than a decade of rallies, making it difficult to buy property due to the soaring prices.
The proposed tax also seeks to address longstanding flaws of current land and home taxes, as both are based on much cheaper assessed values instead of actual trading prices, rendering them ineffective as tax tools, Chang said.
“A more stringent draft would have difficulty winning public support and end up a failure,” he said.
The lenient tax plan appeared to help calm unease as buying interest rose to 57.3 percent this quarter among first-time and self-occupancy buyers, the survey by Chinatrust Real Estate found.
The company said the figure is the second-highest since the broker launched the survey in the first quarter of 2009.
The firm attributed the sentiment rebound to real demand and that real estate properties outperformed other investment tools in defending against inflation.
However, 43.5 percent of prospective buyers said they plan to be patient for as long as necessary to avoid paying too much, the survey said, adding that reports of price declines lend support to caution.
The survey polled 1,269 respondents aged 20 and older between Feb. 7 and Feb. 15 with a confidence level of 95 percent, the company said.
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