Construction shares yesterday rose 2.44 percent in Taipei trading, bucking the TAIEX’s 0.22 percent decline after tax authorities announced plans to conditionally cut holding taxes on multiple homes, a move that would save builders significant tax burdens on newly completed houses.
The National Taxation Bureau of Taipei has proposed lowering house tax rates on newly completed homes from 3.6 percent to 2 percent for one year, as construction companies have accumulated sizable inventory amid sluggish transactions last and this year.
“The planned adjustment is intended to give builders a respite to digest surplus inventory,” a tax official said by telephone.
The tax rate would return to 3.6 percent for new houses that are not sold in one year, the official said.
Developers and builders have refused to concede on housing prices, citing soaring land and building material costs. Low interest rates and ample liquidity have contributed to pricing inflexibility, analysts said.
The city also plans to cut house tax rates from 3.6 percent to 1.5 percent for residential real estate intended as employee and student dormitories, social housing and other non-speculative housing, the city official said.
The proposed tax cut still needs approval from the Taipei City Council before it can be put into practice next year.
The house tax rates are to remain unchanged at 1.2 percent for self-occupancy homes and 2.4 percent for second homes and 3.6 percent for third homes, the city official said.
The tax cut might spare construction companies NT$90 million (US$2.74 million) in annual tax burdens and another NT$30 million for other multiple-home owners, the agency said.
The savings are particularly evident on luxury homes sales that have stalled due to sharp increases in housing tax, said Sinyi Realty Inc (信義房屋), the nation’s only listed broker.
“The tax cut could ease the stifling market where existing home transactions are likely to drop to a 13-year low this year,” Sinyi researcher Tseng Chin-der (曾進德) said.
The central bank last month removed less popular areas in New Taipei City and Taoyuan from mortgage restrictions, saying credit controls have successfully curbed speculation in those areas.
Taipei’s move might lead New Taipei City, Taoyuan and Yilan and Lienchiang counties to follow suit and lower housing tax in the near term, Tseng said.
Other cities and counties did not raise housing tax after the legislature gave them the power to do so in June last year to help cool real-estate prices.
Taipei-based Cathay Real Estate Development Co (國泰建設) and Huaku Development Co (華固建設) saw their shares pick up 3.75 percent and 2.34 percent to close at NT$56.8 and NT$13.95 yesterday respectively, while Huang Hsiang Construction Corp (皇翔建設) added 4.44 percent, ending yesterday’s session at NT$27.05, Taiwan Stock Exchange data showed.
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