The legislature’s Finance Committee is tomorrow to review bills to stiffen property tax terms in yet another attempt to discourage short-term property speculation that has gained momentum amid excessive liquidity and low interest rates.
Legislators have introduced their own bills that differ on the definition of short-term ownership, after the Cabinet last week proposed extending the period from two to five years.
Minister of Finance Su Jain-rong (蘇建榮) is to brief the committee on the proposed property tax revisions, which would raise costs on short-term property transactions, but stop short of imposing taxes on hoarding houses.
Photo: CNA
The revisions seek to subject homes resold within five years of their purchase to combined property taxes of 35 to 45 percent.
The rate would be 20 percent after holding the property for longer than five years. A 10 percent rate for self-occupied homes, held for longer than six years, would remain.
Su last week said the ministry decided not to push house-hoarding tax because the levy would require cooperation from local governments and tends to fuel rent increases.
Landlords, usually multiple homeowners, would pass higher tax burdens to tenants, who are mostly young people, he said.
The revisions aim to expand the scope of property deals to transfers of presale projects and equities to close loopholes often used by corporate buyers to evade property taxes, he added.
The ministry has yet to set an implementation date for the revisions, saying that the Cabinet would make the final decision depending on the legislative progress.
Chinese Nationalist Party (KMT) Legislator William Tseng (曾銘宗) has said that he favors a moderate change that would define short-term transactions as deals taking place within four years after purchase.
A looser definition would hurt the market, Tseng said.
The ministry said it expects the tax revisions to weaken property transactions by 30 percent.
The Taiwan People’s Party has agreed to the four-year definition, but preferred imposing the 20 percent tax rate on properties resold up to a decade after their purchase, as well as a 15 percent rate for properties resold later than that.
Other opposition lawmakers plan to attach a clause clearly stating that the revisions would not affect back transactions.
Roger Wu (吳寶田), chairman of Lih Pao Group (麗寶集團), a major construction company, urged the government to reconsider the tax revisions, saying that they would negatively affect contract taxes, land value increment taxes and investment interest in long-term care facilities.
The revisions would mean property investors must wait longer to make a profit, which is unfavorable for liquidity flows, Wu said.
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