Total mortgages offered by the nation’s banks continued to grow in July, albeit at a slower pace following amendments to the Income Tax Act (所得稅法), which took effect on July 1, data compiled by the Financial Supervisory Commission showed last week.
The revised “integrated house and land transaction income tax” is 45 percent on gains from the sale of property within two years of purchase, and 35 percent on sales made within two to five years of purchase.
The new tax rates apply to individuals and institutions.
Previously, the tax rate was 35 percent for sales made within one to two years of purchase and 20 percent for transactions made at least two years after purchase. Those only applied to individuals.
While some analysts had expected the new tax scheme to cool the nation’s overheated property market, overall mortgages offered by local banks still rose by NT$43.2 billion (US$1.56 billion) to NT$8.41 trillion as of the end of July, commission data showed.
However, the pace of growth fell 46 percent from June’s NT$80.7 billion.
It was also the second-lowest monthly increase after NT$26 billion in February, the data showed.
“Some investors rushed to close their deals in June so that they could avoid higher tax rates,” a commission official said last week. “As a result, there were fewer transactions in July and fewer newly offered mortgages.”
Similarly, construction loans, an indicator of real-estate developers’ confidence in the sector, registered a monthly increase of NT$35.1 billion from a month earlier to NT$2.99 trillion at the end of July — down 21 percent from an increase of NT$44.6 billion in June, the data showed.
The ratio of non-performing house loans to all house loans remained flat at 0.11 percent in July and the ratio of non-performing construction loans dipped one basis point to 0.12 percent, the data showed.
The Banking Act (銀行法) stipulates that a bank’s outstanding mortgage and construction loans combined cannot exceed 30 percent of its deposits and financial debentures.
In July, seven local banks saw their ratios surpass 28 percent and one bank reported that its ratio exceeded 29 percent, prompting a warning from the commission, the official said.
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