Several loopholes in the government’s proposed luxury tax would allow real-estate investors to avoid paying taxes during transactions, the Consumers’ Foundation said yesterday.
The consumer rights watchdog called for a registration system in which realtors would be required to publicize the price at which property is sold, in addition to basic information about the property, such as the location, size, type of use and asking price.
The foundation said the information required under a registration system should be exact, rather than allowing realtors to list only the section of the road on which the property is located, which would not be very beneficial to potential home buyers to use as a reference.
Foundation chairperson Joann Su (蘇錦霞) said the practice should extend to pre-sale properties, in which case the developer would offer a projected asking price and register the property before construction has been completed and the property is officially registered under the owner’s name.
Su said that while the government’s intention to rein in property prices was good, the regulations should be comprehensive enough to prevent realtors and speculators from taking advantage of loopholes to minimize the tax they would have to pay or avoid it altogether.
The luxury tax, which is expected to come into force in July, would subject short-term transactions to a heavy levy if properties were not used for self-occupancy.
Su said that while the government could define “short term” to mean transactions that take place within two years of each other, the foundation supports extending the definition to three years to more effectively control prices.
The foundation also said that if the luxury tax on pre-sale property was only levied starting on the day on which the property is officially listed under the owner’s name, investors and speculators would still be able to avoid paying taxes by completing the transaction shortly prior to completion of the construction site.
Another loophole is the exemption of “farmhouses” from the luxury tax, because many unscrupulous developers have been known to build mansions and luxury homes defined as farmhouses for tax purposes, the foundation said.
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