Property capital gains tax bill approved by Legislative Yuan
The Legislative Yuan on Friday approved a tax reform plan proposed by the Ministry of Finance that will impose a capital gains tax of up to 45 percent on profits made on the sale of property.
The new tax plan, scheduled to take effect on Jan. 1, 2016, is part of the government’s efforts to rein in high residential housing prices and represents a major change from current practices.
Gains on the sale of property are currently taxed based on government-assessed property values, which are merely a fraction of the actual selling prices, but they will be taxed based on the actual gains made in the future.
Luxury Tax to be Abolished
Once the new capital gains tax goes into effect, a luxury tax that has been enforced since June 2011 will be abolished.
The luxury tax scheme, which also was put in place to keep housing prices in check, imposes a 15-percent sales tax on second homes sold within one year of purchase and a 10-percent sales tax on properties sold between one and two years after they were bought.
In the newly approved capital gains tax scheme, home sellers will pay a 45 percent tax on their gains if they sell their property after having owned it for less than one year.
The tax rate falls to 35 percent if the property has been held for one to two years, 20 percent if it has been held between two and 10 years, and 15 percent for properties held more than 10 years.
Non-resident foreign nationals or foreign institutions headquartered overseas will face the same 45 percent tax rate when they dispose of a property after owning it for less than a year, but the 35-percent tax rate will apply to gains on sales of all properties held for more than one year.
People who live in the homes they own will get a tax break if they sell their home after living in it for at least six years.
In those cases, gains of up to NT$4 million (US$129,450) will be tax exempt, and any gains above NT$4 million will be taxed at a 10 percent rate.
Legislators hold signs that advocate for a new tax reform plan. The Legislative Yuan on Friday approved the tax reform proposed by the Ministry of Finance that will impose a capital gains tax of up to 45 percent on profits made on the sale of property.