De­vel­op­ers wel­come new prop­erty tax pas­sage

The China Post - - LOCAL -

Prop­erty de­vel­op­ers on Satur­day lauded a tax re­form bill that was passed in the Leg­is­la­ture the pre­vi­ous day, say­ing mar­ket un­cer­tainty will now be re­moved and prop­erty trans­ac­tions will take off.

Un­der the new law, a tax of up to 45 per­cent will be levied on prof­its from the sale of prop­erty, as part of the gov­ern­ment’s ef­forts to rein in high home prices in the lo­cal mar­ket.

The prop­erty cap­i­tal gains bill, which was put for­ward by the Min­istry of Fi­nance (MOF), tar­gets spec­u­la­tors by im­pos­ing the max­i­mum 45 per­cent tax on peo­ple who sell their homes less than a year af­ter pur­chase.

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.

Shin­ing Build­ing Busi­ness Co. Chair­man Lai Cheng-i said hous- ing sales are ex­pected to pick up now, fol­low­ing an ex­tended pe­riod of un­cer­tainty over the re­form plan, which had hurt mar­ket sen­ti­ment.

The new tax is sched­uled to take ef­fect Jan. 1, 2016 and will ap­ply only to prop­er­ties pur­chased af­ter that date.

In the in­terim, many peo­ple are ex­pected to rush to buy homes, Lai said, adding that de­vel­op­ers are likely to put a large num­ber of res­i­den­tial and com­mer­cial prop­er­ties on the mar­ket for the rest of this year.

Also wel­com­ing the tax pas­sage, Wu Pao-tien, head of the Fed­er­a­tion of the Real Es­tate Devel­op­ment As­so­ci­a­tion of the ROC, said the lo­cal prop­erty mar­ket is ex­pected to re­turn to nor­mal now that the prop­erty tax re­form has been fi­nal­ized.

If the prop­erty mar­ket con­tin­ues to weaken, the value of prop­erty as­sets will shrink ac­cord­ingly, he said.

Wu said a

healthy

prop­erty mar­ket will help sta­bi­lize the do­mes­tic fi­nan­cial sit­u­a­tion and even­tu­ally im­pact pos­i­tively on the coun­try’s en­tire eco­nomic cli­mate.

Trans­ac­tions of homes, shops and of­fices fell al­most 14 per­cent an­nu­ally to 320,598 units in 2014, while in the first four months of this year, they dropped 18 per­cent year-on-year to 87,567 units, ac­cord­ing to Min­istry of the In­te­rior statis­tics.

With the im­po­si­tion of the new prop­erty tax, a luxury tax that was in­tro­duced in June 2011 will be abol­ished.

The luxury tax, which was also put in place to keep hous­ing prices in check, levies a 15 per­cent sales tax on sec­ond homes sold within one year of pur­chase and a 10 per­cent tax on prop­er­ties sold be­tween one and two years af­ter they were bought. The MOF has fore­cast that the new cap­i­tal gains tax will bring in an ad­di­tional NT$4.2 bil­lion (US$135 mil­lion) in rev­enues in the first year.

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