Home pur­chases to rise ahead of new tax: re­al­tor

The China Post - - TAIWAN BUSINESS - BY JOHN LIU

Of those who plan to make a home pur­chase be­fore the end of year, more than 60 per­cent said they are do­ing so to take ad­van­tage of the old sys­tem be­fore the con­sol­i­dated hous­ing and land tax is launched next year, ac­cord­ing to a sur­vey con­ducted by Tai­wan Re­alty Co. ( ).

The sur­vey found

that 35.26 per­cent of the pop­u­la­tion wants to make a hous­ing pur­chase in the lat­ter half of the year, 63.64 per­cent of who said they made the de­ci­sion in or­der to re­main el­i­gi­ble for the ex­ist­ing tax sys­tem.

Tai­wan Re­alty there­fore pre­dicted a surge in prop­erty trade as peo­ple race to buy homes.

The con­sol­i­dated hous­ing and land tax is sched­uled to kick in on Jan. 1, 2016, and those who ac- quire homes be­fore Dec. 31, 2015 and then keep them for two years will qual­ify for the orig­i­nal sys­tem.

In re­gards to why peo­ple do this, Tai­wan Re­alty spokes­woman Char­lene Chang ( ) ex­plained that the face value of prop­er­ties is amor­tized over the years, which is then trans­lated into lower tax pay­ments, based on the ex­ist­ing sys­tem.

The new sys­tem, how­ever, will take home value ap­pre­ci­a­tion into ac­count, and the longer peo­ple hold prop­erty, the higher tax they may have to pay, Chang said.

Most of the Public Un­cer­tain

about the New Sys­tem

Tai­wan Re­alty’s sur­vey also found the ma­jor­ity of the public does not have a good grasp of the new sys­tem. Only 6.28 per­cent said they un­der­stand the con­sol­i­dated hous­ing and land tax com­pletely; 25.6 per­cent said they some­what un­der­stand; 57.98 per­cent said they don’t know about the tax; and 10.14 per­cent said they had never heard of the con­sol­i­dated tax.

Un­der the cur­rent sys­tem, hous­ing and land taxes are paid separately, and tax pay­ments are cal­cu­lated based on gov­ern­ment­de­clared face value, which in most cases falls way be­low the mar­ket price, by 20 to 80 per­cent, said lo- cal sources. The con­sol­i­dated tax aims to cor­rect the in­ac­cu­racy.

Un­der the new sys­tem, those who sell their self-use homes are el­i­gi­ble for NT$4 mil­lion in tax de­ductibles. A rel­a­tively low 10-per­cent tax rate will be ap­plied on the cap­i­tal gains that go be­yond the NT$4 mil­lion mark.

How­ever, there are con­di­tions re­quired for a prop­erty to be con­sid­ered self-use: a house­hold reg­is­tra­tion at the prop­erty, stay­ing at the res­i­dence for six con­tin­u­ous years, and the ab­sence of any rental or other busi­ness ac­tiv­i­ties.

In re­gards to sales of other types of real es­tate, a 45-per­cent tax rate is ap­plied on prop­er­ties held less than 1 year, 35-per­cent for those held be­tween 1 to 2 years, 20-per­cent for those kept 2 to 10 years, and 15-per­cent for those held over 10 years.

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