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May 26, 2017

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New house tax if cleared to take effect '15

TAIPEI--Housing taxes could be subject to new rates by May of next year if an amendment aimed at pulling down extreme housing prices clears the Legislature, Finance Minister Chang Sheng-ford said Wednesday.

His ministry's bill to amend the House Tax Act passed its first reading by the Finance Committee of the Legislative Yuan earlier that day. If it passes a third reading, the bill will raise the tax rate for non-owner-occupied homes to between 1.5 percent and 3.6 percent, though the rate for owner occupied homes will be left intact at 1.2 percent.

It will also allow local governments to set the differential rates for non-owner-occupied property at their own discretion based on each homeowner's property holdings.

Rates for non-residential properties such as private hospitals and law offices will be also raised, from the current 1.5-2.5 percent rate to the higher rate of 3-5 percent under the proposal.

Chang said his ministry will formulate criteria to define owner-occupied and non-owner-occupied properties within one month, as it is mulling widening the owner-occupied category to beyond properties used by spouses and direct family members.

The Ministry of Finance has singled out the lack of distinction between owner-occupied and non-owner-occupied properties as one of the factors driving the gouging of property prices to an exorbitantly high level.

Under the current House Tax Act, taxes are levied on the assessed price of the house. Since the housing tax is a local issue but municipal and county governments do not generally make a distinction on whether the owner occupies his or her property, most houses are invariably subject to the minimum tax rate of 1.2 percent.

Official figures indicate that the housing price-to-income ratio in Taipei is higher than 15:1, meaning it takes the average citizen 15 years of earnings to afford a home.

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