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June 28, 2017

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Real estate players protest gov't plans to raise housing tax

TAIPEI, Taiwan -- The government is expected to hike the housing tax to cool down surging realty prices, and local realtors and builders have cast doubts on the new policy.

In light of Taipei's exceedingly high property prices in relation to average local earnings, Taipei City Deputy Mayor Chang Chin-e (張金鶚) has demonstrated his determination to further suppress realty prices. Chang is slated to meet Finance Minister Chang Sheng-ford (張盛和) next week to discuss the implementation of the housing tax hike from 1.2 percent to 2 percent, local news sources said.

The higher tax is likely to be levied on "properties acquired for purposes other than personal use." Once the fine print is determined, the higher tax rate will be applied to Taipei City first.

However, some have expressed doubts about the new policy's potential effects. The rich may not be too concerned about the 0.8-percent tax increase, but average income earners are more likely to take a hit. Moreover, some realtors say that real estate investors may still use "borrowed accounts" to acquire properties to qualify as "personal use" properties.

In light of the housing tax increase, Wu Pao-tien (吳寶田), president of the Federation of Real Estate Development Associations, said that the tax is a burden shouldered by housing residents and owners, and he called on the government to charge "rational" tax rates.

Demand Still Exceeds Supply

In response to the prospective change in the housing tax, realtors said whatever policies the government rolls out, the current state of the local real estate market can still be characterized as "demand exceeds supply." And by lowering prices just a bit, property sellers can easily find buyers. Unless the supply exceeds the demand, housing prices are unlikely to budge, realtors said.

Deputy Mayor Chang was once a land economics professor at National Chengchi University as well as a major voice opposing Taipei's "irrational housing prices." Since his inauguration, the government has rolled out various measures trying to suppress Taipei's rising housing prices.

One of those measures is the implementation of the "luxury tax," which levies higher tax rates on properties acquired not for personal use and sold within two years of purchase. Also, at the beginning of the year, a 15-percent tax rate is applied on real estate transactions that exceed NT$80 million in value in Taipei and NT$50 million in the rest of Taiwan.

All these measures have had limited effect on Taipei's surging real estate prices, however, said real estate analysts. Companies in the building and construction industry, on the other hand, believe that the government should check on land transaction prices to tackle the housing price issue.

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