Taipei, Large housing developers and experts in the field of real estate expressed divergent opinions as to the impact of a draft amendment passed by the Executive Yuan and intended to rein in real estate speculation Thursday.
Earlier in the day, the Cabinet approved a draft amendment to the Income Tax Act that will adjust the “integrated house and land sales tax” so real estate sellers face heavier taxes if they sell property within a fixed period of time.
Under the bill, private individuals and institutions face a 45 percent tax on property transaction gains on homes or land sold within two years of purchase — an extension from the current one year.
At the same time, a 35 percent tax will be imposed on those who sell their homes or land within two to five years of purchase, according to the proposed amendment which will now be submitted to the Legislative Yuan for review.
To more effectively crack down on short-term speculation, both private individuals and businesses will be required to pay the same level of tax, the aim being to prevent individuals from setting up companies that currently pay 20 percent corporate income tax, the Executive Yuan said.
In an interview with CNA, Huaku Development Co., Ltd. General Manager Jason Hung (洪嘉昇) said his company will continue to develop new projects as scheduled despite the new measures.
As most of Huaku customers buy homes for self-use, the new policy will have no impact on the company, Hung said.
Huaku is planning housing and factory projects worth NT$30 billion (US$1.06 billion) this year, while the figure for 2022 is expected to top NT$20 billion, he said.
Cathay Real Estate Development Co., Ltd., another major developer, expressed the same viewpoint.
Meanwhile, Chang Chin-oh (張金鶚), a real estate expert and an honorary chair professor at National Tsing Hua University’s College of Technology Management, contended that the new rules will be very helpful, especially when individuals and corporate buyers are subject to the same but higher level of tax.
However, General Manager Jack Wang (王俊傑) at Hiyes International Co., a big sales agent for local developers, suggested that the burden of increased tax will be eventually transferred to buyers, which will do little to help curb soaring house prices.
Jessica Hsu (徐佳馨), head of the research department at real-estate agency H&B Business Group, said the new policy is certain to impact the market.
With investors’ profits to be eroded, they are certain to shift their capital to investments that are more profitable, she said.
Ruling Democratic Progressive Party Legislator Wu Ping-jui (吳秉叡) said he supported the Executive Yuan’s draft amendment to levy higher taxes on short-term speculators in response to high social expectations that the government should act to curb housing prices.
Meanwhile, Tseng Ming-chung (曾銘宗), a legislator from the opposition Kuomintang, called on the Executive Yuan to send a draft law on imposing a property hoarding tax to the Legislative to more effectively rein in the housing market.
Addressing the widely touted property hoarding tax, Executive Yuan spokesman Lo Ping-cheng (羅秉成) was noncommittal, saying the sharp differences in housing prices across the country make property hoarding hard to define.
If owners with more than four homes are targeted by the property hoarding tax, as many as 780,000 tenants could be impacted by the measure, he said.
“The main reason the Executive Yuan did not propose such a tax this time around is concern that it would be transferred to tenants,” Minister without Portfolio Kung Ming-hsin (龔明鑫) said.
Source: Focus Taiwan News Channel