Taipei, April 16 (CNA) A real estate broker suggested Monday that a plan to levy a tax on capital gains from property sales based on actual transaction prices should be implemented in stages, with the first stage coming in 2015 when enough data is available.
Starting in July, parties involved in property deals will be required to register the actual transaction prices with the government, prompting expectations that authorities will soon collect property-related taxes based on the prices registered.
Speaking at a conference in Taipei, Taiwan Realty CEO Kevin Peng said that if the government decides to launch such a system, he would suggest it be implemented in stages.
"Such a property tax system can only be implemented when enough transaction data are available in the registration system," Peng said.
Taiwan currently assesses land and property taxes and a land increment tax (a form of capital gains tax on property sales) based on values set by the government.
The government-set values, reviewed on an annual basis, are generally well below market prices, limiting tax revenues.
With actual transaction prices soon to be registered, tax authorities will soon have a chance to use them to collect capital gains taxes.
Peng said that with prices from 400,000 to 500,000 transactions being added to the system each year, the first stage of the new tax system could be launched in 2015, when 2.2 million pieces of data, or less than one-third of the 7.8 million households in Taiwan, are in the system.
Peng also dismissed concerns that capital gains taxes based on actual market prices would adversely affect the housing market and discourage investors.
He noted that Taipei housing prices are still on the rise even after the introduction in June 2011 of a luxury tax designed to curb property speculation, proving that people will put money into property if there are profits to be made.
Four factors will make or break a tax system based on actual property prices -- when it is implemented, the tax rate used, general economic conditions, and the supplementary measures that have been drawn up, he said.
(By Eva Feng and Scully Hsiao)