COST OF LIVING/Cabinet approves draft law to raise tax on hoarding homes
Taipei, Sept. 21 (CNA) The Executive Yuan on Thursday approved amendments to the House Tax Act that will raise the house tax on households owning vacant residential properties, as part of government efforts to rein in speculation in the local property market, according to the Ministry of Finance (MOF).
Under the amendments, the ministry said the so-called house hoarding tax on a vacant fourth or more units will be raised from the current 1.5-3.6 percent to 2.0-4.8 percent, with some exceptions, including a fourth or more home received from inheritance which will be subject to a house hoarding tax ranging from 1.5 percent to 2.4 percent.
In addition, property developers who hold unsold existing homes for less than two years will see the tax rise to 2-3.6 percent, while owners who lease their homes and honestly report their rental income, will be taxed at 1.5 percent to 2.4 percent, the MOF said.
The ministry said the raised house hoarding tax is expected to affect 968,000 to 1.36 million households around Taiwan, while the ministry expects to collect an additional NT$4.57 billion (US$142 million) to NT$5.57 billion in tax revenue a year.
As living costs vary between urban and rural areas around Taiwan, the MOF said, the Cabinet will allow local governments to decide their own house hoarding tax rates between the proposed 2-4.8 percent.
The ministry said it will provide local governments with a house hoarding tax calculating model as a reference and communicate with them about the details in the raised tax before the new tax rates are finalized.
The tax calculating model is likely to be divided into two areas, the ministry said: one for the six largest municipalities -- Taipei, New Taipei, Taoyuan, Taichung, Tainan and Kaohsiung -- and a second for other cities and counties in the country.
According to the MOF, the hike in the house hoarding tax is expected to bring justice and fairness to the local property market at a time when first-time home buyers have found it increasingly difficult to afford skyrocketing home prices.
In addition, the amendments also cut the house tax on the home the owner has for self-dwelling purposes from the existing 1.2 percent to 1 percent, while the proposed tax cut will also apply to second and third homes belonging to home owners, their spouse and minor children for self-dwelling purposes, the MOF said.
However, the tax cut will not cover luxury homes, the MOF said.
In Taiwan, luxury homes have different values from area to area. Luxury homes refer to residential properties valued at NT$70 million in Taipei, NT$60 million in New Taipei, and NT$40 million in other cities and counties in Taiwan.
The tax cut is expected to benefit about 3.10 million households in Taiwan but lead to a reduction in tax revenue of about NT$2.3 billion a year, according to the ministry.
The ministry indicated it will communicate with lawmakers from the ruling Democratic Progressive Party (DPP) and the opposition parties, with the aim of having the Legislative Yuan pass the amendments as soon as possible, to allow the new law to take effect on July 1, 2024.
In early July, Vice President Lai Ching-te (賴清德), the DPP's presidential nominee, pledged to back a new house tax rate plan unveiled by the Cabinet to raise the house hoarding tax for owners of vacant residential properties, saying a higher house hoarding tax will motivate owners to put vacant houses up for sale or rent.
- CPI growth hits 2.90% in November boosted by higher food pricesThe consumer price index (CPI) grew 2.90 percent from a year earlier in November largely on the back of higher food prices, the Directorate General of Budget, Accounting and ...12/06/2023 09:46 PM
- Housing transactions in 6 major cities up 26% year-on-year in NovemberTransactions of residential and commercial property in the six special municipalities in Taiwan rose about 26 percent in November from a year earlier, marking the fifth ...12/04/2023 04:12 PM
- Taiwan's median earnings growth hits four-year high: DGBASMedian earnings in Taiwan grew more than 2 percent in 2022, the fastest pace of growth in four years due to wage hikes and an increase in bonuses in the tech sector, according to ...12/01/2023 04:50 PM
KMT presidential nominee Hou pledges better ties with both U.S., China12/07/2023 06:47 PM
U.S. dollar closes higher on Taipei forex market12/07/2023 06:21 PM
Over 6 million doses of seasonal flu vaccine administered: CDC12/07/2023 06:14 PM
Ko envisions kingmaker role for TPP in Legislative Yuan12/07/2023 05:15 PM
G7 reaffirms importance of peace across Taiwan Strait12/07/2023 05:00 PM