Taiwan plans special property tax

TAIPEI: Taiwan is planning to impose a special tax on short-term investment property transactions in the latest effort to curb speculation and prevent real estate bubbles in major cities.

Finance ministry chief secretary Lee Ching-hua did not give further details of the plan, but local media reported the tax could be as much as 30%, depending on the value of the deal.

The levy would target properties bought for investment and resold within a year, with the buyer paying the tax. The special tax needs legislative approval.

Property shares were the biggest decliners on Friday, Dec 3 after the news, with the sub-index down 0.8% in a broader market up 0.5%.

Authorities and politicians have expressed concern this year over rising property prices in the capital Taipei and other major cities, where average wage earners can no longer afford to buy property.

The ratio of home prices to disposable income in Taipei is at the highest in 20 years and the average price for an existing apartment was around US$442,100 (RM1.39 million) in the first eight months of the year, 11.5 times average yearly household incomes.

The central bank has ordered increased oversight of mortgage lending, especially for second properties, and the government has announced plans to restart construction of affordable housing.

Other Asian countries are looking to tighten regulations on property, also due to fear of asset bubbles. — Reuters