Property taxes are derived from the Legislative Yuan

0

BACKGROUND:
The changes, aimed at preventing individuals from creating entities to avoid capital gains tax, would apply retroactively to transactions dating back to 2016

The Legislative Yuan yesterday approved amendments to the Income Tax Law (所得稅 法) to impose a 45% capital gains tax on July 1 on individuals and businesses selling real estate in the two years after purchase.

The bill, intended to curb real estate speculation, was passed after lawmakers in inter-party negotiations resolved points of disagreement on Wednesday, including setting July 1 for the changes to take effect.

The revisions aim to improve the ‘integrated tax on real estate and land transactions’, which was introduced in 2016 to reduce speculation, especially in the residential housing market, but has failed to act as a deterrent in a context of high liquidity and low interest rates.

Photo: Fang Pin-chao, Taipei Times

Under the changes, personal and business tax would be set at 45% on gains from the sale of property within two years of purchase and 35% on gains from properties sold in both. five years after purchase.

Currently, the 45% rate only applies to gains on real estate sales in the first year of purchase, while the 35% rate only applies to sales made within one to two years. after purchase. These rates only apply to individuals.

Companies pay a general rate of 20% on these earnings under corporate tax rules.

By imposing the same tax rate on individuals and businesses, the bill seeks to prevent individuals from setting up companies to exchange goods and paying only 20% of their earnings.

For people and businesses purchasing property outside of Taiwan, the 45% tax would apply to gains on real estate sales within two years of purchase, up from one year after which the rate would remain at 35% , according to the bill.

The personal tax for gains on properties sold five to 10 years after purchase would be 20 percent, and 15 percent thereafter.

For businesses, the rate would return to 20% after five years.

The revisions also expand the scope of properties to which the tax applies. While the tax previously only applied to transactions of existing residential properties not considered “for personal use”, according to the amended version, it would apply to the sale of pre-sale homes, to the surface use of properties. land rights and special participations.

The measures would apply retroactively to transactions dating back to 2016.

Before the bill was passed, Chinese Nationalist Party (KMT) lawmaker and finance committee chairman Tseng Ming-chung (曾 銘 宗) said his party had several other proposals in the works to improve access. housing, in particular by increasing taxes for owners of several residential properties and increasing transparency in the rental market.

Comments will be moderated. Keep comments relevant to the article. Comments containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. The final decision will be at the discretion of the Taipei Times.


Source link

Leave A Reply

Your email address will not be published.