Tax Cools Down the Housing Market in Taiwan

December 20, 2012 Taxation in Taiwan

Housing in TaiwanTAIPEI – The government of Taiwan has reached its goal of calming down the local investment housing market by imposing a luxury tax over the last two years.

With only a few weeks left until the end of the year, the Ministry of Finance of Taiwan has announced in a statement released on December 19th that over the course of 2012 the country’s tax on luxury items has had the intended effect on consumer behavior, reducing the chance of the country experiencing a further bubble in housing prices.

The tax, which was first enacted in July 2011, is aimed at discouraging taxpayers from purchasing houses as speculative investments, by imposing a 15 percent levy on the sale of all investment properties which have been held for less than one year, and a 10 percent tax charges on the sale of investment properties which have been held for less than two years.

According to the Ministry, owing to the effectiveness of the tax, the number of house sales in Taiwan over the first 10 month of 2012 dropped by up to 38 percent, compared to the previous two years.

The number of houses purchased specifically as investment properties has also dropped by 37.1 percent in the third quarter of this year, compared to the same period in 2011.

Overall, the Ministry stated the luxury tax has had its intended effect, with housing prices falling by as much as 4.33 percent since the tax was enacted.

Photo by Philip Taylor PT