The construction sector got a boost Friday after the finance ministry announced a proposal for property tax reform.
The buying in Friday morning trade also reflected strong bargain hunting as many property stocks have encountered pressure in recent sessions. KGI Securities analyst Phil Chu said that the new tax reform proposal removed the uncertainty that had been plating the construction sector.
At a news conference on Thursday, the finance ministry said home sellers will be subject to a flat tax rate of 17% on their profit if they sell their property after owning it for more than two years. However, the tax rate on capital gains will be 30% if owners sell a property within two years.
According to the proposal, only capital gains on properties sold for NT$40 million (US$1.27 million) or more will be subject to the new tax. This means that the majority of property owners will not be affected by the tax.
The proposal is much less stringent than many expected and helped lift the prices of property stocks.