The legislature has approved a bill that paves the way for housing tax reform.
According to the bill passed on Friday, the government will impose a tax of 45% on homeowners who sell their homes within a year of buying them. Homeowners who sell before the second year will be taxed at a 35% rate. After six years of owning a home, all capital gains under NT$4 million (roughly US$130,000) will be tax free, with a 10% tax imposed on all gains above that.
However, the bill also has provisions for homeowners who have to sell their properties for reasons that they cannot control. In such cases, homeowners will be taxed at the usual 20% rate. Finance Minister Chang Sheng-ford said the bill is not about penalizing non-speculators.
"Our goal is to curb short-term speculation. […] Young people often change jobs. If they need to sell their houses because they take up new jobs, this is not speculation, so they shouldn’t be subject to a high tax rate," said Chang."There are many involuntary reasons for selling your home. For example, if a couple is getting a divorce, they may have to sell their house and split the proceeds," he said.
The new rule will take effect on Jan. 1, 2016.