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Building a healthy real estate market


The cost of housing is a crucial component of the public's cost of living. In December 2020, the Executive Yuan thus approved the Healthy Real Estate Market Plan to strengthen regulation of real estate transactions and expand social housing and rent subsidies. To curtail short-term speculation of real estate, in July 2021 new measures regarding income tax on house and land transactions came into effect, and on February 8, 2023 the revised Equalization of Land Rights Act was promulgated. On July 6, 2023 the Executive Yuan also passed a scheme to apply new differential tax rates on housing, with lower taxes for owners that occupy their own properties and higher taxes for owners of multiple properties that are not all in use. Related amendments to the House Tax Act were promulgated on January 3, 2024 and came into effect on July 1, 2024. These, in addition to a range of other government measures, will set the real estate market on a healthy development path by curbing rampant speculation, combating tax evasion and tax avoidance, and reducing excessive capital inflows, to achieve housing justice and build high-quality living environments.

Five principal measures

Curb presale speculation: Local real estate markets have seen speculation in "purchase orders" for presold houses—which offer agreed-upon sale prices issued by builders or agents on receipt of deposits—in addition to profit-making through real estate swaps. Once the sale officially begins at a higher price, speculators profit by selling these purchase orders to later buyers. To combat such practices, regulation of presold house purchase orders and real estate swaps has been tightened up to deter entities from using fictitious transactions to inflate real estate prices.

Enforce amended Equalization of Land Rights Act: Headline amendments include restrictions on reselling and swapping of sales and purchase agreements (SPAs) for presold houses or new buildings; the introduction of a permit system for purchases of residential property by private entities; heavily penalizing real estate speculation and requiring the registration of contract cancellation for presold houses; and establishing a whistleblower reward scheme to encourage the public to monitor real estate sales and transactions and report any evidence of actual transaction prices that have not been accurately registered, in order to curb speculation within the market.

Suppress short-term speculation and crack down on tax evasion: The tax code has been amended to require that short-term transactions be heavily taxed. Income associated with equity transactions in unlisted corporations must now be reported together with personal income for tax purposes. Furthermore, income taxes for profit-seeking enterprises are calculated based on rates that depend on the length of time property is held, as is the case for individuals. This will eliminate the practice of individuals establishing corporations to engage in short-term property speculation. Additionally, the amended House Tax Act prevents owners from subdividing single, high-value properties into many low-value units to evade property taxes, and higher housing tax rates will also be levied on owners of multiple properties that are not all in effective use, to encourage more housing to be put on the market and reduce the number of unoccupied properties.

Prevent capital flooding into property markets: Banks are supervised and encouraged to exercise caution when extending credit to finance new residential construction by developers and the purchase of residential real estate by investors for other than personal use, while selective credit control measures have also been adopted. To strengthen management of credit risk at financial institutions, special audits of real estate credit extension as well as standard operational auditing will continue, bolstered by already-announced risk management measures.

Ease housing costs for the public: The central government established the National Housing and Urban Regeneration Center, and has worked together with local governments to complete construction of 120,000 social housing units as targeted. Incentives for private landlords have been increased to drive their participation in a subleasing and management program. An expanded NT$30 billion (US$967.9 million) rent subsidy program has benefited 500,000 households per year. The government is also offering policy-based subsidies for loan interest (such as through an enhanced program to provide preferential housing loans for young homebuyers, and a program to provide personal housing loan support for households of middle-class incomes and below), thus lightening the financial burdens of homebuyers.

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