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Cooling a hot real estate market to deflate a bubble
Taiwan News, Staff Writer
2011-09-22 03:20 PM
Taiwanese real estate brokers hope that a new bill under consideration in the Legislative Yuan will help rein in runaway prices on real estate in Taiwan. The bill would require that property taxes be based on the transaction values of homes rather than on government assessments

Government assessments are usually set at levels much lower than actual market prices. This gap in value means that holding costs are insignificant compared to the profits that can be gained through property transfers, which can lead in turn to price manipulation in the market.

In addition, prices have also been inflated by the fact that buyers often do not have enough information on price hikes and inflation and are more willing to pay more than the true value of a property.

The proposed legislation on property transaction disclosures has been welcomed by major real-estate brokers. They believe it will make housing sales more transparent and accountable in the long run, even if makes potential buyers more cautious in the short term.

The bill which is currently pending is a bid to rein in runaway housing prices, which remain unresponsive thus far to a special sales levy, better known as the luxury tax, and other tightening measures. The luxury tax imposes relatively high taxes on property which is re-sold within two years of the date of purchase.

Another aim of the bill is to establish a database of tax assessments and valuations which can serve as a guide to both buyers and sellers future and make both sides more comfortable about property prices in the future.

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