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Property stocks boosted by tax reform proposal

Property stocks boosted by tax reform proposal

Taipei, Feb. 13 (CNA) The construction sector got a boost Friday morning after the Ministry of Finance (MOF) proposed a day earlier to tax property sellers on the actual sales amount rather than the government-assessed value, dealers said. The buying in Friday morning trade also reflected strong bargain hunting as many property stocks had encountered pressure in recent sessions amid uncertainty over the government's tax reform, dealers said. As of 11:21 a.m., the construction sub-index had climbed 2.53 percent to 290.59 points, while the weighted index on the Taiwan Stock Exchange was up 0.38 percent at 9,532.32 points. Among the gaining property stocks, Kindom Construction Corp. had risen 5.87 percent to NT$29.75 (US$0.94), Huang Hsiang Construction Corp. had moved up 4.03 percent to NT$46.45, and Highwealth Construction Corp. had risen 3.54 percent to NT$67.20. "The new tax reform proposal removed the uncertainty that had been plaguing the construction sector in recent sessions," KGI Securities analyst Phil Chu said. "Estimating minimal impact on the property market as a result of the new tax scheme, investors rushed to pick up property stocks soon after the local bourse opened." At a news conference Thursday, the MOF said home sellers will be subject to a flat tax rate of 17 percent on their profit if they sell their property after having owned it for more than two years. In cases where they had held the property for less than two years, the tax rate on the profit will be 30 percent, the ministry said. The MOF had been planning to tax home buyers on a progressive rate of up to 45 percent but changed that plan. It has now also put forward a threshold of NT$40 million for the new capital gains tax in the property market, instead of the NT$20 million it had proposed earlier. Moreover, only property sold after Jan. 1, 2016 will be subject to the new capital gains tax, the ministry said. "It means that only about 1 percent of property transactions will be affected by the new tax," Chu said. "The strong buying in property stocks today, therefore, was no surprise." He said that among the current property stocks, he favors Kindom, which he described as a fundamentally sound company. "Kindom is expected to benefit from the launch of new property projects this year," Chu said. "Since its share price fell from a recent mid-session high of around NT$37 in February 2014, the stock has been looking very attractive." Kindom posted NT$2.77 in earnings per share for the first nine months of last year,, up from NT$0.77 in the same period of 2013. Property agencies have estimated transactions involving homes, shops, and offices will grow by an annual 10 percent this year, now that the uncertainty in the market has lifted. In 2014, transactions of residential and commercial property fell to 320,598 units from 371,892 in 2013. The 2014 figure was the lowest since 2002, when it was 320,285 units. (By Frances Huang)


Updated : 2021-09-26 07:41 GMT+08:00