House Replacement and Tax Refund
Taiwan Gift and Estate Tax Guide 2021
2021-11-01
In Taiwan, property transaction taxes at a minimum includes consolidated income tax, land appreciation tax, sales tax and stamp tax.
Initially, the sales of a house (including the land) required both the consolidated income tax for the house and the land appreciation tax for the land to be computed by the then published value of the land. However, since January 1, 2016, the house and land taxes have been combined into one tax system so that the consolidated house and land income tax applies. Although the land appreciation tax remains, providing that when computing the house and land consolidated income tax, the total land appreciation value can be deducted to avoid double taxation.
The current taxes are summarized below:
Taiwan’s property tax is divided by house and land. The house tax is calculated based on the current house value multiplied by the applicable tax rate which is differentiated between self-use and non self-use. In summary, the house tax is 1.2% when qualified for self-use and may be 1.5%-3.6% for non self-use. For non residential use house, it will be taxed based on business use (3%-5%) and non business-use (1.5%-2.5%), and the actual rate to be applied will be determined by the local legislative councils within the above ranged.
As to the current value of a house, it shall be evaluated based on the space area, unit price, durability, depreciation, and road section rating as set for the road or street on which the house is located. The so-called space area means the total space area derived by putting together the space area specified in the title deed and the total shared public space area, as well as other elements to be determined by the local government’s Real Property Evaluation Committee every three years, which shall be the same as those determined when they were first completed, except for the road section rating to be reevaluated every three years.
Below is the formula to compute house taxes:
Payable house tax = (The current value of the taxable house) x (tax rate).
The current value of the taxable house = (The unit price for the house as approved) x (space area) x (1 - depreciation rate x depreciation years) x (the road section rating)
Also, people receive their tax filing papers in May each year, and that the house tax in general will decrease each year as depreciation lessens each year if the use remains the same (so that the tax rate will be the same). However, in the case where the tax has increased, it may be due to a change in the road section rating which usually reflects the commercial traffic condition, as well as the general supplies and demands condition, in the road on which the house is located. As such, the road section rating near metro stations is higher than those set for areas without metro, and that those near the commercial areas are higher than those set for the general areas.
In case of doubts, please check with local tax authorities in the area where the house is located.
Taiwan Gift and Estate Tax Guide 2021
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Provided by Kingdoms Law