Taiwan's New Housing Tax 2.0 System to Launch in July 2024: Impact on Annual Levy and Ownership Transfer
Starting from July 1, 2024, Taiwan will implement the "House Tax 2.0" system, switching to an annual assessment. The tax period will run from July 1 to June 30 of the following year, with the tax base date set on the last day of February each year. If the property ownership registration is completed by February 28 (or 29 in a leap year), the house tax for that year will be the responsibility of the new owner; otherwise, the original owner will be responsible for paying it. This change impacts tax responsibilities in property sales and auctions, and it is advisable to clearly specify tax-sharing clauses in contracts to prevent disputes.
Key Updates
05/05 06:00
Taiwan's New Housing Tax 2.0 System to Launch in July 2024: Impact on Annual Levy and Ownership Transfer
Starting from July 1, 2024, Taiwan will implement the "House Tax 2.0" system, switching to an annual assessment. The tax period will run from July 1 to June 30 of the following year, with the tax base date set on the last day of February each year. If the property ownership registration is completed by February 28 (or 29 in a leap year), the house tax for that year will be the responsibility of the new owner; otherwise, the original owner will be responsible for paying it. This change impacts tax responsibilities in property sales and auctions, and it is advisable to clearly specify tax-sharing clauses in contracts to prevent disputes.
Property Tax Changed to "Annual Collection," with Clearly Defined Tax Period
According to the Ministry of Finance's announcement, starting from July 1, 2024, the property tax collection method will change from "monthly assessment" to "annual collection," with the tax period running from July 1 each year to June 30 of the following year. For example, the tax period for the 2025 property tax will be from July 1, 2024, to June 30, 2025, and will be collected in May 2025.
The core of this reform is to unify the tax period and payment schedule, simplifying administrative processes and making it easier for taxpayers to understand their tax responsibilities. At the same time, to clearly define who should bear the property tax for the year, the system also establishes a "tax liability reference date," which is the last day of February each year.
End of February as the Tax Liability Reference Date, Registered Owner Responsible for Tax Payment
The new system stipulates that February 28 (or 29) each year is the tax liability reference date for property tax. This means that the person registered as the property owner on that day is the taxpayer for that year.
For example, in 2025, if a property is still registered under Person A's name on February 28, even if the property is transferred to Person B on March 1, Person A remains responsible for the 2025 property tax. Conversely, if the transfer and registration are completed on February 28, the tax obligation shifts to Person B.
This regulation has a substantial impact on both parties in a property transaction. Although legally the taxpayer is determined by registration, the parties can agree on a tax-sharing method in the contract, such as sharing based on the transfer date, to avoid disputes.
Timing of Ownership Transfer Becomes Crucial for Tax Responsibility
Under the new system, the timing of property ownership transfer becomes a key factor in determining tax responsibility. For example:
- If Person A and Person B sign a sales contract on February 1, 2025, and complete the transfer on March 1, Person A pays the 2025 property tax.
- If both parties complete the transfer and registration on February 28, the tax obligation shifts to Person B.
This regulation also applies to properties acquired through court auctions. If the successful bidder obtains the "certificate of rights transfer" issued by the court before February 28, the bidder pays the property tax for that year; if the certificate is issued after February 28, the original owner is responsible.
Co-ownership and Manager System
For co-owned properties, the new system allows co-owners to designate one person as the manager responsible for paying the property tax. If no manager is designated, co-owners share the tax burden according to their respective shares. This regulation continues the spirit of the old system, ensuring clear distribution of tax responsibilities.
Property Tax Declaration and Rate Application Still Based on Usage
Although the assessment method and tax liability reference date have been adjusted, property tax rates are still differentiated based on property usage and the number of properties owned. Starting in 2024, the new property tax 2.0 system applies differentiated rates for non-owner-occupied properties, with progressive rates based on the number of properties owned nationwide, ranging from 2% to 4.8%. For owner-occupied properties with household registration, a preferential rate of 1% to 1.2% applies.
Additionally, if a property is rented out and the rental income declared meets the local standard rent, a lower rate of 1.5% to 2.4% can be applied. To encourage landlords to release idle properties, the Ministry of Finance has extended the declaration deadline for rental properties for the 2025 period to June 2, 2025.
Practical Reminder: Sales Contracts Should Clearly Specify Tax Sharing Terms
Due to the setting of the tax liability reference date, which may lead to misunderstandings about tax burdens between buyers and sellers, experts recommend that property sales contracts clearly specify "property tax should be shared by both parties according to the transfer date" to avoid future disputes.
Additionally, if buyers want to avoid being responsible for the entire year's property tax, they should complete the transfer registration by February 28; conversely, if sellers wish to retain tax responsibility, they can arrange for the transfer to be completed after March.
