Why Are Landlords Letting Property Sit Idle Instead of Lowering Rents?


#21

Even Ding Tai Fung couldn’t make rent behing Zhongxiao Dunhua and closed a few yrs back


#22

Time to set a Property Tax in Taiwan on all property beyond their primary residence.


#23

The property sale tax is extremely high for the rich guys, especially if you sell appreciated price property. Owners who bought 20-30years ago and the property price went to the moon must pay a 40% tax on the increase price of the property. So they don’t sell and keep it empty. If you bought a condo worth 2M 20years ago and it is now worth 30M you will have to pay 40% of the 28M, leaving you with a profit of 16M. Invested for the past 20 years give you an average of less than 1M per year, they can leave without that. The result is high rental or just letting it sit and speculate to sell it later on even higher price. Most of these families are very well off and passing to future generations is not a problem to them. What I get most from conversing with these guys is that Taiwanese rich people simply ‘don’t sell land’. They have a fascination for it, they might sell other things like stocks, bonds, even factories and companies, but real estate… it is like they own the world by owning land.

I think a vacancy tax would still be more effective to lower rents. These people are rich rich, they don’t need the money, but they hate losing money in tax to the government. So I imagine they would prefer to rent it lower price than pay a cent in vacancy tax.


#24

Thanks for the insight, I didn’t realize they get taxed 40% for selling


#25

I think this is one of he root problems of the rental. They prefer to let it empty than cash the 1M USD on a sale of a 30M condo. Who would want to pay 40% tax on the increased value?

You see these old people with 10 properties in Taipei. They are estate rich but cash poor sometimes. Their net worth is very high but the money is locked in real estate. If they sell they lose most of it.

For the fortunate ones who own a business or bonds, stocks etc that make them millions in dividends that’s different, but still unwilling to pay for the sale tax.


#26

I heard of the 15% instituted on selling property within 2 yrs, but sellers have to pay 40% on top of this ?


#27

I recall reading somewhere that 25% of properties in Taiwan are empty. 1.8 million properties. If and when a major correction happens it will be devastating.


#28

If you buy now and sell now you pay 15%, but not on old property that increased value in many years. And if you look around most Taipei city, high value neighborhood especially Xinyi and Daan, is full of old buildings. The owners are all millionaires in their net worth, but since most bought their property at least 20 years ago and the prices went crazy when Taiwan was an Asian Tiger, they will get taxed on increase price if the price appreciation is over a certain percentage.

There is also inheritance laws etc that you must wait a number of year before selling a inherited property otherwise there is more tax. It doesn’t get easy for the rich tax wise, so they try whatever they can to not pay them.


#29

Where did you read that? Only 10% of the properties are empty. 25% is China.


#30

Its ridiculously cheap to hold on to property, but transactions are taxed to death here. Sale of property(or at least that of your primary residence) should be tax free in order to accommodate growing families. I dont have the numbers in my head right now, but basically there is a capital gains tax or around 10-20% on your primary residence. Think of the situation where you get your first apartment a small one bedroom, and then you get a kid and want to move to a bigger place but in the process to you need to pay capital gains taxes on your first place?

I suspect quite many places are empty/rented out for the above reason. Me and the wife are thinking of moving bit closer to the city center, but if we got the cash we will keep our current place in wanlong as there would be massive taxes if we sold it.


#31

Somewhere in between the two of us, it appears.

Is Duncan DeAeth his real name? Crazy name, crazy guy!


#32

That Taiwan News article looks like horseshit. It’s 10.12%.


#33

Taipei Vacancy rate is now at 14%, I read somewhere New Taipei City is closer to 20%


#34

Whatever the precise figure, it’s a hell of a lot.


#35

Especially in New Taipei City and outskirts of Taoyuan. Million dollar empty homes everywhere along the Airport Express all the way to Taoyuan Airport and beyond.


#36

They still weasel out of paying this tax, though. They calculate what this “added value tax over time” is going to be, then make the new buyer pay it to them under the table. This has happened to me on three separate occasions with three different sellers. I refused to pay their sales tax and they refused to sell the land to me.


#37

Where is that somewhere and what is the source of these (stupid) articles in English?


#38

I guess the % gets mistranslated going from Mandarin to English :rofl:


#39

“De’Ath” is a venerable British name.


#40

A gatherer of kindling, no less.