TAIWAN plans to raise taxes on unoccupied homes as part of the government’s latest attempt to try and cool its overheated property market.

The annual tax on a home that’s empty or not being used for residential purposes will be raised to as high as 4.8 per cent of the value of the house from 3.6 per cent now, according to a statement from the Finance Ministry.

About 360,000 households will see higher taxes after the change, which will bring in an estimated NT$2.6 billion (S$112 million) in extra tax revenue, the Finance Minister Chuang Tsui-yun said at a briefing after the Cabinet approved the plan.

The new rule will take effect from May 2024 if it is approved by lawmakers. The rate for a single house occupied for residential purpose will be lowered to 1 per cent. The tax rate for leased houses will also be lowered, the government said.

“The plan aims to encourage the release of houses and reduce the number of vacant houses in an effort to make the housing market fairer,” Cabinet spokesperson Lin Tze-luen said at the briefing in Taipei.

Authorities in Taiwan have pledged to fight high house prices. In January, Taiwan’s legislature passed the Equalization of Land Rights Act to curb speculation and slow the rapid rise in prices. The law, which came into effect this month, aims to ban the reselling of pre-sale homes and the spreading of misinformation with the intention to help flip properties.

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Prices rose 5 per cent in the first quarter from a year earlier, according to data from Taiwan’s biggest realty agent Sinyi. While that was a much slower pace of increase compared to the double-digit rises in 2021 and 2022, prices are still close to record levels, the data shows.

In the latest official data, Taiwan’s Home Price Index rose at the slowest pace since 2020 in the fourth quarter of last year, a sign that prices were heading into a “soft landing” as moderating economic growth and property controls have made residents more conservative in home purchases, according to a statement from the Ministry of the Interior.

Last month, the island’s central bank also announced the fifth round of controls on home purchasing, as it looks to slow the rise in home prices despite the weakening economy. The monetary authority instituted a 70 per cent cap on mortgages to purchase second homes in Taiwan’s major cities in an attempt to make speculation and the purchase of investment properties harder. BLOOMBERG