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Rich people buy real estate to save their faces because of taxes

Property tax, including real estate, is considered by many countries around the world as a tool to avoid the type of continuous buying and selling of real estate that causes “price fever”, curbing the rise of real estate prices. speculative state. Even many countries strongly impose taxes on second home buyers. However, there are countries that are still struggling with property taxes.

Imposing heavy taxes on home buyers constantly

In Japan, property tax is levied by the local tax authority real estate. Real estate is taxed at 1.7% of assessed value by local tax authorities. After statutory depreciation, property tax is charged at 1.4% of original cost.

If the property is a second home or rental, the tax rate on that home is 2% of the property’s value.

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Taxes are considered a tool for many countries to curb the rise of housing prices (Image: Japan Times)

Meanwhile, in Korea, the property tax which is applied to real estate annually from 0.07% to 5% is calculated on the legal value of land, buildings, houses… Newly built or expanded factories in urban areas will have to pay a property tax rate of 5 times for the first 5 years.

In Korea, in 2020, the government of this country has announced many new regulations on tax increases for people who own many houses. This is one of the moves that are seen as aimed at curbing the skyrocketing house prices in this country.

Accordingly, those who own 3 or more homes and those who own 2 homes located in certain high-priced areas including Seoul and surrounding cities are subject to a property tax rate of 1.2%. to 6%, before 0.6 to 3.2%.

On the other hand, to prevent real estate speculation, the Korean government increased the real estate sales tax to 70%. For example, homeowners who want to sell a home 1 year after purchase are subject to 70% of the property sales tax while those who want to sell their home 2 years after purchase for a profit are subject to a 60% tax rate.

In Singapore, the property tax on real estate has long been incorporated into the tax system. Accordingly, properties under S$8000 will not be taxed, but properties valued between S$8000 and S$47,000 will be subject to a property tax rate of 4% or about S$1,880/ year, then followed by other rates and up to S$130,000 up to this level subject to a property tax of S$9380/year.

That is the number valid from 2015 to the present, but from 2023 there will be a change, the level of S$8000 or less is still exempt from tax, but the next level will be calculated from the threshold of S$22,000 to bear $880. Singapore dollars in tax, which means breaking down the taxable amount in the range of 8000 – 47,000 Singapore dollars.

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Second homes will be taxed in many countries around the world (Image: Resources)

Meanwhile, for second homes, Singapore levies property taxes on its citizens at 12% of the purchase price or value of the property (whichever is higher). If you are a permanent resident (long-term resident without nationality), you will have to pay a tax rate of 15% when buying a second real estate.

Foreigners living in Singapore buying a second home will be subject to a tax rate of 20% on the value. However, there are cases like US citizens buying houses in Singapore will be exempt from this tax due to agreements between the two countries.

In the US, real estate taxes can be set by local governments such as cities and counties, the rates vary from state to state, but in general, the parameters are also somewhat uniform across the country.

Revenue from property taxes including real estate funds public schools. This also means that states with higher property tax rates also tend to spend more on education than the national average.

In the US, the state of Hawaii has the lowest property tax of only 0.3% of the value of the home. Nationally, the property tax rate is 1.1% of the median home value. The tax rate is low, but Hawaii is the state with the most expensive home prices on average more than $ 600,000. The highest property tax rate in the US is New Jersey at 2.21%, while the median home price here is just over $330,000.

In the UK, property tax is charged separately for the first and second home onwards. For a second home, in the UK, homeowners pay a property tax of 3% for homes valued at under £250,000, and between £250,000 and £925,000 the tax is 8%, from £1,500,001. 15% tax.

Thailand is the country that imposes a tax on the second house from 2019. Accordingly, a house worth up to 50 million baht will be taxed at 0.02%. For houses classified for other uses, the owner has to pay 0.3% for a house worth 50 million baht.

China has not yet imposed a property tax

China – a country with an active real estate market, To date, there has been no move to impose a property tax on property owners. However, in 2021, the US newspaper CNBC reported, analysts said that Chinese leaders had begun discussing property taxes since 2003, but so far only Shanghai, Chongqing performed at a limited level.

CNBC quoted Larry Hu, chief China economist at Macquarie University, as saying that the experience of these two cities over the past decade does not provide a compelling argument for other local governments to impose a property tax. movables. In 2020 alone, property taxes in Shanghai and Chongqing accounted for less than 5% of local tax revenue and contributed much less than land sales.

According to Moody’s, more than 20% of local and regional government revenue in China comes from the sale of land to property developers. But if the real estate market is exploited through tax channels, it can bring significant revenue to local governments.

Quynh Huong (According to Taxsummaries/USAtoday/Bangkokpost/Koreaherald)

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Ministry of Finance and Justice ‘involved’ to prevent loss of property tax revenue

Many ministries and localities have joined in the fight against tax loss in business activities and real estate transfer.

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