Taiwan has clarified that heirs selling inherited real estate may qualify for a lower property income tax rate by combining the ownership periods of successive deceased owners, potentially reducing the applicable rate from 45% to 15%.
Taiwan’s Ministry of Finance has clarified that taxpayers selling inherited or bequeathed real estate may qualify for a significantly lower property income tax rate by combining the ownership periods of successive deceased owners when calculating the applicable holding period.
The clarification, issued on 16 July 2026, aims to ensure heirs are not unfairly subject to higher tax rates simply because they dispose of inherited property shortly after receiving it.
According to the Ministry, where inherited property is subject to Taiwan’s integrated house and land income tax regime, the ownership periods of each deceased owner or testator can be aggregated to determine the applicable tax rate. This may allow taxpayers to benefit from substantially lower rates than would apply if only their personal ownership period were considered.
Rules introduced to protect heirs
The Kaohsiung National Taxation Bureau explained that real estate acquired by the deceased or testator after 1 January 2016 falls within the unified real estate income tax system under Ministry of Finance Order No. 10404620870, issued on 19 August 2015.
However, the authorities recognised that heirs and beneficiaries often need to sell inherited property shortly after succession, for example, to support surviving family members or pay inheritance tax liabilities. Applying the highest tax rates solely because of a short post-inheritance holding period would therefore be unreasonable.
To address this issue, Article 14-4, Paragraph 4 of the Income Tax Act and Ministry of Finance Order No. 11204619060, issued on 2 November 2023, allow the ownership periods of each successive deceased owner or testator to be combined when determining the relevant tax rate.
Example shows substantial tax savings
The bureau illustrated the rules using the example of Mr. Su.
In the example, Mr. Su’s grandfather purchased a property on 1 May 1985. Following the grandfather’s death on 1 May 2024, ownership passed to Mr. Su’s father, before being inherited by Mr. Su after his father’s death on 15 May 2026.
If Mr. Su sells the property on 15 August 2026, he will have owned it for only three months. Ordinarily, a holding period of less than two years would attract the highest combined property income tax rate of 45%.
However, because the law allows the ownership periods of both his grandfather and father to be counted, the holding period runs continuously from 1 May 1985 until the sale on 15 August 2026. As the combined ownership exceeds ten years, the applicable tax rate falls to 15%, reducing the tax rate by 30%.
The bureau also reminded taxpayers that land registration records can be used to trace successive ownership and accurately calculate the combined holding period when selling inherited or bequeathed real estate.
