On 29 October 2026, the MOF issued an interpretive order (Shui-Fa-Zi No. 1150456789) clarifying the calculation of cost basis for individuals selling inherited or gifted “old-system” houses (properties acquired before the implementation of the current real estate valuation system). The order permits the original assessed present value (assessed at time of inheritance/gift) to be adjusted upward using the Consumer Price Index (CPI) or a construction cost index published by the Directorate-General of Budget, Accounting and Statistics (DGBAS). This adjustment effectively increases the cost basis, thereby reducing the taxable capital gain upon subsequent sale. The rule applies to properties where the original acquisition cost cannot be reliably documented, a common issue for older properties. Taxpayers must apply the index corresponding to the period from the date of inheritance/gift to the date of sale, and retain supporting documentation for five years.
Key Takeaways
- Indexation Relief: The cost basis of inherited/gifted old-system houses can be adjusted by the CPI or construction cost index, lowering taxable gains and resulting income tax liability.
- Documentation Requirements: Taxpayers must retain the inheritance/gift tax return, property valuation notices, and index calculation worksheets for at least five years post-sale for potential audit.
- Effective Scope: This interpretation applies retrospectively to pending cases and future sales, providing certainty for estate planning and property disposition strategies.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement