The real estate market is hitting its high here in Taiwan, and to cool down the heat, the Ministry of Finance is planning to revise its policies.

In the past, as long as the land is labeled as a public area, it is eligible to be exempted from land value tax. But now, starting from next year, all properties will be taxed unless it's a completely public space, such as roads or alleys.

This is the Hsinyi military space located on Jiangou South Road, Taipei City, which was auctioned by the National Property Administration in 2006, making it one of the highest auctioned public land in the Taiwanese history.

Shin Kong Life, an insurance company, bought it with NT$6.3b.

However, two years later, Shin Kong sold it for NT$10.1b, a profit of NT$3.5b.

This land is the classic example of investors pushing up the real estate prices by investing then selling prime locations.

Therefore, in order to stop this seemingly bursting market, the Ministry of Finance is getting involved, first, by limiting the tax free zone on public areas.

According to Regulations Governing the Reduction or Exemption of Land Tax, for land that is procured for public purposes is exempt from land value taxation.

However, the definition for the term public use is unclear, the Ministry has revised the regulation.

Starting from next year, as long as there is land that are procured by private companies and have not been developed will all be under Land Value Tax unless they have been designated for public road use.

On the other hand, the method of cooling the real estate price is still doubtful to some experts.

This levy on idling land against land hoarding seems like a good idea, but since the taxation only accounts for tenth of a thousand on the auctioned price, the effect seems limited.

Therefore, in order to have a more affective result, some say that restriction on loans to construction and developing companies would be a more obvious choice.