Yeah, it was common when I visited Peru 20 years ago.
The tax code wasn't only reason for unfinished buildings. In poorer communities, which couldn't get access to loans, it was common to just buy supplies and do construction bit by bit as funds and time were available.
Homes might start off with as little as bamboo poles in corners and PVC sheets tied between them. I swear I saw some that didn't even have roofs. When they had enough funds, they would buy some bricks and just stack them as walls, throw some roofing iron on top or even PVC sheet as a roof
When they had enough bricks, they would buy cement and construct a solid brick wall. Then maybe some concrete for the floor.
Even in middle-class neighbourhoods, it was still common to construct floor-by-floor.
Government regulation has outlawed people building incrementally in most cases, so people who can't afford to buy a house generally have to rent forever.
Building a house is usually more expensive than buying a similar house, due to building codes, permitting costs, and costs of utility build-out.
If you find a house for sale built by the general contractor for themselves, it's probably very well built. In a lot of ways that wouldn't be obvious to the vast majority of people.
I would imagine that purchasing the land is at least as much a hurdle in most places. I suspect the land my house sits on is worth some small multiple of what the structure is worth.
At least in recent Mexico it's not because of taxes.
People don't have enough money to finish it and they leave it for later which usually never happens. Also they leave the possibility that next generation can add a new floor.
Years ago I read the same about places in the US as well. And of assessors being really intrusive. People being butthurt because they feel they are being punished for keeping their house up.
I've heard California used to base assessments on comparative values so that people don't try and game the system with crummy substandard construction and materials.
Well it's natural that people feel it's unfair to tax them more just because they make their house nicer. It's just a very unfair tax.
Think about it. You spend money and work a lot of hours to refurbish your kitchen and then you're informed you have to pay more because of it. I am surprised people don't rebel against this policy.
A lot of US housing styles, such as saltbox and narrow townhouses, are also attempts to game older versions of the tax code