China unveils new tax breaks to boost property sales, free up household cash
‘Pretty sizeable’ reductions would ease burdens on buyers and sellers, accelerating listings and sales, analyst says
China is amending its tax structure on residential property transactions, effectively lowering the cost of ownership and extending fresh incentives to a wider pool of buyers, in a round of measures to arrest a four-year slump.
First-time buyers will enjoy a 1 per cent deed tax on homes measuring 140 sq m (1,507 sq ft) and below from December 1, the Ministry of Finance said on Wednesday, while a 1.5 per cent rate will be taxed on purchase of units above that size. The existing threshold is 90 sq m.
For second home purchases, a 2 per cent deed tax will only hit transactions involving units starting from 140 sq m instead of 90 sq m, it added.
The new structure will be standardised nationwide, the ministry said, implying the rates in top tier-1 cities like Beijing, Shanghai, Guangzhou and Shenzhen will fall from 3 per cent for transactions involving larger units and second home purchases.
“It’s a pretty sizeable move which will directly boost demand for medium to large-sized homes, specifically those above 90 sq m, by reducing transaction costs,” said Yan Yuejin, vice-president of the Shanghai-based E-House China Real Estate Research Institute. Rates will be more aligned nationwide, further supporting the market recovery, he added.
The plans to boost housing transactions follow calls from regional authorities in recent months to remove the distinctions between standard and non-standard homes. In mainland China, houses measuring at least 144 sq m are deemed above average and non-standard.
