CBN丨China launches tax policies to support property market

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China unveils new tax breaks to boost property sales; Tencent logs 47% jump in Q3 profit on strong gaming growth.

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 percent deed tax on homes measuring 140 square meters and below from December 1, the Ministry of Finance said on Wednesday, while a 1.5 percent rate will be taxed on purchase of units above that size. The existing threshold is 90 square meters.

The revised regulation on home transaction deed tax will mainly benefit those who plan to purchase bigger homes, said Zhang Dawei, chief analyst with real estate agency Centaline Property.

Home buyers planning to buy second homes in Beijing, Shanghai, Guangzhou and Shenzhen will benefit most from the revised deed tax, as a previous rate of 3 percent had been applied to all four of these first-tier cities, Zhang said.

Under the new policy, buyers planning to buy a second home with a floor area of 140 square meters or less will enjoy a lowered deed tax of 1 percent, while for those intending to buy a second home with a floor area above 140 square meters, the revised deed tax has been lowered to 2 percent.

More impactful policies are expected to roll out in the future, which will help stabilize real estate market expectations.

The transaction volume of new homes went up 0.9 percent year on year in China in October, reversing a decline that started in June last year, while second-hand home transactions rose for the seventh consecutive month and by 8.9 percent year on year.

Additionally, authorities will clarify policies on value-added taxes and land appreciation taxes in line with the scrapping of standards for ordinary and non-ordinary housing, reduce second-hand housing transaction costs, and keep tax burdens on real estate companies stable.

Warming home sales, along with further trade improvement in October and vibrant manufacturing activity, have added to evidence proving that the Chinese economy is gaining more traction thanks to pro-growth measures.

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Executive Editor: Sonia YU

Editor: LI Yanxia

Host: Stephanie LI

Writer: Stephanie LI

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