BEIJING: China on Wednesday unveiled a series of tax policies aimed at fostering the steady and healthy development of its real estate market. Analysts believe this strategic move will help stabilize expectations in a crucial industry that bolsters the country’s economic growth.
According to Namibia Press Agency, the Ministry of Finance announced that the nation will enhance incentives related to deed tax to actively support the essential housing needs of its citizens and their desire to improve housing conditions. These new policies, set to take effect on December 1, 2024, were jointly introduced by the Ministry of Finance, the State Tax Administration, and the Ministry of Housing and Urban-Rural Development.
Under the new regulations, individuals purchasing their only residential property or a second home, provided the area does not exceed 140 square meters, will incur a deed tax of 1 percent nationwide. For properties exceeding 140 square meters, the deed tax will be set at 1.5 percent. Zhang Dawei, chie
f analyst at Centaline Property, indicated that the revised regulation on home transaction deed tax would mainly benefit those planning to purchase larger homes.
Particularly, home buyers in cities such as Beijing, Shanghai, Guangzhou, and Shenzhen stand to gain from the revised deed tax, as a previous rate of 3 percent had been applied to all these first-tier cities. Under the new policy, buyers intending to purchase a second home with an area of 140 square meters or less will benefit from a reduced deed tax of 1 percent, whereas those purchasing second homes above 140 square meters will see the deed tax decrease to 2 percent.
Zhang further elaborated that the revised tax standards are expected to stimulate demand for improved housing and second homes. He anticipates the continuous rollout of more impactful policies in the future, which will help reinforce real estate market expectations.
Recent data highlighted a 0.9 percent year-on-year increase in the transaction volume of new homes in China in October
, reversing a decline that began in June of the previous year. Additionally, second-hand home transactions experienced a year-on-year rise of 8.9 percent for the seventh consecutive month.
The new policies also include a reduction in the minimum prepayment rate for land appreciation tax by 0.5 percentage points to ease financial challenges faced by real estate companies. Authorities have also clarified policies on value-added taxes and land appreciation taxes in alignment with the abolition of standards for ordinary and non-ordinary housing, reduced transaction costs for second-hand housing, and stabilized tax burdens on real estate companies.
In a broader economic context, China has introduced several policies to bolster the economy. Since late September, the central government has launched what experts deem a series of milestone macroeconomic measures, focusing on enhancing counter-cyclical adjustments, expanding effective domestic demand, supporting business operations, promoting property market recovery
, and invigorating capital markets.
Buoyant home sales, alongside improved trade and vibrant manufacturing activity in October, provide strong evidence that the Chinese economy is gaining momentum, largely due to these pro-growth measures.
Source: Namibia Press Agency