The Chinese government has announced a new ‘deed tax’ on house sales, which will go into affect in September 2021, state media outlet Xinhua has reported.
As soon as news of the deed tax increase was announced – to raise the “deed tax rate from 3% to 5%” – real estate agents began getting interest from buyers wanting to purchase homes before September 1 next year.
Otherwise, people wanting to buy a home could face additional costs as high as tens of thousands of yuan or more.
In practice, the tax will only be 1% for a family buying their first or only home.
Each region will set its own rates, as local authorities manage the local real estate market. For instance, it is likely the tax will be much higher in Shanghai than Qinghai.
The 21st Meeting of the Standing Committee of the 13th National People’s Congress voted and passed the “Deed Tax Law of the People’s Republic of China.”
Wang Jianfan, director of the Taxation Department in the Ministry of Finance, said that the deed tax law basically continues the provisions of interim deed tax regulations on tax preferences.
The law authorises provinces, autonomous regions, and municipalities to determine differential tax rates for different subjects, regions, and types of housing ownership transfers.
Li Xuhong, director of the Institute of Fiscal and Taxation Policy and Application at the Beijing National Accounting Institute, said that the most recent real estate deed tax rate adjustment was in 2016.
The notice from the Ministry of Finance, the State Administration of Taxation, and the Ministry of Housing and Urban-Rural Development on the adjustment of preferential policies for contract tax and business tax in real estate transactions in that year stipulated that for individuals purchasing their only house for a family – with an area of 90 square metres or less – the tax rate was reduced to 1%.
Wang Jianfan said the deed tax law gives local governments certain tax management authority, which is conducive to mobilising the enthusiasm of local governments to strengthen tax management and promoting healthy development of the real estate market due to city policies.
• Chris Gill
This page was upgraded on January 19, 2022 for style purposes.
