Shanghai eases property taxes to boost sluggish market
Shanghai will lower real estate transaction taxes starting December 1st to boost the property market. This is part of the government’s efforts to revive the struggling sector.
The new measures include eliminating the distinction between “ordinary” and “non-ordinary” housing for value-added and personal income taxes, with “non-ordinary” properties previously subject to higher tax rates.
Additionally, residents will be exempted from value-added taxes (VAT) on property sales held for two years or more. The threshold for levying deed tax has also been raised to 140 square metres from the previous 90 square metres.
These tax cuts are expected to reduce the financial burden on homebuyers, particularly for larger properties. For instance, the deed tax on a 10 million-yuan apartment will now be capped at 100,000 yuan, down from the previous maximum of 300,000 yuan.
Despite these recent policy relaxations, including interest rate cuts and down payment reductions, the Chinese property market remains sluggish.
Resale home prices in Shanghai have declined for 16 consecutive months, while new home prices have shown a slight uptick, and overall demand remains weak.
“Shanghai’s recent move is a continuation of these nationwide policies, all designed to restore confidence and rejuvenate sentiment in the housing sector,” said Bruce Pang, chief economist at JLL, a property consultancy company.
Attribution: Reuters
Subediting: M. S. Salama
