Beijing and Shanghai, China’s two largest cities, announced this Tuesday a reduction in taxes on the purchase of luxury real estate, starting in December, aiming to stimulate the sector, which is going through a prolonged crisis.
In Shanghai, considered the economic capital of the Asian country, authorities will eliminate the distinction between normal and luxury homes. Since 2006, the latter were taxed at 2% of the transaction value, but will now pay 1%, a unified rate for all homes, according to local news portal Shine.
Sellers of luxury homes who have owned the property for at least two years will also be exempt from paying 5% VAT. The plan also includes a reduction in the cost of deeds to 1% for buyers of houses with an area of ​​up to 140 square meters, in accordance with the new fiscal policies announced by the Ministry of Finance on the 13th to “promote stability and healthy development ” of the real estate market.
Shanghai was the first to put the Ministry of Finance’s initiatives into practice, followed by Beijing, which also adopted a similar decree, as published on the website of its Municipal Housing and Urban-Rural Development Commission.
“Saving tens of thousands of yuan in taxes for sellers and reducing deed fees for buyers will give both parties more room to negotiate,” argued Lu Wenxi, an analyst at real estate agency Centaline.
“This will create a favorable environment for transactions, facilitating the conclusion of deals and helping to maintain a relatively high level of activity in the market,” he said.
In recent weeks, Chinese authorities have continued to announce measures to stop the decline in the housing market, an issue that concerns Beijing due to its implications for social stability, given that housing is one of the main investment vehicles for Chinese families.
In mid-October, the Ministry of Housing assured that the sector had already “reached rock bottom” and announced the expansion of the financing program for real estate projects, which will reach the equivalent of around R$530 billion by the end of 2024 , offering greater access to credit for developers to complete works in progress.
The Chinese government will also allow local authorities to use special funds to acquire unsold land and properties, with the aim of converting them into affordable housing.
In May, the authorities had already launched a vast package of measures to try to revive the sector, with the equivalent of billions of euros in loans for subsidized housing projects or the reduction of the down payments required to purchase houses, also increasing the number of people who can be considered first-time home buyers.
Since then, many cities have announced measures to make home buying easier, including some of the country’s largest cities such as Beijing, Shanghai, Shenzhen and Guangzhou.
One of the main causes of the recent slowdown in the Chinese economy is precisely the crisis in the real estate sector, whose weight in the country’s Gross Domestic Product – adding indirect factors – was estimated by some analysts at around 30%.
JPI // VQ
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Source: www.jornaldenegocios.pt
