China will launch its compulsory collection of individual income
tax for second-hand housing transactions next Tuesday, China
Business News reported.
The State Administration of Taxation issued a notice Wednesday
ordering local taxation authorities to collect a 20 percent income
tax upon individual housing transactions. It also asked the local
taxation officials to handle the collection together with other
taxes collected in the transactions.
Though the government has already issued policies on the
collection, local taxation authorities have not forced sellers to
pay it, but instead have authorized them to return the tax by
themselves, Dong Pan, head of the real estate research institute in
Beijing Normal University, told the newspaper.
The notice allows deductions and exemptions. Sellers of budget
houses and privatized public apartments can enjoy a refinishing
deduction, which is up to 15 percent of the original price of the
house. For others, the maximum deduction for refinishing is 10
percent.
To implement the preferential clauses, the notice also adjusted
policies and made clear definitions on different housing types. The
seller of an old home, who plans to buy a new one, may enjoy a full
deduction or part of it, which depends on the gap between the price
of the new house and the selling price of the old house. To enjoy
the rebate, people also have to buy the new house within one year
after they sell the previous one.
There is a conflict between the notice and the central
government's policies to develop the second-hand housing market,
Dong said.
It may block the transaction of those newly bought apartments
and cause a surge in Beijing's 2006 second-hand housing transaction
prices, said Luo Yu, head of the market department of a Beijing
real estate agency. About 1 percent surge on average, he added.
(Shanghai Daily July 29, 2006)