Thursday, January 27, 2011

Shanghai Property Tax Trial Has Begun

China Approves Property Tax Trials in Two Cities to Curb Prices
The Shanghai rate is “temporarily fixed at 0.6 percent for all taxable housing, and is reduced to 0.4 percent for houses bought at prices less than twice the average of newly built commercial homes last year,” the government said. Average sale prices will be released by the local statistics bureau annually.
In Chongqing, only homes bought at more than twice the average price will be taxed, with units purchased at more than four-times the average taxed at 1.2 percent, Mayor Huang Qifan said in a live webcast on the state-run site. Trials there also begin today.
The article does not specify if this is an annual tax or just a one-time tax.


jesse said...

I think the answer is in the quote. Average prices will be released annually.

So some quick math. Say the average is RMB200K. A RMB400K property is taxed at RMB2400/year. A RMB1MM property, at 4x the average, is taxed at RMB6K.

Peanuts, but let's add it up. Say 500K properties in Shanghai are more than 2X above average, with the average at RMB600K. That equates to around RMB2BB intake for the city.

GG said...

I wasn't sure the standard protocol for determining the average said much about the tax's periodicity. I read elsewhere something about the tax being only on newly sold property.

This and the new guidelines for the real estate industry, noises about limiting sales prices. They are going at it from all sides. Well, whether/how the edicts get implemented lower down is always in question.