China likely to impose tax on residential property

BEIJING: China is likely to introduce a property tax on residential housing in the first half of the year as part of its attempts to curb real estate prices, state media reported yesterday.

The levy would be imposed on a trial basis in Beijing, Shanghai, Chongqing and the southern city of Shenzhen, the Economic Observer newspaper said, citing sources familiar with the matter.

Government agencies including the central bank, the finance ministry and the State Administration of Taxation were still working out when to implement the tax, it said.

China has no such levy on residential property but does impose a 1.2 per cent tax on 70 per cent to 90 per cent of the value of commercial real estate.

Details of the new tax were not yet finalised, the report said, such as whether it would be levied against all homes or merely on additional residences purchased by an individual home-buyer beyond the first property.

The report came after Beijing announced a range of new measures to prevent asset bubbles and soaring property prices.

Official data showed real estate prices in 70 cities jumped 11.7 per cent in March, the fastest year-on-year rise for a single month in five years.

The government has recently tightened restrictions on advance sales of new property developments, introduced new curbs on loans for third home purchases, and raised minimum down payments for second homes.

State media reports last week also said banking regulators had ordered lenders to conduct quarterly stress tests on mortgages as the government tries to clamp down on bad loans and rein real estate speculation.

The new property tax was also expected to help replenish the coffers of local governments, which have been depleted by the government-led investment binge of the past year linked to an economic stimulus programme, the report said.

By AFP