China Real Estate Update

China property prices have continued to trend upward despite the government’s previous efforts to cool the real estate market. Such efforts include, among others, limiting the number of residential properties that a household may purchase and raising the down payment requirement. On February 26, 2013, the General Office of the State Council promulgated the Circular of the General Office of the State Council on Continuing Regulation of the Real Estate Market (in Chinese, ????????????????????????, the “Circular”). This Circular is the latest effort by the PRC government to stabilize property prices, restrain speculation in the property market, and encourage the supply of affordable housing.


The Circular reaffirms strict enforcement of the 20% individual income tax on profits derived from property sale. Profits from property sale have long been subject to the 20% individual income tax since 1993, but few property owners have actually had to pay the tax. Currently, such tax is waived for a property owner if the owner’s family has only one residential property for self-use and has owned such property for five or more years. The property owner may also pay an alternative tax of between 1% to 3% of the total sales price, if the owner does not possess or fails to submit property records that evidence the owner’s original purchase price.

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