China extends home purchase tax cut to bolster property market
The exemption applies to individuals selling residential properties they have owned for at least two years
[HONG KONG] China will extend a policy scrapping value-added tax (VAT) on certain home sales, in a move aimed at easing the country’s persistent property slump.
The exemption – which applies to individuals selling residential properties they have owned for at least two years – will be implemented from Friday (Jan 2), the country’s finance ministry said in a statement on Tuesday (Dec 30). A 3 per cent VAT remains for homes sold within two years of purchase.
In cities including Shanghai, sellers of homes held for less than two years previously had to pay VAT of 5 per cent. The country’s major cities already implemented a VAT exemption in late 2024.
The move comes amid a prolonged real estate market crisis that has toppled major property developers, including China Evergrande Group.
China Vanke, the last big survivor still standing, is also facing rising debt woes as home prices saw their steepest decline in a year in October.
Chinese leaders vowed to increase policy support for the housing market at a key economic meeting in December, including encouraging government acquisition of existing housing stock, primarily for use as affordable housing.
But policymakers stopped short of the measures some economists think are needed to revive the sector, such as cash subsidies for home buying and direct government investment.
It was reported in November that the authorities were considering a range of measures to support the market, such as mortgage subsidies and tax rebates to encourage demand. BLOOMBERG
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