We’ve all been watching with fascination as events unfold at Li Ka-shing’s foray into hotel room sales at Apex Horizon in sunny Kwai Chung, as investors try to evade the new stamp duty. So far they seem to have outwitted chief executive CY Leung’s attempt to foil the developer, but for how long no one is sure. Meanwhile, a similar tax has been imposed on buyers of second homes in some cities in China, with the aim of cooling property market hotspots.
Perhaps we should pay less attention to the antics of folks in Kwai Chung and more to the canny investors north of the border. It seems you only have to say “I do”, that is, get married, then nip around to the divorce court two weeks later and problem solved. Then you get re-married, to the same person. These jolly divorcing Shanghai couples explained to the FT that the mortgage officer at their bank recommended this ruse as the best way to wriggle around the new property tax.
It works like this. The capital gains tax on housing sales was intended to calm China’s roaring market, but in the week since it was announced, it has not panned out as anticipated.
Transactions have shot up, together with prices, with buyers racing to complete before the new 20 per cent duty kicks in. The date is unknown. All understandable, but why the leap in the divorce rate? This, says the FT, is a practical, if rather cynical strategy for exploiting a loophole. It seems mainlanders are as addicted to property dealing as their Hong Kong cousins and will go to even greater extremes to save money.
Practical Solution