Couples with second homes file for divorce to beat capital gains tax

This warning posted on a sign board at a marriage registration office in Shanghai was stark: "Beware the risks arising from the housing market. Have second thoughts before deciding to get divorced."

The message that appeared in southwestern Minhang district has become the talk of the town as hundreds of couples filed for "divorce" to beat a new capital gains tax on second homes.

"Nobody wants to do so because it's painful for a couple to split up - in legal terms," said a 30-year-old woman identifying herself as Xiao Lu.

"But we have no choice but to get the divorce certificates because the documents save our families hundreds of thousands of yuan."

Admitting that the divorce was just a tactic rather than a real split with her husband, Xiao Lu wasted no time in blaming government policymakers for her dilemma.

Beijing announced recently it would charge property sellers a 20 per cent capital gains tax to curb the red-hot housing market.

Those owning just one flat are exempt from the tax if they sell their home. But households offloading a second home or more faced potential tax bills of several hundred thousand yuan on those properties.