Big cities announce capital gains tax on second-hand properties
Beijing, Chongqing and Shanghai will levy a 20 per cent capital-gains tax on second-hand property transactions, officials in the three cities said yesterday.
Their statements came just 24 hours before a State Council deadline for local governments to say how they will implement measures announced on March 1 to cool the property market.
From today, any individual permanently resident in Beijing who has not bought property in the city before will be allowed to buy only one home.
Those who already own one or more homes will be banned from buying any more.
Those who wait at least five years to sell their only home will not have to pay capital-gains tax.
Two years ago, Beijing issued similar policies limiting home purchases to rein in speculation, but the limit applied to households, meaning that if a couple divorced, the one giving up the home was eligible to buy more property. This loophole triggered a wave of couples divorcing and later remarrying.
Guangdong announced similar measures on Monday in response to the State Council's order.
The council ordered local governments to take five measures to rein in property prices. Among them was a 20 per cent capital-gains tax on secondary-market transactions.
All three cities will ban residents from applying for bank loans to buy a third home.
Stricter conditions will be imposed on bank loans to buy a second home; in Shanghai, additional conditions will apply to applicants whose permanent residence is not in the city, and to foreigners, young people or divorcees.
No date for implementing these loan restrictions was given.
Jia Kang , who heads a Ministry of Finance think tank, said Beijing had applied the rule to individuals as a countermeasure to the previous divorce frenzy that allowed people to become eligible to buy a new home.
"It's reasonable to keep the policy unchanged for homes that have been owned for more than five years," he said, "but it seems there should be a more detailed definition of the 'capital gains' for second-hand-home sales."
Xu Feng, director of property agent Midland CyberNet's national research centre, said the release of new rules to cool the property market meant the golden decade for commercial real estate had ended, and that property in the top cities was no longer suitable for investment.
More local governments are expected to release their own regulations today, the deadline set by the central government.
The State Council's announcement triggered a wave of panic among buyers and sellers this month, with brokers raking in substantial commission fees amid the frenzy.
In Beijing on Friday, frantic buyers and sellers swarmed housing registration centres in hopes of finalising their deals before the municipal government issued the regulations.