China unveils tax incentives to revive struggling property sector
7:48 am Wednesday, November 13th, 2024
BEIJING (Reuters) -China unveiled tax incentives on home and land transactions on Wednesday, aiming to support the crisis-hit property market by increasing demand and easing developers’ financial difficulties.
A finance ministry statement outlining the measures followed pledges by the finance minister to issue relevant tax policies to support the healthy development of the property market in the near term.
The ministry will expand the eligibility for the 1% deed tax to include apartments up to 140 square metres, up from the previous 90 square metres, according to the statement, effective from Dec. 1.
The minimum pre-collection rate for land value-added tax will be reduced by 0.5 percentage points, the statement said.
Residents are exempt from VAT when they sell their homes after two years of purchase and beyond. The rule also applies to four first-tier cities — Beijing, Shanghai, Shenzhen and Guangzhou.
The property market is grappling with a prolonged downturn since 2021 and remains a major drag on the world’s second-largest economy.
Authorities rolled out a raft of property easing measures at the end of September, including a cut in the minimum down payment ratio to 15% for all housing categories and relaxation in home purchase restrictions.
“Stimulus measures announced since late September will likely narrow the decline in national contracted sales value over the next 12-18 months. The effect of a high base in H1 2023 will also fade in 2025,” said Moody’s Ratings in a research note this week.
“Homebuyer sentiment continues to be impaired by a slowdown in economic and income growth and lingering concerns about project incompletion. It is uncertain whether the contracted sales decline can be halted,” said Moody’s Ratings.
(Reporting by Liangping Gao, Ella Cao and Ryan Woo; Editing by Andrew Heavens, William Maclean)
