Tax rate hits new home sales

08:20, February 24, 2011      

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Fewer than 200 new homes costing more than 28,426 yuan (US$4,325) per square meter were sold in Shanghai between January 28 and Tuesday.

The data came after the city's tax watchdog confirmed the local threshold of a preferential property tax rate of 0.4 percent.

The Shanghai Local Taxation Bureau announced late on Tuesday that taxable properties will be eligible for a preferential rate of 0.4 percent if their prices are either equal to or less than 28,426 yuan per square meter, twice the average price of new homes registered in the city last year.

A total of 198 new homes have been sold at a price higher than 28,426 yuan per square meter so far since the city launched its trial property tax effective from January 28, Century 21 China Real Estate, operator of the city's second-largest estate chain, said yesterday. These houses, eligible for a standard rate of 0.6 percent, accounted for 11.9 percent of the city's total registered during the period.

Sales of second-hand homes above the standard price took a share of 4.3 percent, according to transactions registered at more than 300 Century 21 branches across the city.

New homes, including those built under affordable housing programs, were sold for an average 14,213 yuan per square meter in the city in 2010, Shanghai Statistics Bureau said last Friday. The average price of new homes which excluded those built under affordable programs was 20,995 yuan per square meter during the same period, the bureau said.

"In my opinion, the threshold seems comparatively reasonable if we take into consideration the average price of new houses in the city," said Wang Jing, director of China Realty Research Center.

"What we should always keep in mind is that the local introduction of the property tax, with a rather mild rate, is by no means designed to lower housing prices significantly."

Sales of new houses beyond the city's Outer Ring Road, excluding those built under affordable programs, with an average price of 17,227 yuan per square meter, accounted for nearly 70 percent of the city's total in 2010, according to the local statistics bureau.

Source: Shanghai Daily
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