Official: all housing owners to face tax soon

17:45, October 25, 2010      

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An official with the Ministry of Finance disclosed on Oct. 23 that a real estate ownership tax will be imposed "within a few months". The information now available shows that buyers would not have to pay such taxes for their first house, but property bought for investment purposes will be targeted.

Unlike the property tax in America, the proposed tax in China is based on the value of the home itself and does not include the value of the land, of which the government retains ownership.

According to the local media in Chengdu, the capital city of Sichuan Province in southwest China, Jia Kang, director of the Research Institute for Fiscal Science under the Finance Ministry, said at the First West China Finance Forum there that the real estate taxes would be launched within a year. He added that the ownership tax policy would complement the property tax framework.

Jia said he had no idea about the possible Shanghai and Chongqing version of the real estate ownership tax systems, which had been a hot topic on the Internet. However, he was sure that the tax would start in major cities, and owners' first properties would be exempted from the tax.

Jia explained that the housing ownership tax would come before the property tax, which normally needs much longer legislation process. The common practice of some other countries is that the property tax is increased as the value of the property concerned goes up.

Under China's existing housing tax rules effective since 1986, individually-owned property for non-business purpose is not taxed. The level of the tax is based on the depreciation of the property and the rent income generated by the property. Given that, the first step of the current reform is to tax all the property — either for business or non-business purposes — of individual owners.

By Jia Li, People's Daily Online


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