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Home tax worry addressed

By Zheng Jinran (China Daily)

08:09, March 08, 2013

People line up outside the housing authority in Beijing's Chaoyang district on Tuesday, waiting to get advice about secondhand housing transactions or wrap up a deal. (China Daily/Wang Jing)

China's latest property market curbs have stirred heated discussion, with experts close to policymakers saying China will try to control the side effects of the measures.

The central government announced last week that home owners who sell their homes will have to pay an income tax equivalent to 20 percent of the profits they make on the transaction. The income tax for such sales is currently 1 to 2 percent of the sale price.

Qin Hong, a researcher with the Ministry of Housing and Urban-Rural Development, said those who sell their only home after five years of use will be exempt from paying the tax.

She said the tax exemption will support reasonable housing demand and help control speculation.

"Though some people are worried about the tax, the policies have listed several preferential terms for people who bought new houses to improve their living conditions," said Qin, as quoted by the People's Daily on Thursday.

Jia Kang, a researcher with the Ministry of Finance, said local governments should make clear regulations in accordance with the policy and prevent non-speculative buyers from being hurt by the tax hike.

Local governments are to release their own detailed regulations in line with the guideline by the end of March.

The top housing authority also promised to protect non-speculative buyers from being hurt during the implementation of the policies.

"People complained some speculators gained fat profits because of soaring housing prices, so the government released this income tax on home sales," said Vice-Minister of Housing and Urban-Rural Development Qi Ji, in response to the heated discussion on levying a 20 percent income tax on home sales.

"Whoever gains from property sales should pay the tax," he said.

Qi said on Monday that if the measures create problems during their implementation, the authorities will adjust them in a timely manner.

Yin Bocheng, director of the real estate research center at Fudan University, said the tax will prove effective.

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