MAINLAND’S REAL ESTATE TAX HAS ONCE AGAIN BECOME A HOT TOPIC

國內房地產稅再度成熱點話題

Since the central government proposed the construction of a long-term real estate mechanism, the issue of real estate tax levied by local governments has once again become one of the hot topics in recent months. According to market speculation, the draft of the real estate tax law will be reviewed in December this year. According to legislative regulations, the new tax is subject to a minimum of three trials and is expected to be passed by 2020. Additionally, data shows that the national real estate registration platform has achieved nationwide networking this June, and will provide channels for levying real estate tax to help reduce future taxation costs.

In fact, the purpose of the government's real estate tax is for social wealth redistribution. Such tax can also finance the government's demand for public services. The market predicts that the government will promote real estate tax reform through adopting principles such as broadening the tax base, lowering tax rates, considering the scope of affordability for the owner, and gradual implementation.

It is expected that the regulation of the property market in the fourth quarter will still be dominated by relatively direct property control measures such as price limits, restricted sales and limited loans. The draft of China's real estate tax in the legislation is expected to be gradually extended to all first-tier and second-tier cities after 2021. It is also expected to have an impact on the market during the initial stage. In addition to first-tier cities, the areas supposed to initially levy real estate taxes also include Chongqing, Hangzhou and Nanjing. From another perspective, since property prices still depend on supply and demand, even if the mainland levies real estate taxes, property prices may still be pushed up due to increased costs. As a result, the transaction growth may eventually slow down and even form a soft landing after the continued adjustment period.