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China’s New Tax Policies Lead to Significant Tax Reductions in Real Estate Market

China’s New Tax Policies Lead to Significant Tax Reductions in Real Estate Market

Beijing, January 26, 2025 – The Europe Today: China’s new tax policies, designed to stabilize the real estate market, have resulted in 11.69 billion yuan (approximately 1.6 billion U.S. dollars) in tax reductions and exemptions during their first month of implementation. This data, released by the State Taxation Administration on Saturday, highlights the immediate impact of the tax measures, which were introduced on December 1, 2024.

The new tax policies focus on three major areas: an expanded deed tax benefit, incentives for second home purchases, and value-added tax exemptions.

The threshold for homes eligible for a lower 1 percent deed tax rate has increased from 90 to 140 square meters, providing 6.5 billion yuan in tax cuts and benefiting over 1.4 million households. These households make up 89.4 percent of all those receiving deed tax breaks, marking a 14.4 percentage-point increase compared to pre-policy levels.

In major cities such as Beijing, Shanghai, Guangzhou, and Shenzhen, deed tax benefits for second home purchases have resulted in a tax reduction of 2.58 billion yuan, impacting 35,974 households. Shanghai saw the highest reduction, with 940 million yuan in tax cuts for 15,572 households.

Additionally, value-added tax has been uniformly exempted for individuals transferring homes in these four cities that have been owned for at least two years, regardless of whether the property is considered ordinary or non-ordinary. This has led to 2.61 billion yuan in new tax exemptions, while the number of home transfers in these cities rose by 71 percent in December 2024 compared to the previous month.

These measures represent a significant effort by the Chinese government to address the challenges in the real estate sector and stimulate the housing market.