Shenzhen new property policy rebuffs investors
Updated: 2007-07-25 17:39
The Shenzhen Municipal Administration of Local Taxation said July 17 that it would collect a 20 percent income tax based on prices for second-hand housing, according to yesterday's 21st Century Business Herald.
The policy will officially come out in September, with the aim of eliminating tax avoidance which is made possible by the signing of two different property contracts between the buyer and the seller, according to the administration.
Usually, there are two different prices when second-hand property buyers sign purchase contracts for second-hand housing. One is the actual price shown to the buyer privately, and the other is the original price on the property ownership certificate, which is filed in local bureau of land resources and housing management department.
Buyers can pay less tax based on these contracts, because the actual price is much higher than the certificated one, which makes more profit for them.
Beginning in June, the Shenzhen taxation department started to emphasize prices-based individual income taxation.
The average real estate price in Shenzhen was 15,487 yuan (US$2,050.03) a square meter in June, 14.6 percent higher than in May and soaring by over 70 percent from the average price of 9,384 yuan a square meter in 2006.
"The government will collect income tax and land value-added tax on transfer of second-hand property," said Zhang Jiashou, vice-director of the Shenzhen Municipal Administration of Local Taxation, adding that the local government is preparing to draw up rules on land value-added tax on transactions of second-hand non-ordinary commodity housing as well.
Meanwhile, on July 18, the Shenzhen Municipal Bureau of Land Resources and Housing Management and Shenzhen Planning Bureau said that this year Shenzhen would provide an additional 3.4 square kilometers of land for housing construction and build 143,300 apartments with total construction area of 11.4 million square meters.
By the end of this year, Shenzhen will start construction on 25,000 apartments and ensure 6,000 apartments to be available by year end, according to their joint announcement.
The upcoming new property policy and measures may have triggered panic among investors.
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