Shanghai to Reduce Property Transaction Taxes to Boost Demand

According to state media, Shanghai announced that it will reduce certain taxes on real estate transactions starting from December 1, aiming to support the property market in China's second-largest city.

China seeks to support the property market affected by the crisis by boosting demand and alleviating financial difficulties for developers, with the finance ministry announcing tax incentives for home and land transactions last week. An index tracking Chinese real estate stocks and an index for mainland property developers listed in Hong Kong saw higher trading on Monday.

Shanghai will eliminate the distinction between "ordinary" and "non-ordinary" residential properties while levying value-added tax and personal income tax on sales. "Non-ordinary" residential properties previously subjected to higher taxes include those with a size of 144 square meters (1,550 square feet) and larger. According to state media, residential buyers will be exempt from VAT when they purchase a property and hold it for two years or more before selling. Shanghai will also standardize the collection of deed taxes.