The general housing standard was abolished and 1 per cent tax would apply to all housing transfers in shanghai
The cost of buying a house has decreased and market confidence continues to grow
Five days after the issuance of the new property transaction tax, the shanghai city housing urban and rural construction board, the municipal housing authority, the municipal finance authority and the municipal tax authority jointly issued a circular on matters related to the removal of general housing standards, which expressly abolished the general housing and non-general housing standards, and a related tax on personal housing transactions following the explicit removal of the criteria。
Each vat tax is adjusted
The circular makes it clear that, in the absence of complete and accurate proof of the original value of the house to be transferred by the individual, the original value of the house and the taxable amount cannot be correctly calculated, in accordance with the circular of the general state tax administration on issues relating to the taxation of personal income from the transfer of personal housing (state tax) [2006] article 3 provides for an authorized tax on personal income tax to be applied to the amount of the individual income tax payable for 1 per cent of the transfer income。
In accordance with the above-mentioned provisions, shanghai abolished the 2 per cent of the authorized personal income tax payable to individuals for the transfer of non-general housing to transfer income. Other personal income tax policies have not been adjusted, such as transfers to individuals for more than five years, which are the proceeds of the family's only living accommodation, and are exempt from personal income tax; the individual income tax policy relating to the replacement of housing by residents continues to be implemented in accordance with the relevant state documents。
In recent days, the ministry of finance, the general tax administration and the ministry of housing, urban and rural construction have issued the proclamation on tax policy for the peaceful and healthy development of the real estate market (hereinafter referred to as the proclamation), which defines preferential policies such as value-added tax (vat), which are linked to the elimination of general and non-general housing standards. According to the proclamation, individuals are exempt from vat for the purchase of housing for foreign sales for more than two years (including two years). Individuals who buy housing for less than two years will pay vat in full at a rate of 5 per cent。
According to the proclamation, shanghai is governed by a nationally harmonized policy of individual tax incentives for home purchases. The tax is reduced by 1 per cent for individuals who purchase the only home in the family (family size includes the purchaser, spouse and minor children) and up to 140 square metres, and by 1. 5 per cent. The tax is reduced by 1 per cent for the purchase of a second home by an individual with an area of 140 square metres and less, and by 2 per cent for an area above 140 square metres。
How does the adjusted cost of buying a house fall
Under the new deal, from 1 december, what are the real cost savings from buying a house in shanghai
First, for example, in shanghai, if citizens purchase a housing unit of 140 square metres, the total cost is $9 million. In the case of the first suite, the pre-adjustment tax was $135,000, and the adjustment was $90,000, saving $45,000. In the case of the second suite, the pre-adjustment tax was 270,000 yuan, which resulted in savings of 180,000 yuan。
The second is the adjustment of the value added tax policy. The value-added tax policy linked to general housing and non-general housing standards will be optimized when removed. Vat policies and the sale of houses are more relevant and can reduce sellers ' costs. If a shanghai citizen purchased a housing unit in 2014 at a total cost of $6 million, the housing price in 2024 was $10 million, with an added value of $4 million, and a value added tax of $200,000 for more than two years. The new deal will not require a further value added tax of $200,000。
Finally, a tax policy adjustment. Shanghai operates a differentiated tax policy on housing transactions, with ordinary housing being charged at 1 per cent of transfer income and non-ordinary housing at 2 per cent of transfer income. The current abolition of general and non-general housing standards in shanghai has naturally resulted in a uniform rate of 1 per cent for approved taxes. If a seller in shanghai sells a housing unit for a total cost of $10 million, the previous tax or contribution of $200,000 is now or is needed to pay $100,000, and the cost of the sale is reduced and the income from the housing estate increases。
Recent data from the national statistics institute on the price index of 70 cities across the country, the prices of both new and second-hand housing have been on the rise, and the real-estate market has shown a steady and positive trend. Shanghai indicators are among the highest in the country. As the vice-president of the shanghai institute for residency real estates advanced, it is expected that the policy effect will continue to be released, supply-demand relations will be positively adjusted in four quarters and market confidence will continue to grow。
In the case of second-hand houses, as of 17 november, shanghai had reached 15076 second-hand rooms this month, and only half a month had reached the monthly “honor line” (i. E. 15,000). “the market for second-hand houses is expected to last until the end of the year, with good policies, good trade volumes expected to remain high, and trade prices likely to be consolidated to speed up the construction process.” according to shanghai's in situ property analyst lu wensee。
The notification is effective from 1 december 2024. Until 1 december 2024, personal income tax, value added tax and deed tax relating to the sale of individuals, the purchase of housing had not yet been declared and were subject to the applicable enforcement provisions of the proclamation and circular. (reporter, chi wing, u dan wing)
