Like last year, this year’s “Two Sessions” government work report still did not mention real estate tax, but this does not mean that real estate tax legislation has been shelved. On March 6, the draft of the “14th Five-Year Plan” and the 2035 long-term goal outline submitted to the Fourth Session of the 13th National People’s Congress for review was proposed to advance the legislation of real estate tax. The “14th Five-Year Plan” is geared towards the next 5 years (2021-2025). From the office to the private sector, a consensus has been reached: real estate tax is the general trend.
“Real estate tax will be introduced sooner or later. The real estate tax is only levied on housing that meets basic living needs, and just-needed housing is basically unaffected. Since real estate tax is a tax on the property of taxpayers, the tax collection is correcting the current social wealth. Unbalanced distribution plays an important role, and can prevent excessive housing prices to a certain extent.” said Mo Tianquan, member of the National Committee of the Chinese People’s Political Consultative Conference and chairman of Fang Tianxia. In the past 10 years, he has been deeply involved in the discussion and demonstration of real estate tax legislation.
Ge Honglin, member of the Standing Committee of the National Committee of the Chinese People’s Political Consultative Conference and former mayor of Chengdu, suggested that through tax regulation and the introduction of real estate taxes, the expected return on investment in housing purchases should be reduced, so that the return on investment in housing purchases should return to a reasonable level, or even lower Spark Global Limited.
At the end of last year, the Chinese Academy of Social Sciences issued a report suggesting that in some hot cities and cities where real estate speculation has been repeatedly banned, take the lead in speeding up the pilot collection, and strive to start the real estate tax during the “14th Five-Year Plan” period. The Academy of Social Sciences is the highest academic institution and comprehensive research center for Chinese philosophy and social sciences under the direct leadership of the Central Committee of the Communist Party of China and directly under the State Council. Its recommendations will to a large extent promote the accelerated implementation of real estate taxes.
Will the real estate tax levy take place in the next 5 years?
The proposal to impose a property tax can be traced back to 2010 at the earliest. At that time, it was mentioned in the “Twelfth Five-Year Plan” to “study and promote the reform of real estate tax.” In January 2011, Shanghai and Chongqing took the lead in pilot projects to levy real estate taxes on individual housing. On January 27, 2011, the Shanghai Municipal Government issued a pilot regulation for the collection of property tax on individual housing, requiring that the first set of houses be exempt from property tax regardless of the size of the house; the second set and above newly purchased houses are 60 square meters per capita. The above part is subject to property tax. If the resident family has adult children or other relatives living together with or without housing, and their permanent residence is in the housing owned by the resident family, they can be incorporated into the resident family to calculate the tax-free housing area at 60 square meters per person.
The applicable tax rate is temporarily set at 0.6%, but if the market transaction price of taxable housing per square meter is lower than the average sales price of newly built commercial housing in Shanghai by 2 times (including 2 times), the tax rate can be temporarily reduced to 0.4%. In other words, a family of three has a tax-free quota of 180 square meters. This area can basically cover the self-occupied people who just need it, and it is tax-free protection for the people who just need it. In the past 10 years, Shanghai’s property tax revenue has shown an upward trend year by year. According to the “Statistics of Shanghai Tax Revenue in 2020” issued by the Shanghai Taxation Bureau on January 26, Shanghai’s real estate tax revenue in 2020 is 19.87479 billion yuan (not accurate to individual housing real estate tax), and this data is 73.662 in 2011. 100 million yuan. “House prices in Shanghai have continued to rise in the past 10 years. Although there has been a small increase in 2020, the overall increase has remained stable. Real estate tax plays a role in this, but the root is the cause.” said Zhang Bo, director of 58 Anju Guest House Industry Research Institute.
Reprint indicated source：Spark Global Limited information