Home sale tax could hit Shenzhen by month's end
2013-March-7 Source: Szdaily web edition
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The new law levying a 20-percent tax on profits from home sales could be implemented in Shenzhen by the end of March, Shenzhen Evening News reported yesterday(Mar.6).

Local home transaction volumes are likely to peak in March, the paper said, quoting real estate experts. A veteran real estate agent surnamed Wu said home prices aren't likely to decline after adoption of the new tax, at least not in the short term.

Wu said the new tax likely would shrink the transaction volume for pre-owned homes before prices drop, and market demand could increase sales of new homes.

A property agent surnamed Zhong shared Wu's opinion.

"The 20-percent tax will have greater impact on transactions involving pre-owned homes that have seen their market value multiply in recent years," Zhong said.

No official announcement had been made as of yesterday regarding when the tax would be implemented locally, but insiders said it could be in late March or early April, according to the News.

The new tax is causing a chain reaction in the housing market. Property brokers may shift their main business focus to new homes, Wu said. Furthermore, owners of pre-owned homes might lease their homes instead of selling them, which would put more rental housing on the market. Potential buyers might then hesitate to buy a new home and continue to rent.

Several real estate agents in border areas said home transactions have surged among Shenzhen residents from Hong Kong who are in a hurry to complete home deals before the new tax is implemented.

A property broker surnamed Lu in Futian District's Xiangmihu area said business with Hong Kong home traders was rising sharply.

"Taxes will be as heavy as 400,000 yuan (US$64,320) for medium-scale and upscale housing, and the strong RMB exchange rate to Hong Kong dollars will push the total cost of home transactions higher," Lu said.

In perhaps the most unexpected effect of the new tax, some Chinese-language media outlets have reported that Shanghai's divorce rate has surged in the past few days as people seek ways to circumvent the heavier taxation that's intended to curb property speculation. There is no indication of a higher divorce rate in Shenzhen, according to local marriage registration offices, but a few couples have admitted that they divorced in order to purchase a second home.

Editor: Jecey
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