May 20, 2013
Translated by Pang Lei

A controversial plan to expand a property tax that is already being levied in Shanghai and Chongqing to other cities is back on the agenda, according to what an unnamed source told the China Securities Journal (中国证券报).

The specific details regarding at what rate any new property taxes will be levied will be set in accordance with local conditions, though it is expected that the tax will mainly be applied to newly-constructed properties and not secondhand homes.

The tax trial began in January 2011 when Chongqing and Shanghai both announced they would introduce a property tax.

According to the Chongqing rules, which were revised in Oct 2011, free-standing commerical residential properties (villas), newly-purchased up-market properties and second (or additional) residential properties owned by people who do not work, run a business or have their hukou registered in Chongqing, are all subject to the property tax. The regulations only apply to properties within the nine main urban districts of the western metropolis. The tax is levied at a rate of either 0.5 percent, 1 percent or 1.2 percent respectively, according to the amount paid for the property.

In Shanghai, new homes costing more than 27,740 yuan a square meter get are taxed at a rate of 0.6 percent. The tax on both new and existing homes is 0.4 percent if the value of the property is less than 27,740 yuan a square meter. Locals who purchase a house with a floor space of less than 60 square meters per head are exempt from the tax.

The report also noted that as there will only be a number of cities included in the second phase of the property tax trial, the impact on the broader property market will be limited.

Links and Sources
China Securities Journal: 房产税试点扩容提上日程
Economic Observer Online: Controversy Over Property Tax Expansion
Economic Observer Online: Property Tax Should Be On NPC Agenda
Economic Observer Online: Beijing Eyes Introduction of Property Tax