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China unveils more measures to support property sector

Xinhua | August 25, 2023


Relevant government departments of China unveiled a slew of measures on Friday to bolster the country's property sector.

The Ministry of Housing and Urban-Rural Development announced that it is in favor of the re-adjustment of mortgage lending-related policies and measures regarding the identification of first-home buyers.

The ministry said that this is in accordance with a circular that was jointly issued recently by the ministry, the People's Bank of China, China's central bank, and the National Financial Regulatory Administration.

According to the circular, a household whose family members do not own a house in a certain locality, should be deemed a first-home buyer when applying for a mortgage loan from a bank.

The housing ministry, however, indicated that the new policy only provides an option for cities, which means cities can either adopt it or not adopt it, based on their own choice.

The ministry added that this policy will enable more home buyers to enjoy reduced down-payment ratios and lowered mortgage lending rates, help reduce house purchase costs for residents, and better meet the rigid housing demand and needs of those who wish to improve their housing conditions through a property sale and repurchase process.

Previously, home buyer classification was based on the identification of either mortgage loan usage or ownership of a house. To put it simply, in the past a home buyer would have been seen as a second-home buyer if he/she had a record of mortgage loan usage or previous house ownership. For second-home buyers, the down-payment ratios and lending rates are higher than for first-home buyers.

The Ministry of Finance (MOF), together with two government bodies, also announced on Friday that tax incentives for residential purchases would be extended to the end of 2025.

From Jan. 1, 2024 to Dec. 31, 2025, taxpayers who buy new homes within one year of selling their old homes will enjoy refunds for personal income tax on the sale, according to a statement on the finance ministry's website.

Individual income tax already paid upon the sale of the old housing should be fully refunded if the price of the newly purchased home surpasses or equals that of the old one. Otherwise, the tax rebate will be based on the price ratio of the two homes, the statement noted.

It also said that homes sold and repurchased by taxpayers should be located in the same city, and those who sell their housing must be the owner or one of the owners of the newly purchased home.

The tax incentive measures were first introduced in 2022 and will expire at the end of this year.

He Daixin, of the Chinese Academy of Social Sciences, said that the extension of the incentive policy is conducive to supporting residents in improving their housing conditions.

Also on Friday, the MOF said on its website that it would extend tax preference policies for public rental housing until the end of 2025.

He said that the extension of preferential tax and fee policies related to the capital market and housing sector will help further stabilize expectations and boost confidence.