Money

Residential property tax 'necessary' for healthy market: ministry

(Xinhua)
Updated: 2010-10-01 10:13

BEIJING - The introduction of a residential property tax is "necessary" to ensure a healthy property market, which could further boost income distribution adjustment and economic restructuring, China's Ministry of Finance said?on Sept 30?in a statement on its website.

The statement came after the government rolled out a series of new measures to cool the real estate market, including suspending loans for third home purchases and raising down payment requirements for all first-home buyers.

Also, property tax pilot programs will be introduced in certain cities and then extended to the entire country, said the statement.

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The ministry did not reveal when the pilot program would be launched or which cities would be chosen for the program.

Currently, China only levies property taxes on commercial housing.

The ministry also announced Wednesday that beginning Oct 1, China will halve the contract tax for buyers of ordinary homes that are used as the sole residence for a family. If the purchased homes are under 90 square meters in area, the tax rate would be reduced to 1 percent.

Additionally, for those who sell their homes and buy new ones within one year, there would not be any reduction or exemption on personal income tax on the profits from the sales.

Official statistics showed that property prices in China's 70 major cities rose 9.3 percent in August year-on-year, but were unchanged from those of July, which also did not decline from June.

In April the government introduced an array of policies to cool the run away property market, including higher down payments and an end to mortgage discounts to dampen speculative demand, and issued orders urging local governments to build more affordable housing in a bid to increase the supply for low-income people.