China plans to slash homebuying taxes in fiscal stimulus
China is planning to cut taxes for home purchases as the government dials up fiscal support to revive a moribund housing market, according to people familiar with the matter.
Regulators are working on a proposal that would allow mega cities including Shanghai and Beijing to cut the deed tax for buyers to as low as 1% from a current level of as much as 3%, the people said, requesting not to be identified because the matter is private. City governments have leeway to tweak the rules, the people added.
The plan, hinted at on Friday by Finance Minister Lan Fo’an, underscores Beijing’s increased willingness to use fiscal tools to shore up the sluggish economy along with monetary easing. Lan pledged to carry out “more forceful” fiscal policies next year after unveiling a 10 trillion yuan ($1.4 trillion) debt swap for local governments, signaling bolder steps could come after US President-elect Donald Trump takes office.
Under the latest proposal, top-tier cities are expected to be allowed to scrap the distinction between ordinary and luxury homes, which would substantially lower purchasing costs for people seeking to upgrade their residences, people familiar with the matter said. China first flagged its plan to rid such distinctions following the Third Plenum in July.
In Shanghai for example, apartments bigger than 144 square meters (1,550 square feet) are considered “non-ordinary.”
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