The Chinese government is collecting property tax on a trial basis in Chongqing and Shanghai as a way to tame the heated housing market. From the Wall Street Journal:
The trial tax, the closest thing yet to the style of tax levied annually on residential property in countries like the U.S., will be applied differently in Chongqing and Shanghai, apparently to see which one works best, before being rolled out across the country.
The tax comes after the country’s cabinet on Wednesday raised the minimum down payment on second-home purchases to 60% from 50%, and imposed limits on home purchases as part of efforts to cool the overheated real-estate sector and rein in inflation.
“The tax, by itself, is not very harsh. But together with the new limits on home purchases and higher down payment for second homes, it shows the government is determined to rein in speculation,” said Remy Chan, managing director of CBD Commercial Investment Management, a 3 billion yuan ($456 billion) private-equity property fund in Shanghai.
The tax, which comes into effect Friday, “can guide residents toward more rational housing consumption,” the Ministry of Finance said Thursday in a statement issued jointly with the Ministry of Housing and Urban-Rural Development and the State Administration of Taxation.