Tax Policy Change Prompts Brisk Sales

BEIJING, Dec. 11 -- Thousands of landlords are selling their apartments to dodge a tax that will be levied on property transfers from next year.

The government announced on Wednesday it would continue most of its financial stimulus policies, started in January this year, at an executive meeting of the State Council. However, the housing transfer tax relief policy is still set to expire at the end of the year.

According to the current relief policy, apartments purchased within the last 2 years are exempt from the transfer tax, which is 5.5 percent of the total price, when sold. When the relief policy expires at the end of this month, transfers of properties bought within the last five years will be taxed.

This new regulation is having a dramatic impact on the current housing market.

According to statistics from bjfdc.gov.cn, the official website for the Beijing real estate trade administration, the housing transaction volume in December reached 1,800 units per day, compared to 1,000 in November.

"The end of the relief policy clearly aims to curb the quick speculation on the real estate market, a major force that has been pushing the housing price up," Hu Jinghui, deputy general manager of 5i5j, a real estate agency, told METRO.

"We usually sell nine apartments every month, but that number doubled in the first 10 days of December alone," a branch store manager surnamed Li from 5i5j said yesterday.

According to statistics from the company, about 40.7 percent of apartments in Beijing's real estate market have been purchased in the last five years.

"The adjustment can definitely control speculators in the real estate market, but because the landlords will probably add the tax into their deals, housing prices in Beijing will continue to rise," said Zhang Dawei, marketing director of the Midland real estate agency.

Not everyone is upset though. A woman surnamed Zhao has done well out of the rush for properties.

Zhao sold her 1994 70-sq m apartment near the West Third Ring Road in Beijing yesterday for 1.85 million yuan, or about $264,000.

She told METRO she had purchased the apartment at the end of 2007 when Beijing's housing market growth was in a slowdown amid fear of a global financial crisis.

After learning that the housing transfer tax relief policy would end, Zhao quickly accepted an offer in cash.

If she had waited until next year, Zhao would have had to pay three-times more tax, or about 100,000 yuan.