Residential property trading

Sale

1. Value-added tax(VAT)

If an individual sells a residential property within two years of purchase, the value-added tax will be payable in full at a rate of 5 percent. Tax payable = full price and other charges ÷ (1＋5 percent)×5 percent.

If an individual sells ordinary housing after two years (inclusive) of the purchase, the value-added tax is exempted.

If an individual sells non-ordinary housing after two years (inclusive) of the purchase, the value-added is payable as the transaction income from the sale with the original purchase price or the valuation when the property was acquired deducted. The VAT rate is 5 percent. The tax payable = (Full price and other charges – original price of purchase/evaluation at the time of acquisition) ÷ (1＋5 percent) ×5 percent. The VAT-related extra taxes include urban maintenance and construction tax, extra charges for the education fund, and the local education surcharge. The tax base is the value-added tax.

2. Individual income tax

a. For individuals transferring the only residential property of the family that has been used for more than 5 years, the income is exempted from individual income tax.

b. For individuals transferring residential property that is within 5 years of purchase or not the only residential property of the family, the taxable amount is the transaction income with the original value of the property, tax paid in the process of transaction, and other reasonable costs deducted. The tax shall be paid under the category of property transfer at a rate of 20 percent. 

c. If the taxpayer cannot provide complete and accurate proof of the original value of the property, so that its original value and taxable amount cannot be properly calculated, the tax authority can determine and verify the taxable amount. Ordinary housing is taxable at 1 percent of the property transfer income, and non-ordinary housing is taxable at 2 percent of the verified taxable amount.

d. The taxable individual income tax for property transfer excludes value-added tax. The value-added tax paid at the time of the property purchase is included in the original price of property. The value-added tax during this transfer shall be excluded from the deductible tax when calculating the transfer income.

Purchase

1. Deed tax

For individuals buying the only residential property for the family, the purchase is taxable at a reduced deed tax rate of 1 percent for residential property that is below 90 square meters (inclusive), and at a reduced deed tax rate of 1.5 percent for such property above 90 square meters. The transaction price for calculation of deed tax excludes value-added tax.

For individuals buying the second or more residential properties, the deed tax rate is 3 percent of the taxable value. The transaction price for calculation of deed tax excludes value-added tax.

2. Stamp tax

The certificate of title of individual purchased property is charged at a stamp rate of 5 yuan/document.