Chinanews client, Beijing, October 20th (Zuo Yukun) Recently, the topic of real estate tax has once again aroused heated discussion.

Chinese leaders clearly stated that “we must actively and steadily advance legislation and reform of real estate tax, and do a good job of pilot work”, which is considered by the industry to make a clear conclusion on the trend of real estate tax.

Actively promote legislation and reforms, actively establish pilot cities, and the long-awaited real estate tax is about to enter the landing stage.

Data map: There are many buildings in the city.

Photo by China News Agency reporter Wang Dongming

"Old formulation" has "new position"

　　“The current housing resource allocation situation is very different. Some people have dozens or even hundreds of houses, while some people’s basic housing needs cannot be solved.” In response to this structural problem, Huaxia New Supply Jia Kang, Dean of the Institute of Economics, believes that, on the one hand, we must better solve the problem of effective supply of housing, and on the other hand, we must build a real estate tax system.

　　"It is necessary to play the role of real estate tax in preventing and suppressing real estate speculation, reducing vacancy, adjusting income distribution and property allocation, and curbing the polarization of income disparity." Jia Kang said.

　　In the past few decades, the discussion about real estate tax has been around for a long time.

In this year alone, the real estate tax has been mentioned many times by the central government.

　　In May 2021, the heads of the four departments including the Ministry of Finance held a symposium on the pilot work of real estate tax reform in Beijing to listen to the opinions of some city leaders and some experts and scholars on the pilot work of real estate tax reform.

　　In April 2021, Wang Jianfan, Director of the Tax Administration Department of the Ministry of Finance, stated that it is necessary to further improve the comprehensive and classified personal income tax system, and actively and steadily advance the legislation and reform of real estate tax.

　　In March 2021, China's "14th Five-Year Plan" was officially released. In the real estate-related content, it was mentioned that "advance the legislation of real estate tax, improve the local tax system, and gradually expand the management power of local tax administration".

　　In the eyes of industry insiders, the latest mention of real estate tax still sends out some different signals.

"Compared with previous formulations based on fiscal and taxation policy reforms and other perspectives, the legislation, reforms and trials of real estate tax mentioned this time have a higher position. That is, in the completion of common prosperity, there is a link in the need to pass the real estate tax. The pilot project is carried out.” said Yan Yuejin, research director of the Think Tank Center of E-House Research Institute.

What are the "new changes" in the "re-piloting"?

　　The statement of “doing a good job of the pilot work” has also attracted much attention.

Chen Wenjing, deputy research director of the Index Division of the China Index Research Institute, explained: Generally speaking, real estate tax legislation needs to go through the third review of the National People's Congress, and the time period is longer. It is more likely that some cities will be selected for pilot projects.

　　"The national version of real estate tax must be based on'tax statutory', and legislation is destined to be a long process. The pilot can be issued through administrative channels, and it may land at any time." Zhang Dawei, chief analyst of Centaline Real Estate, also judged the pilot. Before and after legislation, it should be the trend.

　　In 2011, Shanghai and Chongqing have piloted the levy of "property tax" on individual housing.

However, there are problems such as Shanghai's second housing only for local residents, and Chongqing only levies for villas and high-end housing.

Zhang Dawei commented on this, “The coverage is too narrow, the tax rate is extremely low, and the impact is small. It will neither help supplement local finances nor curb the momentum of housing price increases.”

Data map: Shanghai.

Photo by Xu Jing

　　The launch of a new round of real estate tax pilot projects is expected to be substantially different from Shanghai and Chongqing.

Which cities are most likely to be included in the pilot?

The industry generally believes that the city will start with an active property market.

　　"On the one hand, these cities generally face housing problems for residents, housing prices are relatively high, and it is urgent to promote the construction of a housing security system, and real estate taxes can help increase the liquidity of the second-hand housing and rental housing market and promote the rational allocation of resources; on the other hand, these cities Currently in or gradually entering the real estate stock market, real estate tax can be used as an important supplement to local taxation." Chen Wenjing said.

　　Jia Kang suggested that Shenzhen, Hainan, Zhejiang and other places can first join the pilot scope to carry out real reforms, "because these three regions are currently relatively high-level demonstration zones at the forefront of innovation."

　　In addition to the pilot launch, Li Yujia, the chief researcher of the Guangdong Housing Policy Research Center, predicts that the tax rate should not be very high, probably 0.5%-1% of the appraised value of the property; secondly, there may be tax-free areas, such as 30 square meters per capita tax-free for owner-occupied houses and many more.

What impact will it have on the property market?

　　Real estate tax can be said to be a way to regulate the real estate market, or to replace the financial guarantee of land, but ordinary people are most concerned about whether the real estate tax will bring about a decline in house prices.

　　The first real estate tax to enter the public eye was due to the crackdown on real estate speculation.

Considering the laws of the market, using taxation as a lever to regulate holdings is the best way to curb speculation.

But the real estate tax and the fall in housing prices cannot be simply equated.

Data map: sales office.

Photo by Zhang Yuhuan

　　Fan Gang, vice chairman of the China Society for Economic System Reform and director of the National Economic Research Institute, believes that “levying a real estate tax can avoid administrative control of housing price market variables, and it is also a good long-term mechanism for market regulation.”

　　Luo Zhiheng, deputy dean and chief macro analyst of Yuekai Securities Research Institute, also said: "The collection of real estate taxes can reduce the expectation of rising housing prices and help promote the steady and healthy development of the real estate market."

　　Industry insiders believe that in the medium and long term, housing prices are affected by multiple factors, and real estate tax is only one of the variables.

But in the short term, the real estate tax pilot will send a strong regulatory signal to the society, which will reverse the market’s expectation of "housing prices will always rise" and have the effect of stabilizing housing prices.

　　"Current real estate participants need to pay attention to the fact that the idea of'get rich by real estate speculation' is not feasible, unreliable, and unacceptable." Yan Yuejin said that although the credit policy may be relaxed in the near future, real estate developers and buyers should all be treated rationally.

"Subsequently, the disposable income of households should also be more invested in the real economy, and behaviors obsessed with real estate speculation will face great risks."

　　Are you planning to buy a house recently?

Will the plan be affected by the real estate tax news?

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