Starting July 15, the Shanghai Municipal Government began to
levy land value-added tax on transactions of second-hand
non-regular commercial housing, the Xinhuanet reported Sunday.
According to a notice issued on July 13 by the city's taxation
bureau, value-added tax is currently imposed on non-regular houses
transferred individually without assessed prices or invoices.
A tax of 0.5 percent of the net gains from property deals will
be levied on owners who have retained their property for less than
three years. A 50-percent exemption is available if an apartment is
kept for more than three years but less than five years before the
transaction, according to the notice.
According to the municipal government's rule, regular housing
refers to houses up to the following criteria: The floor-area ratio
is above 1.0; the total floor space per suite is no larger than 140
square meters; the selling price is less than 17,500 yuan(US$2303)
per square meter if the property is located within the Inner Ring
Road of Shanghai, less than 10,000 yuan per square meter between
the Inner Ring Road and the Outer Ring Road, or less than 7,000
yuan per square meter outside the Outer Ring Road. Those homes
which cannot meet the above requirements are categorized as
non-regular housing.
From now on, the total amount of tax levied on the transaction
of non-regular second-hand houses theoretically can reach as high
as 9.55 percent of the transaction price. That includes the
business tax (5.55 percent), deed tax (1.5 percent), individual
income tax (2 percent), land value-added tax (0.5 percent), as well
as stamp tax and service fees.
(Chinadaily.com.cn July 16, 2007)