[photopress:_10_Frank__ESES_2001____Thermosyphon_systems_on_on_new_built_multi_familiy_houses_in_Huang_Shan__China__2006.JPG,full,alignright]China’s State Administration of Taxation says that the total revenue from deed taxes has reached over RMB36 billion in the first four months of the year. Although turnover in the real estate sector in many areas has dropped, the income has jumped 32% from a year earlier.
Deed Tax is normally based on the price in case of sale/purchase of houses or sale or ‘right to use’ of State-owned land. Or through an assessment made by tax collection offices in reference to the market price of land, ‘right to use’ sale, sale of houses and in case of transferring land, ‘right to use’ of a house or a house as a gift.
Deed Tax adopts a flat rate within the range of 3%-5%. The rate applicable at a provincial level is determined within that range by the government at the provincial level.
Data shows that 32 provinces, municipalities and autonomous regions have seen their deed tax revenues spike up this year. However, the property markets in most of these areas are rather quiet. In Beijing, the turnover of completed apartments dropped 50% in the first quarter, while sales of properties under construction fell nearly 30%.
This seems odd but is caused by a difference in timing.
Lian Qifeng, official of State Administration of Taxation said: ‘Tax payment is usually later than the trading itself. Many buyers do not pay the tax until they get the property title certificates. So the tax income actually reflects the turnover of the previous period.’
Experts appear to agree deed tax income is not a good indicator of the overall health of the real estate market.