Real Estate

China Clarifies Tax Treatment for Real Estate Companies before De-registration

Jan. 30 – In a recent announcement, the State Administration of Taxation clarified issues regarding the refund of overpaid corporate income tax (CIT) to property developers prior to the developers’ deregistration. This CIT overpayment primarily comes from the prepayment of land appreciation tax (LAT).

Issued on December 24, 2010, the “Announcement on CIT Treatment for Property Developers before Deregistration (State Administration of Taxation Announcement [2010] No. 29)” allows real estate companies in a taxable loss position to apply for a CIT refund during their tax deregistration process. Continue reading →

Ministry of Commerce Calls for Stricter Reviews on Approval of Foreign Invested Real Estate Projects

Dec. 27 – China’s Ministry of Commerce (MoC) urges an intensified review process for the approval of foreign capital entry into China’s real estate field, another measure the government is trying in an attempt to rein in the country’s surging inflation.

The MoC released the “Circular on Strengthening the Reviews on the Approval of Foreign Investment into Real Estate Filed” on November 22, requesting intensified reviews on foreign-invested property projects, not only to ensure the complete qualifications of foreign investors, but also to restrain speculative and round-tripping investments. Continue reading →

New IMF White Paper Says Talk of Housing Bubble Overblown

Dec. 6 – A new IMF working paper titled “Are House Prices Rising Too Fast in China?” has declared that housing prices in China are not entirely out of line and fears of a housing bubble are exaggerated.

The paper, however, does indicate that certain regions have seen dramatic increases in the value of homes that are not sustainable, particularly in the luxury segment. Examples of cities where prices can be seen as out of line with fundamentals are Shanghai, Shenzhen, Beijing and Nanjing. Continue reading →

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China Tightens Restrictions on Real Estate Purchases by Foreigners

Nov. 19 – A new circular recently released by the Chinese government reiterates a four-year-old regulation that limits housing purchases by foreigners and imposes more restrictions on the amount and region of the properties.

The circular, co-issued by the State Administration of Foreign Exchange and Ministry of Housing and Urban-Rural Development on November 4, clarifies that an overseas resident can only purchase one house for personal use and that a foreign institution with a branch or representative office can only purchase a non-residential house for business use in the city where the office is registered. Continue reading →

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Report: China’s Banks Suspend Property Loans

Nov. 15 – According to a report by state-run media in China, China’s four largest commercial banks have ceased issuing new loans to property developers from November.

According to China Economic Net, Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China and Bank of China have already achieved their annual allocated loan targets and will therefore suspend property loans until the beginning of 2011. Continue reading →

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China’s Real Estate Market Still Cause for Concern

Oct. 21 – As China’s housing market continues to expand with its economy, concerns that the sector’s growth is being driven more by speculation than by actual housing demand are becoming more prevalent. A hot property market is prone to boom and bust cycles and some fear that China is on the tail end of such a boom.

One leading factor contributing to the current state of China’s real estate market is a lack of safe and reliable investment options for the country’s emerging middle and upper classes. China’s wealthy are investing in second or third properties while many citizens are trying to buy their first. Continue reading →

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SAT Releases Tax Exemptions for Public Housing

Sept. 29 – The State Administration of Taxation announced in a statement dated Monday that it was exempting taxes on the use of urban land where the land is developed for public housing.

The steps will be a boost for companies involved in the construction and management of public housing projects.

The tax authorities also said they would stop levying stamp duties for the construction of public housing and will waive both taxes and stamp duties in cases where a property-management company buys apartments for use as public housing. Continue reading →

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China Studies Proposal to Tax Real Estate Based on Market Value

Jul. 27 – China is weighing a proposal that would tax commercial property based on its market value in an effort to reform its tax system and discourage speculative buying.

Commercial property tax is currently based on the original purchase price. Taxpayers who use commercial property for their own use are charged a 1.2 percent tax annually. Continue reading →