Shanghai Daily news

China's home buyers are hoping that a new tax policy being drafted will save them money by making them pay 10 to 20 percent less on the purchase price of a home.
The taxation authority, the State Administration of Taxation, is planning to merge the nine property taxes into one. The unified tax will be paid annually.
Xie Xuren, director of the SAT, said the new policy is expected to be put in place at an "appropriate time." The tax, once it becomes effective, will lower the housing prices by 10 to 20 percent, according to industry insiders.
"The new policy will reduce the housing prices," said Zhao Yanjing, a director of the research institute of China Academy of Urban Planning and Design. "In addition, the simplified tax will ease home purchases."
Currently, the home buyers have to pay nine taxes, including land use rights and property management, when they sign the purchase contract. The amount they have to fork out is estimated at 10 to 20 percent of the total housing price, Zhao said.
According to the tax authority, the tax rate will be based on market conditions.
"Based on international practices, the property tax rates should be evaluated periodically," said Zhao. "For instance, when the property appreciates, the home owners should pay more."
However, the new tax policy may raise home buyers' cost after the purchase. The tax amount over the years "could be even larger than the current one-time payment," Zhao noted.
Qin Bing, a lawyer of Beijing Long An Law Firm, said it will be easier to buy a home but harder to keep it. "Although the home buyers save money at the purchase point, they will have to pay the annual tax no matter if they occupy the home or not. That will raise the investment cost."
Qin also noted the government should take into consideration the differences in income levels of existing home owners. "The policy should contain different rates for poor and rich families."
On the other hand, some investors fear that the new tax will cause trouble in their investment.
"For instance, it's hard to calculate the cost of an apartment for rent if the tax rate increases year by year," said Zhu Qi, a local property investor.
"Therefore under the new tax system, I will have to raise the rent."
In Shanghai, purchasing homes for investment have accounted for more than 16 percent of the city's total, according to the Shanghai's Statistics Bureau. Most of the investors make profits through rentals.
China's housing prices have surged for more than three years. To calm down the bullish property market, the government has passed regulations, including tightening bank loans to developers and luxury home buyers.
Shanghai, which has seen its housing prices jump more than 20 percent last year, is planning a restriction on uncompleted housing transfers.