With the Shanghai municipal government's announcement to abolish the distinction between ordinary and non-ordinary housing, effective from December 1, 2024, this policy change is bound to have a profound impact on Shanghai's and the national real estate market. This report will provide a comprehensive analysis of the core content of this policy and its implications for the industry.
The policy adjustment aims to implement national policy deployments and better meet residents' rigid and improved housing needs. By eliminating the division between ordinary and non-ordinary housing, the Shanghai government intends to simplify tax policies, reduce transaction costs, and promote the stable and healthy development of the real estate market.
The core content of the policy includes:
Personal Income Tax: For individuals transferring housing without providing complete and accurate original value documents, unable to correctly calculate the original value of the house and the tax payable, personal income tax is levied at a rate of 1% of the transfer income.
Value-Added Tax: Individuals selling housing purchased for more than 2 years (including 2 years) are exempt from VAT; those selling housing purchased for less than 2 years shall pay VAT at a rate of 5% of the full amount.
Deed Tax: Shanghai applies the same personal housing purchase deed tax preferential policies as the rest of the country. For individuals purchasing the only family home, with an area of 140 square meters and below, the deed tax is reduced to 1%; for areas above 140 square meters, the rate is reduced to 1.5%.
The industry impact analysis includes:
Reduced Transaction Costs: The new policy will effectively reduce housing transaction costs, particularly adjustments to deed tax and VAT, directly alleviating the tax burden on homebuyers and sellers.
2. Stimulating Market Vitality: By reducing transaction costs, the new policy is expected to stimulate market vitality, increase the volume of housing transactions, and promote the liquidity of the real estate market.
Optimizing Supply and Demand: The new policy will optimize the supply and demand relationship in the real estate market, meet residents' rigid and improved housing needs, and promote the market towards a healthier and more sustainable development.
Supporting Improved Housing Needs: The new policy supports residents' improved housing needs through tax incentives, helping to enhance the quality of life and promote social harmony and stability.
In conclusion, Shanghai's policy of eliminating the distinction between ordinary and non-ordinary housing is an important measure to respond to national policy deployments and promote the stable and healthy development of the real estate market. This policy will reduce transaction costs, stimulate market vitality, optimize supply and demand relationships, and support residents' improved housing needs, positively impacting the industry.