Thursday, December 18, 2008

Beijing adds more gas to real estate stimulus

The State Council announced further measures intended to boost China's ailing property market on Wednesday, the South China Morning Post reported. The package includes tax relief for homebuyers and measures to improve liquidity for property developers. Buyers may now purchase a second home on the same preferential terms as their first, provided the size of the first property is below the city average. This means that the downpayments on second homes will be reduced by half and the mortgage rate will be reduced from 1.1 to 0.7 times the benchmark rate. Homeowners will be exempt from paying sales tax (currently 5.6% of the sales price) on property sold two years after purchase, three years less than the prior tax exemption. For property sold within the two year window, the tax base will be calculated on the basis of the profit from the resale, not the sale price.

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