(chinadaily.com.cn)
Updated: 2007-07-16 11:31

Starting July 15, the Shanghai Municipal Government began to levy land value-added tax on transactions of second-hand non-ordinary commodity housing, the Xinhuanet reported Sunday.

According to a notice issued on July 13 by the city's taxation bureau, value-added tax is currently imposed on non-ordinary houses transferred individually without assessed prices or invoices.

A tax of 0.5 percent of the net gains from property deals will be levied on owners who have retained their property for less than three years. A 50-percent exemption is available if an apartment is kept for more than three years but less than five years before the transaction, according to the notice.

According to the municipal government's rule, ordinary commodity housing refers to houses up to the following criteria: The floor-area ratio is above 1.0; the total floor space per suite is no larger than 140 square meters; the selling price is less than 17,500 yuan(US$2303) per square meter if the property is located within the Inner Ring Road of Shanghai, less than 10,000 yuan per square meter between the Inner Ring Road and the Outer Ring Road, or less than 7,000 yuan per square meter outside the Outer Ring Road. Those homes which cannot meet the above requirements are categorized as non-regular housing.

From now on, the total amount of tax levied on the transaction of non-ordinary second-hand houses theoretically can reach as high as 9.55 percent of the transaction price. That includes the business tax (5.55 percent), deed tax (1.5 percent), individual income tax (2 percent), land value-added tax (0.5 percent), as well as stamp tax and service fees.