Cross-posted from Investing in Chinese Stocks.
China is mulling the imposition of a property tax that could range from 0.5% to as much as 2% to 3% according to the latest report. (Chinese Real Estate Tax 0.5%, More For Investment Properties).The rental yield in Beijing is barely more than 2%. Shenzhen, Guangzhou and Shanghai are all similar. Xiamen’s rental yield is 1.5% in the city center. Yields improve in lower tier cities and out west are better, but still only about 5%.
Retired people who received their home from their company have very low income and have very low housing costs, which is good because their pensions are very small. Their homes in cities such as Beijing may be very valuable though. Even a 0.5% real estate tax could equate to months of spending for retirees, there are probably cases where the tax will be more than 100% of their annual income.
Five things the tax will accomplish:1. Crush speculators
2. Weaken investment in homes (holding of empty homes)
3. Inhibit home price increases
4. Reduce need for land finance
5. Reduce the wealth gap
Widespread implementation is expected in 2017. iFeng: 房地产税初稿成形 100万房每月或缴税400元
