Taxes on Acquisition & Transfer of Real Estate in China

Stamp Duty & Legal Costs
In China, under the 1988 provisional regulations on Stamp duty, local governments are allowed to set the stamp duty within a given range. Stamp duty on sale or lease agreements for real estate is assessed at 0.03% in Shanghai and Beijing or 0.05% in Guangzhou on the value for sales, and at 0.1% of the leasing fee. All foreign-invested enterprises and foreign enterprises are subject to stamp duty since 1994.

Notarization fees are typically charged at 0.03% of the property’s purchase price. In Shanghai, up to 70% discount is sometimes given at the discretion of the notary agency, though it is not written in the tax regulations. In Guangzhou, the notarization fee is 0.3% of the transaction price but it is not compulsory.

Registration fees for mortgage contracts are charged at 0.1% of the purchase price.

Deed Tax
Deed tax is generally levied on purchasers at 3% of the total purchase price. For properties that satisfy the predefined ‘common residential property’ qualification, a discounted rate of 1.5% is applicable.

Business Tax
Business tax is levied at 5% on gross rental income for property leases and at 5% on total sales value for property sales. Sales of the only residence owned by individuals for more than two years are exempted from the tax. However, business tax is still levied at 5% on profits from the sale of a non-residential property after two years of individual ownership.

City maintenance and Construction Tax
City Maintenance and Construction Tax is levied at 1-7% of Business Tax, which is set by the local government. The highest rate is applicable to downtown locations, while foreign companies from the tax.

Land Appreciation Tax
The Land Appreciation Tax (LAT) was introduced in January 1994 and implemented in 1995. LAT applies to the sale of real estate and is levied at rate between 30% and 60% on profits from real estate sales.

- LAT Rate 30% on the portion of profit not exceeding 50% of deductible
- LAT Rate 40% for the portion over 50% but not exceeding 100%
- LAT Rate 50% for the portion over 100% but not exceeding 200%
- LAT Rate 60% for the portion over exceeding 200%

Costs deductible for the calculation of profits include the original cost of Land Use Rights, land development cost, construction cost, interest, business tax and stamp duty. A property developer may deduct 120% of the original cost of Land Use Rights, cost of land development and construction cost.

Owner-occupiers who have used a property for at least five years will be exempted from this tax, which is aimed at curbing speculative development in particular.