Anna Zhao

    anna.whizh@yahoo.com

    LOCAL real estate agencies said the city will likely soon implement a new property tax following a Central Government announcement that will increase the number of cities piloting property taxes this year.

    But local realtors didn’t see any possibility that a property tax would ease Shenzhen’s rising home prices in the short term.

    Li Jian, a veteran real estate agent based in Nanshan District, said a residential property tax would continue to spike prices of pre-owned homes because home sellers would shift the cost to buyers.

    “A property tax could urge owners of multiple properties to sell homes, so home prices would decline due to excessive supplies, but that is not the case in the market,” Li said.

    A realtor surnamed Huang, based in Futian District, also said he doesn’t expect home prices to drop if a residential property tax is implemented. He said prices of pre-owned homes, especially homes with school seats, will continue to rise due to the city’s shrinking supply of new homes.

    Shanghai and Chongqing piloted a residential property tax in January 2011. Shanghai has taxed home purchases since January of that year, with rates of 0.4 percent and 0.6 percent, while giving an exemption of 60 square meters per capita for every household.

    The property tax in Chong-qing is levied on homes purchased both before and after the pilot scheme was implemented there, at rates of 0.5 and 1.2 percent, respectively.

    Yang Long, vice director of the Shenzhen Local Taxation Bureau, said last week that Shenzhen had not yet received any order to implement a property tax. The bureau has collected information about the city’s different types of properties, such as commercial housing, military housing, illegal or gray-market housing and subsidized housing.

    “Shenzhen is ready to implement the Central Government’s policy to pilot a residential property tax,” Yang said.

    That’s the bureau’s first response to public speculation that the city will implement a property tax. The bureau had declined to comment on the issue before Yang’s statement.

    A home-tax law has been a hot topic since early March, when the Central Government tightened regulations on home purchases.

    Yang said Shanghai and Chongqing levy taxes on homes with real estate property rights, which means that military housing, illegal or gray-market housing and subsidized housing are excluded from taxation.

    He said data from the two cities showed that the home-tax is not yet a major source of fiscal revenue, but added that revenue levels could rise as implementation of the tax expands.