China okays property tax trials to prick asset bubble

Written by Bloomberg | Updated: Jan 29 2011, 05:34am hrs
China approved property tax trials on some homes in Shanghai and Chongqing, adding to measures announced earlier this week in its campaign to curb real-estate speculation and asset bubbles.

Both cities will begin trials for the levy on Friday, following the governments January 26 announcement it will raise the minimum down-payment for second-home purchases and ask local authorities to set price targets for new properties. Property prices rose for a 19th month in December, even after the government suspended mortgages for third-home purchases and restricted loans to developers.

The Shanghai rate is temporarily fixed at 0.6%for all taxable residential properties, and is reduced to 0.4% for housing bought at prices less than twice the average of newly built commercial homes last year. In Chongqing, only homes bought at more than twice the average price will be taxed, with units purchased at more than four times the average taxed at 1.2%, mayor Huang Qifan said in a live webcast.