On November 18, Caijing reported (Reporter Wang Haichun) that the preferential tax policy for housing transactions in Shanghai has officially been implemented.

On November 18, the Shanghai Municipal Housing and Urban-Rural Development Committee and four other departments jointly issued a notice regarding the cancellation of the ordinary housing standards, clarifying the cancellation of the ordinary and non-ordinary housing standards, as well as the relevant personal housing transaction tax matters after the cancellation; this policy will take effect on December 1, 2024.

Industry insiders stated that by the end of September, the "Shanghai Seven Measures" policy had clarified that according to the national work deployment, Shanghai will promptly cancel the ordinary and non-ordinary housing standards to reduce housing transaction costs and better meet the residents' housing improvement needs.

"Shanghai is the first city among the four first-tier cities to cancel the standards for ordinary and non-ordinary residences, and it is expected that the other three first-tier cities will soon cancel the related standards as well," said Yan Yujin, vice president of E-House Research Institute, to reporters.

Liu Zhuowei, an analyst at the China Index Academy Shanghai, pointed out that the latest policies in Shanghai mainly consist of three aspects: first, canceling the 2% income tax for individuals selling non-ordinary residences and taxing at a rate of 1%; second, individuals selling properties held for two years or more will be exempt from value-added tax; third, the preferential policies for personal housing transaction tax in Shanghai will be aligned with national standards.

Specifically, regarding the personal income tax on housing transfers, the latest policies in Shanghai made it clear that the provision for assessing individual income tax at 2% of the transfer income for non-ordinary residences has been abolished. No adjustments have been made to other personal income tax policies; for individuals transferring their own home used for more than five years and which is the only residence for the family, income will be exempt from personal income tax; policies concerning personal income tax related to residents' housing exchanges will continue to be implemented in accordance with national relevant documents.

"After the Ministry of Finance and other three ministries released the financial and tax preferential policies related to real estate, Shanghai actively implemented these measures and officially canceled the standards for ordinary and non-ordinary residences. As a result, the related taxes linked to the ordinary and non-ordinary housing standards will also be optimized accordingly," Yan Yujin stated.

The adjustment of tax policy in shanghai has cancelled the 2% income tax on the sale of non-ordinary residences, applying a 1% standard tax assessment, and expanded the coverage of transaction tax incentives, which may help to release demand for upgrading and replacement. Liu Zhuowei stated.

Regarding the value-added tax on individuals selling housing, the latest policy in shanghai clarifies that individuals who sell a house purchased for more than 2 years (including 2 years) will be exempt from value-added tax. Individuals selling a house purchased for less than 2 years will pay the value-added tax at a rate of 5%.

Analysts believe that the value-added tax policy is closely related to the sale of houses, and the latest policy is expected to significantly reduce housing transaction costs.

"Exempting value-added tax on eligible properties reduces the transaction costs of individuals transferring housing, simplifies the tax process, and is conducive to increasing the circulation speed between second-hand and new houses," Liu Zhuowei stated.

For individuals purchasing housing deed tax, shanghai applies the same preferential deed tax policy as the national standard. Individuals purchasing their only family housing with an area of 140 square meters or less will be taxed at a reduced rate of 1%; for areas exceeding 140 square meters, the tax rate will be reduced to 1.5%. For individuals purchasing a second family housing, if the area is 140 square meters or less, a reduced rate of 1% will apply; if the area exceeds 140 square meters, a reduced rate of 2% will apply.

Industry insiders indicate that the adjustment of housing transaction deed tax policy in shanghai may have significant impacts in two aspects.

In严跃进's view, purchasing housing with an area of 140 square meters or less in shanghai has reduced the deed tax to the minimum level of 1%, covering the vast majority of rigid and upgrading housing demand, which strongly supports consumer behavior in purchasing homes. Furthermore, the deed tax for purchasing a second house shows a significant effect in alleviating the transaction tax burden.

Zhang Bo, director of 58 Anjuke Research Institute, pointed out that from the perspective of the second-hand housing transaction process, due to the different deed tax and value-added tax rates for ordinary and non-ordinary residences, and the high proportion of non-ordinary residences, the transaction costs between the two differ significantly; after canceling the classification standards, the expansion of benefits will promote more upgrading groups to enter the market.

Liu Zhuowei believes that the latest policies introduced in shanghai have reduced personal income tax and housing deed tax expenditures, making transaction costs more reasonable, while also better meeting the residence replacement needs, which is particularly beneficial for improving demand for upgraded housing. These measures will enhance the confidence of market participants and are advantageous for further stabilizing market expectations.

According to monitoring data from the China Index Academy, from November 1 to 15, there were 4,909 units of commodity residences sold in shanghai, a year-on-year increase of 58.5%.

Zhang Bo stated to the reporters that since the adjustment of real estate transaction taxes was announced in November, expectations for the elimination of standard public housing in first-tier cities have been increasingly strengthened. Among this round of first-tier cities, shanghai was the first to cancel related standards, which will help optimize the housing transaction process, significantly reduce transaction costs, and more effectively stimulate market vitality. In addition, real estate companies can also enjoy more bullish benefits related to land value-added taxes on the development side, reducing corresponding development costs, which is also beneficial for stabilizing housing prices and the land market.

It is believed that if this policy can be combined with more measures, it will release greater effectiveness. "In addition to combining with taxes, if the next step can also integrate with fourth-generation buildings, policies for multi-child families, and purchase restrictions, and achieve multidimensional combinations, it will more precisely release targeted effectiveness to the market."