China Trims VAT on Short-Held Home Sales as Property Easing Continues
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Potential homebuyers view a model of a residential complex in Baoshan district, Shanghai. Photo: VCG
China will cut the value-added tax (VAT) on individual home sales for properties held less than two years, as authorities continue to lower transaction costs in the housing market.
The rate will be lowered to 3%, down from 5%, starting Jan. 1, 2026, according to a Tuesday announcement by the Ministry of Finance and the State Taxation Administration.
Homes held for two years or longer will remain fully exempt from VAT, a nationwide policy already in place since late 2024.
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- China will reduce VAT on home sales held less than two years from 5% to 3% starting January 1, 2026.
- Homes held for at least two years are fully exempt from VAT since late 2024.
- Deed tax preferences now apply to homes up to 140 square meters, and personal income tax exemptions remain for sole homes owned over five years.
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What Happened When
- Late 2024：
- Homes held for two years or longer are fully exempt from VAT under a nationwide policy.
- Late 2024：
- The threshold for the preferential 1% deed tax rate was raised to homes of up to 140 square meters, from 90 square meters previously.
- As of 2025：
- A 1% personal income tax levy on the transaction price generally applies, unless the property has been the seller's only home for more than five years.
AI generated, for reference only
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