Real estate perspective: how much do you know about real estate taxes?

Published:

2021-11-12

On October 23, 2021, the 31st meeting of the Standing Committee of the 13th National People's Congress decided to authorize the State Council to carry out pilot real estate tax reform in some regions. The pilot implementation of this policy is of great significance. It is one of the very important policies in the tide of real estate system reform and is closely related to the lives of ordinary people. In this paper, the real estate tax pilot problem to carry out the following analysis: Development of Real Estate Tax in 1. In 2011, the collection of personal property tax has been piloted in Shanghai, Chongqing and other places. Among them, Shanghai only levies property tax on the increment, that is, the part with more than 60 square meters per capita, while Chongqing levies property tax on the stock of single-family houses (180 square meters of tax-free area) and the increment of high-grade houses (100 square meters of tax-free area). The valuation is based on historical transaction prices, and the tax rate is between 0.4 and 0.6. However, in the pilot process of the past ten years, the increase in housing prices in Shanghai and Chongqing is not inferior to that of the surrounding cities that have not levied property taxes; In August 2013, the then Minister of Finance Lou Jiwei and the Director of the Development and Reform Commission Xu Shaoshi both proposed to "expand the scope of the pilot reform of personal housing property tax", and the focus gradually shifted to the current real estate tax legislation; On August 5, 2015, the real estate tax law entered the legislative planning of the National People's Congress for the first time; On March 9, 2019, the second session of the 13th National People's Congress further pointed out that the real estate tax law is being drafted; On March 14, 2021, the "Outline of the Fourteenth Five-Year Plan for the People's Republic of China National Economic and Social Development and the Long-term Goals for 2035" proposed to promote real estate tax legislation, improve the local tax system, and gradually expand the power of local tax administration; On May 11, 2021, the responsible comrades of the four ministries and commissions of the Ministry of Finance, the Budget Working Committee of the Standing Committee of the National People's Congress, the Ministry of Housing and Urban-Rural Development, and the State Administration of Taxation presided over a symposium on the pilot work of real estate tax reform in Beijing to listen to the opinions of some city people's governments and some experts and scholars on the pilot work of real estate tax reform, of which Jinan is listed. On October 16, 2021, "Seeking Truth" published an article "Solidly Promoting Common Prosperity", proposing to actively and steadily promote real estate tax legislation and reform, and do a good job in pilot work. 2. the basis for the real estate tax pilot (I) regulations and policy basis On October 23, 2021, the 31st meeting of the standing Committee of the 13th National people's Congress adopted the decision of the standing Committee of the National people's Congress on granting the State Council to carry out the pilot work of real estate tax reform in some areas (hereinafter referred to as the "decision"). The standing Committee of the National people's Congress authorized the State Council to carry out pilot work of real estate tax reform in some areas. The purpose of the "Decision" is to actively and steadily promote the legislation and reform of real estate tax, guide the rational consumption of housing and the economical and intensive use of land resources, and promote the stable and healthy development of the real estate market. The "Decision" clarified that the objects of real estate tax are residential and non-residential real estate, excluding legally owned rural homesteads and their above-ground residences. Taxpayers are land-use rights holders and house owners. Among them, non-residential real estate continues to be implemented in accordance with the "Interim Regulations on the People's Republic of China Property Tax" and "Interim Regulations on the People's Republic of China Urban Land Use Tax. The specific measures for the pilot real estate tax shall be formulated by the people's governments of the pilot areas. The State Council and its relevant departments and the people's governments of the pilot areas shall establish a scientific and feasible collection management model and procedures. The author believes that the "decision" has pointed out the path for the future real estate tax reform, that is, to implement the legal principle of taxation and promote the reform by formulating the "real estate tax law" by the National People's Congress. (II) interpretation of the decision 1. Expropriation scope The real estate tax in the pilot areas is levied on all kinds of real estate, such as residential and non-residential use, excluding legally owned rural homesteads and their upper residences. Residential real estate mainly includes commercial housing, affordable housing, housing reform housing, fund-raising housing, resettlement housing, military delivery housing, small property rights housing, etc. Non-residential houses, including operating and non-operating, such as office buildings, shops, factories, warehouses, garages, etc., are not applicable to the new real estate tax plan, and continue to follow the previous property tax and land use tax regulations. implement. It should be noted that houses built on rural homesteads have not enjoyed the dividends brought by urbanization development like commercial houses. Rural homesteads owned by law and houses built on homesteads are not within the scope of this real estate tax pilot. However, illegally held rural homesteads and houses built on this basis should fall within the scope of real estate tax. In addition, it is still uncertain whether the small property right house needs to pay real estate tax. On the one hand, the small property right house belongs to the residential house, which is in line with the scope of taxation. On the other hand, the small property right house is built on rural collective land, and basically has not handled the property right registration. If it is taxed, it is objectively difficult. 2, adhere to the legislation first In line with the previous principle of "legislation first, full authorization, and step-by-step advancement", in accordance with the principle of active and prudent, overall consideration is given to deepening the pilot and unified legislation to promote the stable and healthy development of the real estate market. 3, by the city policy The State Council shall formulate specific measures for the pilot real estate tax, and the people's governments of the pilot areas shall formulate specific implementation rules. Referring to the pilot situation in Shanghai and Chongqing in the early stage, that is, the State Council and various ministries and commissions are responsible for drafting the real estate tax pilot measures (draft), proposing the pilot cities, and the local people's governments decide on the collection objects, collection standards, collection tax rates and other detailed rules within their jurisdiction. 4. Purpose of expropriation The purpose of levying real estate tax is to guide the rational consumption of housing and the economical and intensive use of land resources, promote the stable and healthy development of the real estate market, and ultimately achieve common prosperity. 5. The pilot period is 5 years Counting from the date of issuance of the State Council's pilot measures. In the course of the pilot, the State Council shall summarize the experience of the pilot in a timely manner. When conditions are ripe, laws are enacted in a timely manner. Real estate tax legislation may not be widely implemented in the past five years. How do 3. determine the real estate tax rate? As of 2018, the per capita housing area in cities and towns is 39 square meters, and the average household is about 1.1 units. Among them, the proportion of three units is as high as 10%, which means that many families cannot afford one unit. The ultimate goal of levying a real estate tax is to replace land finance, promote common prosperity, and transform the track to achieve high-quality development. The focus of real estate tax reform is how to make low-income people feel happy, but the middle class does not feel pain. Specific need to clarify the following points: 1. Tax basis Many views believe that the tax basis of real estate tax should not be the transaction value at that time, but the market value or assessed value of the house. However, the real estate tax is a direct tax, and only the assessed value of the house is used as the tax basis of the real estate tax. The tax burden is too heavy, and the people will have a significant "sense of pain", which will affect residents' consumption and reproductive desire, and ultimately affect the sustainable development of the economy. Therefore, we should not consider the real estate tax rate from the perspective of housing market value, but from the perspective of residents' "affordability. Based on this, in the case of high housing prices, in order not to reduce the happiness of the people, the real estate tax rate should not be too high. 2. Determination of tax rates The market value of houses in each city and even each district is different, and the consumption ability of ordinary people is also very different. The unified tax rate will not achieve real fairness. It is recommended to calculate the disposable income of households based on the per capita disposable income of each district, so as to infer the amount of tax that the people can accept, and then divide the amount by the market value of the house to determine the real estate tax rate in the district. For example, in 2020, the per capita disposable income of residents in the country will be 32189 yuan, with 2.62 people per household, and the average annual household income will be 84300 yuan. The acceptable tax payment for ordinary people is about 1500 yuan per year. Assuming that the national average house price in 2020 is 9860 yuan per square meter and the average area is 39 square meters, the market value of a house is about 380000 yuan, the reverse real estate tax rate should be about 1500 yuan/380000 yuan = 0.4%. 4. question on whether the first set is exempt In the previous pilot project in Shanghai, the first suite was exempted from real estate tax, but it is unknown whether the new pilot project will still enjoy the first exemption, because the first exemption will lead to a large number of houses in third-and fourth-tier cities, and everyone will go to first-and second-tier cities to buy houses, or cause everyone to concentrate in the city center to buy houses, aggravating population loss and rising housing vacancy rates. 5. the impact of the introduction of real estate tax? 1, increase the market supply of second-hand housing Based on the dual attributes of real estate investment and consumption, the collection of personal housing property tax is aimed at the holders of residential real estate, which increases the real estate holding cost of investors and real estate speculators, and limits the purchase demand of speculators or real estate speculators. For speculators who hold multiple sets of real estate, in order to prevent the continuous loss of their interests, they will choose to transfer the cost by renting or sell to avoid risks, the market supply of second-hand housing will also increase, and under this system, developers' future expectations of real estate market demand will decline, forcing developers to tighten supply and reduce the vacancy rate of existing storage. 2, reduce market demand, real estate market prices temporarily fell. A real estate tax would reduce real estate developers' expectations of future consumer demand for home purchases. However, the production cycle of housing is relatively long, immediately know that the supply of housing in the future is greater than the demand can not adjust the supply in time, the supply of housing in the real estate industry will not change in the short term, but the demand for housing will decrease, the supply will remain unchanged and the demand will decrease, the equilibrium price will decrease briefly, but will not decrease in the long term. References: 1. Wu Shaofen, Lin Lina, Wu Hongyi, Wu Xueling, Analysis of the Expected Impact and Effect of Individual Housing Property Tax on Housing Prices [J] Economic Research, 2021(1); 2, Zhao Fengjun, real estate tax pilot do not follow the old path, the national social science fund project "China's housing vacancy rate status quo, causes and solutions to study" (20BJY073) results; 3, Liu Xiaobo, "real estate tax, or beyond your imagination", public number: Liu Xiaobo said finance. Attachment: "Decision of the Standing Committee of the National People's Congress on Authorizing the State Council to Carry out Pilot Real Estate Tax Reform in Some Regions" (Adopted at the 31st Session of the Standing Committee of the 13th National People's Congress on October 23, 2021) In order to actively and steadily promote the legislation and reform of real estate tax, guide the rational consumption of housing and the economical and intensive use of land resources, and promote the stable and healthy development of the real estate market, the 31st meeting of the Standing Committee of the 13th National People's Congress decided to authorize the State Council to carry out pilot work on real estate tax reform in some areas. The real estate tax in 1. pilot areas is levied on residential and non-residential real estate, excluding legally owned rural homesteads and their upper residences. The owner of the land use right and the owner of the house are the taxpayers of the real estate tax. Non-residential real estate continues to be implemented in accordance with the "Interim Regulations on the People's Republic of China Property Tax" and the "Interim Regulations on the People's Republic of China Urban Land Use Tax. 2. the State Council to formulate specific measures for the pilot real estate tax, and the people's governments of the pilot areas to formulate specific implementation rules. The State Council and its relevant departments and the people's governments of the pilot areas shall establish a scientific and feasible collection management model and procedures. 3. the State Council, in accordance with the principle of being active and prudent, comprehensively consider deepening the pilot and unified legislation, and promote the stable and healthy development of the real estate market to determine the pilot areas, and report to the Standing Committee of the National People's Congress for the record. The pilot period authorized by this decision is five years, starting from the date of issuance of the State Council's pilot measures. In the course of the pilot, the State Council shall promptly sum up the experience of the pilot and report the pilot to the standing Committee of the National people's Congress six months before the expiration of the period of authorization, and if it is necessary to continue to authorize, it may put forward relevant opinions, which shall be decided by the standing Committee of the National people's Congress. When conditions are ripe, laws are enacted in a timely manner. This Decision shall come into force as of the date of promulgation, and the time for launching the pilot program shall be determined by the State Council.

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