Shenzhen moves to slash taxes on larger home transactions, following Beijing and Shanghai

Shenzhen city in South China's Guangdong Province announced on Tuesday that it will eliminate the distinction between ordinary and non-ordinary housing to ease the tax burden on larger home transactions.

Non-ordinary properties that have been owned for two years or more will be exempted from a 5-percent value-added tax for the buyers and sellers, granting them the same tax exemptions as ordinary homes, according to a notice issued by the city government.

The removal of the distinction will take effect on December 1.

Before the policy adjustment, homes in Shenzhen were defined as ordinary homes if they met two conditions - the home is having a building plot ratio of 1.0 or above, and the home's internal floor area should not exceed 120 square meters or an apartment's total floor area of no more than 144 square meters, according to the local government. Otherwise, they were classified as non-ordinary homes.

Earlier this week, the capital city of Beijing, as well as Shanghai also announced similar policy adjustments.

China has rolled out a series of measures to boost the recovery of the housing market, including cutting mortgage rates, lowering down payment ratios and relaxing purchase restrictions.

Lately, three government agencies including the Ministry of Finance said the country will increase incentives including cutting deed tax to support people's essential housing demands and their needs for improving housing conditions, which will be effective from December 1.

"Property market activity picked up in October. Inquiries and property viewings have increased noticeably, while the total area and value of commercial housing sales reported some notable gains," Fu Linghui, a spokesperson with China's National Bureau of Statistics, said at a press conference on Friday.

"The property market demonstrated some encouraging signs in October," Fu said. "As the effects of the government's pro-growth policy package continue to unfold, real estate market recovery momentum is expected to grow. Therefore, we are optimistic about the outlook of the property market."