This policy adjustment raises the area standard for the 1% tax rate from 90 square meters to 140 square meters on one hand, and on the other hand, lowers the tax rate for second homes while reducing the purchasing cost for first-time buyers and improved housing, which is expected to enhance demand.
According to the Zhitong Finance APP, guolian has released a research report stating that the tax incentives for deed tax and value-added tax positively contribute to the activity levels in the housing market and help stabilize the real estate market; the adjustment of land value tax can alleviate cash pressure on property companies while benefiting their profit margins. It is recommended to focus on property companies with a strong presence in first-tier and core second-tier cities, those offering improved products, those capable of continuous land acquisition, and real estate intermediary platforms that benefit from the continued implementation of bullish policies and increased activity in the primary and secondary housing markets, possessing core competitiveness.
Industry Event: On November 13, the Ministry of Finance, the State Taxation Administration, and the Ministry of Housing and Urban-Rural Development issued an announcement regarding tax policies to promote the stable and healthy development of the real estate market, involving deed tax, value-added tax, land value tax, and other aspects.
Guolian Securities' main points are as follows:
The deed tax rate is lowered, further reducing the purchasing cost.
The Ministry of Finance and other three departments issued a new policy on deed tax: For families purchasing their only residence, if the area is 140 square meters or less, the deed tax rate is 1%, and if the area exceeds 140 square meters, the deed tax rate is 1.5%. For families purchasing a second home, if the area is 140 square meters or less, the deed tax rate is 1%, and if the area exceeds 140 square meters, the deed tax rate is 2%. This policy adjustment raises the area standard for the 1% tax rate from 90 square meters to 140 square meters on one hand, and on the other hand, lowers the tax rate for second homes while reducing the purchasing cost for first-time buyers and improved housing, which is expected to enhance demand.
Standardized housing value-added tax is expected to release improved demand.
According to the announcement, after the cancellation of the standard for ordinary and non-ordinary residences in first-tier cities, a uniform value-added tax policy for second-hand houses will apply nationwide: individuals selling properties held for more than two years will be exempt from value-added tax. By the end of September, shanghai and shenzhen adjusted the exemption period for individuals dealing with housing value-added tax from five years to two years, and this policy further reduces the value-added tax related to the cancellation of the ordinary residence standard. The bank expects the activity level of the second-hand housing market to improve, and demand for upgrades is expected to be released.
Lowering the land value increment tax pre-collection rate to alleviate cash pressure.
For taxpayers building ordinary standard residences for sale, if the appreciated amount does not exceed 20% of the deductible item amount, they will continue to be exempt from land value increment tax. In cities where the standards for ordinary and non-ordinary residences are canceled, the scope of exemption is expanded, which can improve the profit margins of real estate companies, especially those with a high proportion of previously non-ordinary residential projects. The lower limit of the land value increment tax pre-collection rate is reduced by 0.5 percentage points. After the adjustment, except for affordable housing, the lower limit for pre-collection rates in eastern provinces is 1.5%, in central and northeastern provinces is 1%, and in western provinces is 0.5%. The reduction in the pre-collection rate can lower the cash outflows of real estate companies in the early stages of projects and alleviate current liquidity pressures.
Investment advice
It is recommended to focus on key layouts in first-tier and core second-tier cities, emphasizing upgrade products, and real estate companies capable of continuously acquiring land, such as greentown china (03900), c&d intl group (01908), and hangzhou binjiang real estate group (002244.SZ).
Pay attention to real estate intermediary platforms that benefit from the continuous implementation of policy bullishness, the activity level of the first and second-hand housing markets improves, and that have core competitive advantages, such as 5i5j holding group (000560.SZ).
Risk warning: Policy effects do not meet expectations; liquidity risks for real estate companies increase; market confidence falls short of expectations.
