Guide to Property Taxes in China

Nonresidents are taxed only on income derived from Chinese sources. Joint taxation is not permitted, so married couples are assessed and taxed separately. Chinese nationals residing abroad may still be considered tax residents if they have household registration, family, or economic ties to China.

Rental Income Tax

Investment income, including rental income, is taxed at a flat withholding rate of 20% on gross income. Business tax is levied at 3%, with taxable income calculated after deducting business tax, operating, administrative, and financial expenses. Real Estate Tax (RET) applies at 12% of annual rental income for properties rented out, but can be reduced to 4% for residential rentals. In Shanghai, rental-related taxes are consolidated into an integrated rate of 5% on gross income.

Capital Gains Tax

Gains from property transfers are taxed at a flat rate of 20%. Business tax is also imposed at 5% of net gains, with an exemption for properties held for five years or more in some areas. Land Appreciation Tax (LAT) is applied at progressive rates based on the net gain:

Corporate Taxation

Income from property, including rents and capital gains, is taxed at a flat rate of 25%. Business tax is also imposed on the sale of immovable property at 5%. Corporate property transfers are subject to the same Land Appreciation Tax rates as individual transfers.

Property Buying and Selling Costs/Taxes

Property Holding Tax

Urban real estate is subject to a 1.20% tax on its assessed value. If rented, the tax is 12% of annual rental income, reduced to 4% for residential properties. Payment is made annually in installments.