Acquisition costs |
Real
estate sales in China take place in the form of transfer of right to
use land. The length of time over which property rights are assigned
are limited, and depend on the purposes of land utilization. Price of
land use rights will be determined through negotiations between two
parties to transfer or through tender or auction. Acquisition costs in
China include total amount of fee, as determined by the state, for
assignment of right to use land. Land user shall go through
registration to obtain certificate for land use. Contract for assigning
right to use land shall be signed by and between land administration
departments at the municipal and county levels. |
Property and ownership information |
Registration
of assignment, transfer, lease, mortgage and termination of right to
use land is handled by local land administrative departments and
housing administrative departments in accordance with land and
pertinent regulations of State Council. Registration documents are
available for public reference. |
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Real estate trade association |
China Real Estate Association
N° 8 Cui Wei Nan Li
Wan shou road
Beijing, China
Phone : +8610 68286524
Fax : +8610 68281299
e-mail : kfc@21cn.net
Web : www.ccdpc.org.cn |
License requirements |
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Land description meters and bounds survey system |
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Rights and interests in land |
Any
individual or entity that obtains income from assignment of right to
use state owned land, buildings and facilities must pay land
value-added tax. Foreign and foreign-funded enterprises engaged in the
above mentioned activities are also subject to land value-added tax. In
case of tax payers failure to pay taxes, land and housing
administration will reject title transfer application of taxpayer.
A progressive tax rate is employed. If taxable sum value of a real
estate transaction does not exceed 50% of sum of deductible items, tax
rate is 30%; where it is in excess of 50% but does not exceed 100% of
sum of deductible items, tax rate is 40%; where it is in excess of 100%
but does not exceed 200% of sum of deductible items, tax rate is 50%.
For sum of value addition in excess of 200% of sum of deductible items,
tax rate is 60%. |
Forms of ownership |
Ownership
of property in China is divided into three types: (1) Socialist
ownership by whole people, equivalent to ownership by state; (2)
collective ownership, which is ownership by collective organization;
and (3) private ownership by individuals or private entities.
Property may be owned by two or more citizens or legal persons.
Joint owners have preemptive rights on the same terms and conditions
offered third parties. State owned land may be used by collective units
and state units. |
Transfer of title |
Real
estate sales in China take place in the form of transfer of right to
use land. The length of time over which property rights are assigned
are limited, and depend on the purposes of land utilization. Land user
shall go through registration to obtain certificate for land use.
Contract for assigning right to use land shall be signed by and between
land administration departments at the municipal and county levels.
Chinese marriage law provides that husband and wife have a right to
inherit each other’s property, and that parents and children have a
right to inherit each others property. There are two means of
inheritance by law in China, intestate succession and by will. |
Recordation and transfer of title |
Registration
of assignment, transfer, lease, mortgage and termination of right to
use land is handled by local land administrative departments and
housing administrative departments in accordance with land and
pertinent regulations of State Council. Registration documents are
available for public reference. |
Contracts |
In
general, contracts must be made in written form. Documents regarding
amendments to contracts agreed upon by all parties shall be
indispensable parts of contracts. Contracts according to Chinese law
are formed when principal clauses are agreed unanimously through
consultation by parties according to law. Principal clauses refer to
the following: a) subject matter (goods, property etc.), b) quality and
quantity, c) time limit, method and place of performance, and d)
liabilities for breach of contract. Invalid contracts refer to
contracts made through fraud or duress, in violation of any laws and
administrative decree of state, contract executed by agents in excess
of their authority, or contract which violates interest of State or
public.
When a contract is breached through fault of one party, that party
is liable for breach of the contract. If both parties are at fault,
each party must assume corresponding liabilities according to actual
circumstances. |
Mortgages |
Shenzen
and Guangzhou have enacted legislation to provide procedures for
mortgages on real property. GuangzhouLaw provides regulations for
handling mortgages and requires domestic mortgage lender to be licensed
by a central bank. Mortgaged and mortgage agreements must be notarized
and registered with the city land bureau. |
Financing and lending practices |
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Property taxes |
Any
individual or entity that obtains income from assignment of right to
use state owned land, buildings and facilities must pay land
value-added tax. Foreign and foreign-funded enterprises engaged in the
above mentioned activities are also subject to land value-added tax. In
case of tax payers failure to pay taxes, land and housing
administration will reject title transfer application of taxpayer. A
progressive tax rate is employed. If taxable sum value of real estate
transaction does not exceed 50% of sum of deductible items, tax rate is
30%; where it is in excess of 50% but does not exceed 100% of sum of
deductible items, tax rate is 40%; where it is in excess of 100% but
does not exceed 200% of sum of deductible items, tax rate is 50%. For
sum of value addition in excess of 200% of sum of deductible items, tax
rate is 60%. |
Closing and escrows |
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Appraisal |
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Insurance |
People’s
Insurance Company of China provides insurance in China to individuals
and collective enterprises. Foreigninsurance firms have representative
offices in China and Chinese have entered some off-shore joint ventures
with foreign firms. |
Land use control |
According
to Chinese Land Administration Law, users of land who have obtained
right to use of land shall, in theira ctivities to manage, develop and
utilize land abide by laws and regulations of the state and may not
jeopardize the interests of society and the public. The land
administrative departments under people’s government or at the county
level have the authority to conduct supervision and inspection of land
use. |
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