Chile    Real Estate Guide    China 

China

JunHe LLP

1

Restrictions

Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?

Under Chinese laws, lands are owned by the State, therefore individuals and companies can only own a right to use the land. But they can own erections and architectures built upon lands. Foreigners and foreign companies can also own real estate as described above, but are subject to certain requirements, including government pre-approvals, loan restrictions, etc.

Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?

Yes. A foreign-invested real property company must meet the following requirement before applying for loans: its project development capital must reach 35% of the amount of its total project investment, and it must have already obtained the land use right certificate.

Moreover, foreign exchange is subject to strict regulation in China, and foreign-invested real property company is prohibited from borrowing in shareholder loans.

It should be noted that the above mainly targets real property development companies. Foreign companies purchasing real estate for its own daily use is not subject to the above restriction.

2

Taxes

Buying

Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.

Apart from the purchase price, there may be fees and costs incurred by real estate agents, valuations, rea estate registration and professional advisor fees.

As to taxes payable by the purchaser, these mainly include: deed tax, stamp duty tax (if the purchaser is an enterprise). It should also be noted that business tax, personal/corporate income tax and value added tax, though charged to the seller of the estate, may actually be borne by the purchaser under current market practice.

Owning

Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner)?

Currently, no such taxes is applicable to real estate owners. However, the legislature has been discussing approaches of imposing taxes against real estate owners, and a new law might come out for that purpose in the next couple of years.

Tax Breaks

Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so what are they?

No particular incentives are provided for foreigners to purchase real estate in China. On contrary, in certain cities, foreigners are subject to further restrictions on the basis of their work permit in China or the record of their social insurance contribution.

3

Title of Real Estate

How is the ownership of Real Estate evidenced in your jurisdiction?

The ownership of real estate in evidenced by registration at the local bureau of the Ministry of Land and Resources. The transfer, pledge, attachment, seizure, correction and other matters relevant to the ownership of the estate is also evidenced by such registration.

Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?

Real estate ownership registration is not made entirely public. Only the estate owner or a stakeholder may conduct search of that estate in the registry by providing ID or business license (if the owner is an enterprise). Public authorities, including courts, prosecutors and police officers also have the right to inspect the registry if warrant is issued.

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Henry Shi
JunHe LLP
Beijing, China