Taxes and Fees for Home Transactions

The smartest move is for buyers to consult the local tax authority themselves, because tax rules are highly detailed and complex, with piles of paperwork that are hard to navigate. Tax officers also interpret policies differently, making it virtually impossible for anyone to give an accurate, rigorous breakdown of transaction taxes across regions—let alone the exact rate that will apply to your specific property transfer. No one is more authoritative than the tax bureau.

When buying a home, you need to understand the tax-exemption policies for three major taxes: deed tax, individual income tax (for resale properties), and business tax (now replaced by value-added tax).

Buyer’s deed tax: usually 1%–3% of the online contract price, depending on property size or type.

Seller’s VAT (after the business-to-VAT reform): the old business tax was 5.5% of the transaction price. VAT is now 5% of the price difference between the contract sale price and the original purchase price.

Seller’s individual income tax:

Phrases like “held over five years and is the owner’s only home,” “held over two years and is the owner’s only home,” or “held over five years but not the only home” refer to whether the property qualifies for exemptions from individual income tax and VAT. “Held over” means how many years have passed since the property certificate was issued. “Only home” means the owner has just this one property (generally within the same province or city).
The VAT exemption requires the property to have been held for at least two years. That holding period is measured from whichever date comes first: the property certificate or the VAT payment voucher.

Individual income tax can be calculated in two ways: either 1% of the contract transaction price (the rate may vary by city), or 20% of the profit margin. The latter hits hard if the property was acquired for free through inheritance or gifting. Properties held for over five years used to be exempt from this tax under previous rules.

Property transaction fee: RMB 6 per square meter of built-up area, split evenly between buyer and seller.

Property registration fee: RMB 80, borne by the buyer.

In resale transactions, parties often negotiate who pays which taxes. Legally, the buyer should cover the deed tax while the seller covers individual income tax and VAT. But after years of heavy trading activity in China, practice has shifted. Most sellers quote a “net” price, meaning they want that exact amount deposited into their bank account. For example, if a seller lists a property for RMB 2 million, they expect to receive the full RMB 2 million. Any individual income tax or other fees triggered by the transfer are then shifted entirely to the buyer, so the buyer actually pays well above RMB 2 million.