Proposed tax cuts for home purchases aim to boost the sluggish housing market and provide fiscal support for the economy

China’s government is reportedly set to introduce tax cuts on home purchases, a move aimed at reviving the country’s struggling housing market and providing broader fiscal support to an economy grappling with sluggish growth. According to sources familiar with the discussions, regulators are working on a proposal that would allow major cities like Beijing and Shanghai to reduce the deed tax on home purchases to as low as 1%, down from the current maximum rate of 3%.

The change is expected to be part of a larger fiscal stimulus package aimed at addressing economic challenges, including the ongoing downturn in the real estate sector, which has been one of the key contributors to the country’s broader economic slowdowns. The proposal signals a significant shift in policy as China attempts to mitigate the effects of a faltering housing market that has struggled to recover in the wake of previous regulatory measures intended to curb excessive property speculation.

The deed tax cut is designed to lower the upfront costs for potential homebuyers, which could stimulate demand in a market that has seen cooling sales and falling prices in recent years. The tax change will also provide city governments with the flexibility to make adjustments based on local conditions, offering further support to regions hardest hit by the housing slump.

The proposed tax cut is expected to be part of a broader set of measures aimed at reigniting the housing market, which has seen its growth stagnate due to a combination of factors, including tighter mortgage rules and reduced consumer confidence. By lowering taxes on home purchases, the government hopes to ease the financial burden on homebuyers and stimulate market activity.

Despite the uncertainty surrounding the timing and full scope of the measures, analysts believe this move underscores China’s ongoing efforts to stabilize its economy, especially as the country continues to navigate challenges in key sectors like construction and real estate.