Chinese Couples Divorce Before Buying Home to Avoid Property Tax
While more and more young couples in the United States are sealing their commitments to one another by buying a home before marriage, thousands of "happily married" couples in China are rushing to get divorced -- before buying a home together. Why the seemingly backwards move? According to Time, it's a direct result of soon-to-be-enacted government regulations in China that will hike taxes on the sale of second homes for married homeowners.
The regulations are part of a package of measures that will require couples to pay a capital gains tax of up to 20 percent on the sale of second homes -- a huge hike from the current tax of 1 percent to 2 percent. According to Reuters, the tax on gains from selling second homes has actually been in place for almost two decades -- but it hasn't been strictly enforced until now. According to TIME, determined investors won't let that get in the way of a good bargain: the 20 percent tax won't apply if the second home was bought after the couple was divorced.
Which, for many Chinese couples, isn't such a big deal: Divorce in China, after all, is not the lengthy and expensive ordeal that it is in the United States. In fact, Chinese couples are able to get a "quickie" divorce by simply presenting themselves, together, at the marriage and divorce registration center and paying a fee of only $1.50. (Some centers have reported as many as 53 divorces processed in just one day). Once the sales are complete, the couple is free to remarry.
"It's a practical attitude," managing director of realty consulting firm International Strategic Group Li Li told Reuters. "It's strange, but policy forces people to do it."
Even the officials at the registration offices agree it's a smart move. "I told all of them to come here again for remarriage registration as soon as their transaction is finished," one official told the Shanghai Daily.
See more on first-time homebuyers:
Millennials Forge Fresh Trends in Homebuying
Should Young People Buy Homes? Weighing the Pros and Cons
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