(Yicai) Nov. 14 -- China is rolling out tax breaks for home buyers and developers in a new push to encourage purchases and ownership, particularly in the four first-tier cities of Beijing, Shanghai, Guangzhou, and Shenzhen, as well as ease the financial burden on builders.

The nation will lower the deed tax to 1 percent for first- and second-home buyers purchasing apartments of up to 140 square meters on Dec. 1, expanding eligibility from the previous 90 sqm limit and reducing the tax rate from a top 3 percent, according to a document jointly released late yesterday by the Ministry of Finance, State Taxation Administration, and Ministry of Housing and Urban-Rural Development.

Residents of Beijing, Shanghai, Guangzhou, and Shenzhen will also now follow the same housing value-added tax policy as the rest of the country, whereby homes owned for at least two years will be exempt from value-added tax when sold.

The move will significantly lower costs for people buying property, especially in first-tier cities, Chen Wenjing, director of policy research at the China Index Academy think tank, told Yicai.

The new deed tax rate could save first-home buyers CNY25,000 (USD3,450) and second-home buyers CNY50,000 (USD6,900) on a 100 sqm property costing CNY50,000 per sqm, according to CIA calculations. In four first-tier cities, second-home buyers could save as much as CNY100,000.

Easing the financial strain on home buyers could encourage them to spend, not only spurring the real estate market but also promoting broader consumption, said Tian Zhiwei, deputy director of the Institute of Public Policy and Governance at the Shanghai University of Finance and Economics.

The land appreciation tax that developers pay when they sell to buyers will also fall by 0.5 percentage point from next month. It is currently levied at a 2 percent rate in eastern regions, 1.5 percent in central and northeastern regions, and 1 percent in western regions.

The lower land appreciation tax will ease the financial pressure on builders, helping to boost expectations and market stability, Chen said.

Editors: Tang Shihua, Kim Taylor