(Yicai Global) June 6 -- People who rent their homes could benefit from a new policy allowing them to pay lower personal income tax, according to a document recently issued by the State Council, China's cabinet.
Rent-paying tenants will be granted personal income tax cuts, according to the document. It has not been announced when the policy will be implemented.
The move could boost the country's residential rental market, which has long been relatively sluggish compared with a sizzling property market, by aiming to bring more empty properties onto the leasing market to help address a supply-demand gap.
The leasing market has been slow to develop because Chinese people generally prefer to buy rather than rent. Shanghai's rental market is very active, but tenants do not enjoy any preferential treatment for paying high rents. The government is now trying to change this.
Also, to encourage more landlords to rent out their properties, they may also enjoy preferential tax treatment. A landlord with monthly rental income of less than CNY30,000 (USD4,560) could be exempt from tax.