New China Trend: Divorce by Condo CNN recently covered an intriguing new trend in Beijing: couples getting divorced in order to buy more condos.

The Chinese government has lately begun levying a 20% capital gains tax on any Chinese household that sells a second property or condominium. A family's ability to purchase many residences is likewise limited. commercial real estate

According to CNN, this has resulted in thousands of Chinese couples seeking a "paper divorce" in order to increase their capacity to invest in real estate without the constraints and additional taxes.

This is only the most recent twist in China's ever-evolving real estate industry. China's real estate prices are way too high. The government wants to let some of the air out of the bubble before it bursts and drags the rest of the economy down with it, potentially jeopardizing social stability.

Raising real estate transaction taxes is one approach to accomplish this. So, on March 1, 2013, China's State Council in Beijing stated that a 20% capital gains tax on sales of second residences would be vigorously enforced, and that the tax on couples who purchased second homes would be hiked to 60%. The idea was to cool China's overheated real estate market, which sees mainland Chinese pour billions of dollars into new condos every month.

The fundamental reason for China's strong buyer's market is that condos are now considered as a superior method to put their money while benefiting from rapidly rising property values in several of the country's major cities.

Furthermore, the Chinese government prohibits people from taking more than $50,000 USD out of the country to invest abroad, and their stock market has been volatile in recent years. As a result, the best alternative investment vehicle available in their market today is parking money in new China condo complexes. Particularly in a country where property ownership is still a new concept.

Lesley Stahl of CBS's 60 Minutes recently reported on "ghost cities" in China, where tens of thousands of empty—but-purchased—condos exist for the Chinese emerging middle class to put their money.

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