Resale Home Taxes: VAT, Income Tax & Deed Tax Explained

Q: What taxes apply when selling a resale home?

Seller side: VAT 5.3% (if held under 2 years), personal income tax (1% assessed or 20% of gain), plus minor surcharges. Buyer side: deed tax 1–3%. Agent fee 1–2.7% typically split or negotiated. On a ¥3M home held under 2 years, total transaction taxes can reach ¥250k+.

Q: What does 满二 (2-year) exemption mean?

Homes held 2+ years (from deed registration or tax payment date, whichever earlier) are exempt from the 5.3% VAT in most cities — only ordinary homes in tier-1 cities had different rules historically. Under 2 years: VAT applies to the FULL price, not the gain. This is usually the single biggest tax in a quick resale.

Q: What does 满五唯一 (5-year only-home) mean?

If the seller has owned the home 5+ years AND it is the family's only residential property, personal income tax is fully exempt. On a ¥3M home that saves ¥30k (1% assessed) or far more under the 20%-of-gain method. Both conditions must hold — 5 years alone or only-home alone is not enough.

Q: 1% assessed vs 20% of gain — which income tax method applies?

If the seller can document the original purchase price (invoice, contract), tax = (sale price − original price − reasonable expenses) × 20%. If documentation is missing, tax authorities assess 1% of the sale price. Sellers can often choose; when the gain is small, 20%-of-gain can actually be cheaper.

Q: How are inherited or gifted homes taxed on resale?

Inheritance itself is tax-free, but resale income tax = 20% of (sale price − original decedent purchase cost − expenses), with no 1% assessed option in strict regions — potentially a large bill on old properties. Gifted homes to non-relatives carry similar 20% rules. 满五唯一 exemption still applies if conditions are met.

Q: Who pays which tax in practice?

Law: seller pays VAT and income tax, buyer pays deed tax. Market reality varies — in hot markets sellers quote net prices and buyers shoulder everything. Always write the tax allocation into the contract. A "net price" deal on a 满五唯一 home costs the buyer much less than one on an under-2-year home.

Resale Home Taxes: VAT, Income Tax & Deed Tax Explained

Updated 2026.08.01~3 min read

Selling a resale home: VAT 5.3% if under 2 years (exempt after 2 years in most cities), income tax 1% of price or 20% of gain (exempt if owned 5+ years and only home), deed tax 1–3% paid by buyer. Includes the "满二/满五唯一" exemption rules and real cost tables.

Key Takeaways

VAT: exempt if held 2+ years (non-ordinary homes pay on the gain); under 2 years → 5.3% of full price

Income tax: 1% assessed or 20% of documented gain; exempt when owned 5+ years AND it is the family's only home (满五唯一)

Deed tax: buyer pays 1–3% by home size and first/second home status

Who actually pays: legally seller pays VAT/income tax, but market practice often shifts them to the buyer — negotiate explicitly

Core answer: Resale (二手房) transactions involve up to five taxes: VAT (增值税) 5.3% if owned <2 years, seller's income tax (个税) 20% of gain OR 1% of price (exempt if 满五唯一), buyer's deed tax (契税) 1–3%, plus stamp duty (exempt for individuals) and small fees. On a ¥3M ordinary home: 满五唯一 → buyer pays ~¥45k total; 不满二 → the deal carries ~¥190k of taxes. The ownership clock starts from the deed-tax invoice or property certificate date, whichever is earlier.

The tax matrix (ordinary housing)

Tax	Rate	Condition
VAT + surcharges	~5.3% of price	exempt if owned ≥2 years (满二)
Seller income tax	20% of gain OR 1% of price	exempt if 满五唯一 (5yr + only home)
Deed tax	1% (≤90m² first) / 1.5% (first) / 3% (second+)	buyer always pays

Non-ordinary housing (豪宅线 above area/price caps) may owe VAT on the GAIN even after 2 years, and 3% deed tax.

Worked examples

Example 1 — 满五唯一, ¥3M, 100 m², buyer's first home. VAT 0, income tax 0, deed tax 1.5% = ¥45k. Total taxes ¥45,000.

Example 2 — 不满二, ¥3M. VAT 5.3% = ¥159k; income tax 1% = ¥30k; deed tax 1.5% = ¥45k → ¥234,000 total — 7.8% of price in taxes. Waiting 8 months until 满二 saves ¥159k.

Example 3 — Gain-based income tax. Bought at ¥1.8M with documents, selling at ¥3M: 20% × (3.0 − 1.8 − reasonable costs) ≈ ¥220k vs flat 1% = ¥30k. When the original purchase invoices exist and gains are large, the 1% flat method is chosen; when documents are LOST, tax offices may assess 1–3% deemed. Keep every invoice forever.

Example 4 — Who actually pays. Listing "¥3M, seller's taxes on buyer" vs "¥3.1M, each pays own": compute both — Example 2's taxes make the ¥3.1M clean deal cheaper by ~¥80k.

Common mistakes and myths

Confusing 满二 and 满五 — 满二 kills VAT; 满五唯一 kills income tax; different clocks, different savings.
Using the signed price to dodge tax — "阴阳合同" (yin-yang contracts) understate price for tax; the tax office has district floor prices (核定价), and the legal risks fall on both parties.
Forgetting non-ordinary housing rules — big/expensive units lose the 满二 VAT exemption partially (VAT on gain) and pay 3% deed tax; check local 豪宅线.
Ignoring inherited/gifted property rules — selling an inherited home can trigger 20% income tax on the FULL price minus minimal basis if not 满五唯一; plan family transfers carefully.
Missing the clock start — ownership time counts from the earlier of deed-tax invoice or certificate date, NOT the contract date; verify documents before signing anything.

Frequently Asked Questions

What taxes apply when selling a resale home?

Seller side: VAT 5.3% (if held under 2 years), personal income tax (1% assessed or 20% of gain), plus minor surcharges. Buyer side: deed tax 1–3%. Agent fee 1–2.7% typically split or negotiated. On a ¥3M home held under 2 years, total transaction taxes can reach ¥250k+.

What does 满二 (2-year) exemption mean?

Homes held 2+ years (from deed registration or tax payment date, whichever earlier) are exempt from the 5.3% VAT in most cities — only ordinary homes in tier-1 cities had different rules historically. Under 2 years: VAT applies to the FULL price, not the gain. This is usually the single biggest tax in a quick resale.

What does 满五唯一 (5-year only-home) mean?

If the seller has owned the home 5+ years AND it is the family's only residential property, personal income tax is fully exempt. On a ¥3M home that saves ¥30k (1% assessed) or far more under the 20%-of-gain method. Both conditions must hold — 5 years alone or only-home alone is not enough.

1% assessed vs 20% of gain — which income tax method applies?

If the seller can document the original purchase price (invoice, contract), tax = (sale price − original price − reasonable expenses) × 20%. If documentation is missing, tax authorities assess 1% of the sale price. Sellers can often choose; when the gain is small, 20%-of-gain can actually be cheaper.

How are inherited or gifted homes taxed on resale?

Inheritance itself is tax-free, but resale income tax = 20% of (sale price − original decedent purchase cost − expenses), with no 1% assessed option in strict regions — potentially a large bill on old properties. Gifted homes to non-relatives carry similar 20% rules. 满五唯一 exemption still applies if conditions are met.

Who pays which tax in practice?

Law: seller pays VAT and income tax, buyer pays deed tax. Market reality varies — in hot markets sellers quote net prices and buyers shoulder everything. Always write the tax allocation into the contract. A "net price" deal on a 满五唯一 home costs the buyer much less than one on an under-2-year home.

5Y+ LPR history (year-end)

Resale Home Taxes: VAT, Income Tax & Deed Tax Explained

Key Takeaways

The tax matrix (ordinary housing)

Worked examples

Common mistakes and myths

Frequently Asked Questions

5Y+ LPR history (year-end)