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New Housing Regulation Triggers Surge in Divorces

On March 1, 2013, China’s State Council issued a new measure to reinforce the control of housing prices, including a capital-gains tax of 20 percent on profits from the sale of a family’s second home.

This provision immediately triggered shock waves in the secondary housing market, leading to many divorces of couples who owned two or more homes. China currently allows a couple with two houses to allocate one house to each at the time of divorce. If a couple intends to sell their second hone without being taxed, they can divorce so that the house to be sold goes to one spouse, who is able to sell that house as the only family home so as to avoid the 20 percent tax. Then the couple can remarry.

The divorce procedure in China is relatively simple. Cities, including Shanghai, Guangzhou, Harbin, and Ningbo, saw a surge in the rate of divorce immediately after the new regulation went into effect. Three years ago, another a policy restriction on the purchase of second homes also led to waves of divorce. In recent years, China’s divorce rate has continued to rise: about 2.87 million couples divorced in 2011, a jump of 7.3 percent over 2010.

Source: BBC Chinese, March 6, 2013