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Hundreds of Chinese couples divorce to avoid paying property tax

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March 6, 2013 - Chinese people walk past a shopping mall on a hazy day in Beijing, China.AP

Breaking up wasn’t hard to do in China this week, as hundreds of couples rushed to get quickie divorces to avoid tougher tax laws on home sales.

At one marriage registration center in Shanghai, officials divorced a record 53 couples in a single day, according to a Reuters report. The uncontested divorces cost just a few yaun, making it well worth the money saved. First the couples split up, then they split ownership of their properties and sell them, without having to pay capital gains taxes of as much as 20 percent.

The Chinese tend to invest much of their wealth in real estate, as they have few alternatives. Home prices in the China’s largest cities have risen for nine straight months, Reuters noted.

But last week, Beijing encouraged local governments to crack down on property speculation by more strictly enforcing an existing tax on gains from selling second homes.

Many couples realized that primary residences owned for more than five years will remain tax exempt, so by divorcing and divvying up other real estate assets, they can sell properties as individuals, and avoid paying a tax.

"It's a practical attitude," Li Li, a real estate consultant for International Strategic Group in Shanghai, told Reuters. "It's strange, but policy forces people to do it."

These pretend partings are apparently not a new phenomenon. In 2010 and 2011, state media reported some couples forged divorce certificates to skirt restrictions and purchase more property.

"I know people who have divorced to evade taxes," a man who asked not to be named told Reuters. "But I think marriage is more important than property."

Once sales are completed, couples may remarry, but it remains to be seen whether love of spouse will rise above love of money.

Click for more from Reuters.