Case Studies
Housing Tax Refunds Under New China Policy: What Homebuyers Need to Know
A recently renewed policy offers refunds of personal income tax paid from home sales when replacing your home—this article explains eligibility, refund amounts, and how to claim.
By NomadicTax Research Team • 5 min read • August 25, 2026
## Policy Overview
On **June 1, 2026**, China’s Ministry of Finance, Tax Authority, and Ministry of Housing renewed the **优惠性个人所得税政策** to support residents upgrading their homes. Under Announcement No. 3 of 2026, residents who sell their current home and purchase another home within **one year**, in the **same city**, can get a refund on the personal income tax previously paid on the sale. ([gs.mof.gov.cn](https://gs.mof.gov.cn/zhengcefagui/202606/t20260601_3990935.htm?utm_source=openai))
## Refund Amount Rules
- If the **purchase price** of the new home is **equal to or greater than** the sale price of the old home, the full tax paid on the sale can be refunded. ([gs.mof.gov.cn](https://gs.mof.gov.cn/zhengcefagui/202606/t20260601_3990935.htm?utm_source=openai))
- If the new home costs **less**, the refund is prorated — based on the ratio of the new home’s value to the sold home’s value. Only that percentage of the paid tax is returned. ([gs.mof.gov.cn](https://gs.mof.gov.cn/zhengcefagui/202606/t20260601_3990935.htm?utm_source=openai))
## Eligibility Criteria
You must meet all of the following:
- Both sale and purchase must occur **in the same city**. Same city defined by same administrative area: municipality; vice-provincial city; prefecture-level city. ([gs.mof.gov.cn](https://gs.mof.gov.cn/zhengcefagui/202606/t20260601_3990935.htm?utm_source=openai))
- The buyer of the new home must be the **same person** or joint owner who sold the previous house. ([gs.mof.gov.cn](https://gs.mof.gov.cn/zhengcefagui/202606/t20260601_3990935.htm?utm_source=openai))
- The purchase must be made **within one year** of the sale. Property contracts must be legally valid and verifiable through housing administration sources. ([gs.mof.gov.cn](https://gs.mof.gov.cn/zhengcefagui/202606/t20260601_3990935.htm?utm_source=openai))
## How to Apply
- Submit contracts of: the old house sale, the new house purchase, and other documents requested by the tax bureau. ([gs.mof.gov.cn](https://gs.mof.gov.cn/zhengcefagui/202606/t20260601_3990935.htm?utm_source=openai))
- Local real estate departments and tax authorities must **share information** about property transactions in real time. Where not yet implemented, authorities must establish timely reporting mechanisms. ([gs.mof.gov.cn](https://gs.mof.gov.cn/zhengcefagui/202606/t20260601_3990935.htm?utm_source=openai))
- Refunds handled by tax authorities after verifying documents. Deducted tax already paid on the sale will be returned accordingly. ([gs.mof.gov.cn](https://gs.mof.gov.cn/zhengcefagui/202606/t20260601_3990935.htm?utm_source=openai))
## Practical Example
If you sold your home for **RMB 5 million**, paid **RMB 500,000** in personal income tax, and buy a new home in same city within one year:
- If new home costs **RMB 6 million (≥5 million)** → full **RMB 500,000** refunded.
- If new home costs **RMB 4 million (<5 million)** → refund = \(4/5\)×500,000 = **RMB 400,000**.
## Actionable Tips
- Keep all contract documents and verify the **market-price values** used. Real estate contracts will need to show actual transaction amounts.
- Ensure you move quickly: purchases should occur within a **12-month window** of sales.
- Confirm ownership or joint ownership status; if sold as joint owner, newly purchased property should reflect similar rights.
- Watch local system for how well contract signing and registration are shared with tax offices — delays in sharing could delay refunds.
## Conclusion
This policy provides a meaningful tax relief opportunity for homeowners trading up. With well-timed transactions and proper documentation, eligible taxpayers can recover substantial income tax on sales. For many, the savings will offset a large portion of moving costs and closing fees.