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)
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)
- 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)
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)
- The buyer of the new home must be the same person or joint owner who sold the previous house. (gs.mof.gov.cn)
- 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)
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)
- 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)
- Refunds handled by tax authorities after verifying documents. Deducted tax already paid on the sale will be returned accordingly. (gs.mof.gov.cn)
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.