Tax Planning
Tax Benefits for Selling One House and Buying Another in the Same City (换购住房退税解读)
New tax refund policy gives homeowners incentive to upgrade within their city — learn if you qualify and maximize the benefit.
By NomadicTax Research Team • 5-8 min read • August 28, 2026
## What the Policy Covers
The announcement **财政部 税务总局 住房城乡建设部公告2026年第3号** allows homeowners who sell their existing home and **repurchase a home in the same city within one year** to apply for a refund of the **个人所得税** paid upon selling their first home. ([zhejiang.chinatax.gov.cn](https://zhejiang.chinatax.gov.cn/art/2026/1/15/art_8409_84375.html?utm_source=openai)). The policy applies from **January 1, 2026 to December 31, 2027**. ([zhejiang.chinatax.gov.cn](https://zhejiang.chinatax.gov.cn/art/2026/1/15/art_8409_84375.html?utm_source=openai))
Key points:
- If the **purchase price of the new home** is **greater than or equal to** the selling price of the old home, **100% of the tax already paid is refundable**.
- If the new home **costs less**, the refund is **proportionate**: new price ÷ sold price × tax paid.
## Example Scenarios
| Scenario | Sold Price | New Price | Tax Paid | Refund Amount |
|---|---|---|---|---|
| A | ¥2,000,000 | ¥2,200,000 | ¥30,000 | Full ¥30,000 |
| B | ¥2,000,000 | ¥1,600,000 | ¥30,000 | ¥30,000 × (1.6M ÷ 2.0M) = ¥24,000 |
Example: Ms. Zhang sells her apartment for ¥3 million in Shanghai, pays ¥45,000 in personal income tax. She buys another home a year later in the same city; if the new home costs ¥3.5 million, she gets back the full ¥45,000. If it costs ¥2.7 million, she gets back 2.7 ÷ 3.0 × 45,000 = **¥40,500**.
## Eligibility Criteria
- Sale and purchase must be in the **same city**.
- The interval between sale and repurchase must be **within one year**, counting from sale of existing home.
- Documentation: sales contract, purchase contract (market prices), proof of personal income tax payment, proof of residence or housing registration.
- If buying second-hand, the成交价 (transaction price) is used. If buying new, the contract price under housing authority record is used. ([zhejiang.chinatax.gov.cn](https://zhejiang.chinatax.gov.cn/art/2026/1/15/art_8409_84375.html?utm_source=openai))
## Tax Planning Tips
- Plan timing of sale and purchase carefully to stay within one-year window.
- Check market values and contract paperwork early; price disparity can affect refund amount drastically.
- For owners expecting lower cost for new home, calculate proportional refund to ensure financial benefit if applicable.
- Retain **full record** of sales and purchase contracts and税务缴款凭证, as the tax office will require those for refund processing.
## Potential Pitfalls to Avoid
- Delays in signing purchase contract may push you **outside the one-year timeframe**, disqualifying the refund.
- Buying outside city boundaries will nullify the policy — check municipal definitions.
- Misreporting price or failing to use official合同备案价格 may lead to reduced refund or rejection.
## Broader Impacts and Context
This policy is part of China’s broader housing and tax incentive framework to encourage orderly upgrading of housing stock and to **stimulate domestic consumption** in real estate. It pairs with other tax incentives for home sellers and supports financial liquidity in housing markets. Also, it intersects with individual IIT (income tax) reporting obligations, so staying compliant avoids penalties.
## Final Thoughts
If you're considering selling your property and buying another in the same city within the next 12 months, this tax refund opportunity could be significant. The benefit is maximized when the new home's value is equal to or exceeds the old one’s. Proper documentation and timing are key. If you’re unsure about eligibility, consult with a tax professional or local税务局 to ensure you meet all criteria.