Chinese Couples Divorce to Dodge Property Tax

A capital gains tax hike in China has couples racing to file for divorce to avoid paying a steep rate on the sale of their second home.

On March 1, 2013, the Chinese government unveiled a set of new policies in an effort to reign in the country's growing real estate bubble, including raising the tax on second home sales from 1-2 percent to 20 percent.

Faced with the higher tax, some couples with two properties are now amicably divorcing so that each person becomes the owner of one of the properties. Then, they can sell one of the properties and avoid the 20 percent tax before remarrying.

Thanks to the hike, the phrase “fake divorce” has become a buzzword on China's most popular microblogging site Sina Weibo. Although legal experts have warned couples against getting a divorce in order to avoid tax, most netizens blame the trend on the policy itself. “We are forced to do so”, Web users claim [zh].

Chinese magazine Nandu ran a cover story titled “Chinese-Style Divorce”, which read [zh]:

In Shanghai, the Civil Affairs Bureau set up a banner as a reminder, which reads: “Real estate market is risky, be cautious about getting a divorce.”

In Shanghai, the Civil Affairs Bureau set up a banner, which reads: “The real estate market is risky, be cautious about getting a divorce.”

若不是“东风恶”,谁愿意假离婚,这样的夫妻,大部分是刚需人群。一个逼得普通百姓离婚来避税的制度,就一定是恶政。“国五 条”出台后,因离婚排队民政局立牌提醒“楼市有风险,离婚需谨慎”,可制订政策的人又没有反思一下:“离婚几辛酸,政策须谨慎

If it were not for the evil policy, who is willing to fake divorce? For the majority of such couples, owning an apartment is a must. A policy that has forced ordinary people to divorce to avoid taxes must be bad governance. After the introduction of new policy, people queued up to apply for a divorce, so the Civil Affairs Bureau set up a banner as a reminder: “The real estate market is risky, be cautious about getting a divorce.” However, have those policy-makers reflect themselves: “divorce is bitter, be cautious about policy making.”

Journalist “Zhu Xudong” commented [zh]:


Fake divorce exploits a loophole in the policy, it shows the moral decay of society. However, it also warns policy makers that they have to think about ordinary people and try to avoid the loopholes in policy making.

Some Web users criticized the distorted values behind the fake divorce trend. “Huangshi Haican” wrote [zh]:


Which is more unbreakable, marriage or an apartment? Is there any bottom line in love and marriage for modern people? Are we really so vulnerable in front of money?

Another user “Huang Sheng” echoed [zh]:


This is rare scene, and also pathetic. Marriage is worth nothing compared to an apartment.

Real estate consultant “Hanjia Gaoxianlin” added [zh]:


For modern Chinese people, money-making is more important than marriage and family. The distorted priority will definitely leave a strange mark in the history of mankind!

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