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Chinese File Uncontested Divorce Over Property Tax

Posted By Attorney Jim Cairns || 11-Mar-2013

There are a lot of reasons to get an uncontested divorce, ranging from infidelity to having "outgrown" a spouse. Chinese couples now have found new grounds for uncontested divorce: property taxes. The Chinese government has announced new real estate taxes, and married couples are being creative when it comes to dodging the tougher tax laws on home sales.

Some married individuals have rushed to property bureaus to register their property for sale, while others have filed for uncontested divorce on the grounds of no longer having mutual affection for one another. Chinese couples appear to be in good spirits when filing their uncontested divorces and many have come right out and stated they want a divorce due to the new taxes – though the divorce documents state another reason. The tax issue has hit home, pun intended, with a lot of Chinese couples because they tend to put their larger investments into property.

Under the new tax law, Chinese couples would face reduced gains from selling a second home in the form of a twenty percent tax on profit made from the sale of property. Couples who have two homes, one from the wife and the other from the husband, will no longer be able to sell their property tax free (after five years of ownership). When government officials decided to announce the real estate taxes they overlooked a potential loophole. Individuals can sell their piece of property tax free, but married couples can only sell one piece of property tax free – so an uncontested divorce makes financial sense for couples with more than one piece of real estate.

The Chinese have a reputation for attempting to circumvent taxes and the latest uncontested divorce spree is no exception. Reports have confirmed that Chinese couples were looking for a way to avoid the additional tax. After the completion of property sales, the same couples have remarried.

During 2011, happily married Chinese couples were breaking up in order to avoid the ban on a third mortgage. Though, in 2011 there were reports of forged divorces, also known as the fake divorce. Forged documents were then used to obtain bank loans for a third mortgage.

People are finding a favorable market to sell their property. The recent spree of sales has not only increased sales but has also increased market prices. Unfortunately for the Chinese government, the latest tactic in attempting to hold back a market bubble in the housing sector appears to have to backfired.