By Li Hongmei
Divorce rates in megacities like Beijing and Shanghai have soared since the announcement of a property tax that includes a loophole for couples who split up, figures show.
Nearly 40,000 couples divorced in the Chinese capital in the first nine months of this year - up 41 percent on the same period in 2012, according to figures released by Beijing's civil affairs officials this month.
And more than 44,000 couples separated in the January-September period this year in Shanghai, up nearly 40 percent year-on-year, official data showed.
But figures from the southwestern city of Chongqing, where the tax has yet to be imposed, had divorces there rising by just over 7 percent.
In March, China announced a nationwide capital gains tax of 20 percent on the profits owners make from selling residential property.
But the terms allow couples with two properties who divorce and put each house into one person's name to then sell them tax-free under certain conditions - after which they can remarry.
The capital's divorce growth rate was "far higher" than in the previous four years, Beijing Youth Daily reported yesterday.
"Some of these people divorced in order to avoid the capital gains tax," Zhang Dawei, director of research at real estate agency Centaline China in Beijing, said. "They will quickly remarry."
Getting separated on paper is currently the "only feasible" way to escape the tax, he added.
With property prices skyrocketing in recent years, the capital gains tax can amount to tens of thousands of dollars in China's first-tier cities if fully implemented.
Homeowners were previously taxed at just 1 or 2 percent of the sale price. An exemption from the tax is available for vendors who are selling their only home and have owned it for more than five years.
Shanghai divorce lawyer Zhong Tao said the effect of the capital gains tax on his business had peaked in the early part of the year, as it had been widely publicized at the time but Shanghai had yet to fully implement it.
"The divorce rate is rising every year, caused by multiple factors including the 20 percent capital gains tax, but this is just an episode," he said.
Other financial considerations that can also play a part in divorces include qualifying to take out a lower-rate first-time-buyer mortgage or, in other cases, buy a second apartment.
