Property Transfers in China

[dan1984]

Jian Wen has never been a CCP member or worked in a state/government office or organization. With that said, her mom does and has for the past 25 years. One of the benefits of working in one of these state offices/µ¥Î» is you have access to purchasing extremely cheap apartments in new complexes that are being built, many times at 1/5 or 1/6 of the market price.

 

Her hometown is in XiChang, Sichuan province. It currently has the second highest housing price in the province, behind Chengdu. Although nowhere near the 40,000RMB/square meter price seen in parts of Beijing, Shanghai, Shenzhen, etc, Xichang has a 10,000RMB/square meter in the nice parts of the city, and an overall price of around 8,000RMB/square meter.

 

Although WenWen's mom is close to retirement age, through her current office she is going to be getting access to purchase 2 new apartments at only 1,900RMB/square meter. In addition, she just got "a promotion" and is transferring to a new office, and in through that office she will also have the opportunity to purchase an extremely cheap new apartment - 3 new apartments in total for less than the market price of one apartment.

 

Wenwen and I do not have plans to move to XiChang anytime soon, and plan to stay in Beijing, but her parents are going to let us have one of the apartments, and then reap the rewards/profits from then selling it after construction is complete - as we don't plan to live there. The other two her parents may keep, or also sell one and just have the one apartment to live in.

 

Either way, here's where my question comes in, and what we've been talking about lately - actually somewhat of a grim topic and I was a little surprised the issue came up, as death is usually seemingly never mentioned in Chinese culture.

 

When WenWen's parents pass away, as an only child, all property, possessions, money, etc will go to her. God willing, this is still a long ways away, as her parents are in their early 50's, but, "30 years" from now we imagine that WenWen and I will be together in the US, and WenWen has already fully immigrated to the US and a US citizen.

 

With that said, 1) I assume when WenWen inherits the apartments, she/we would have to pay an inheritance tax on them. Her mom was asking us, because she obviously has 100% faith in her daughter, if right now she should just put the apartment names in WenWen's, and down the line avoid the inheritance tax issue. Still being relatively young, I've never owned property or had other complicated tax situations. Do you think it'd make sense to put the apartments in WenWen's name from the start to avoid unnecessary taxes on them in the future??

 

2) As I said, "30 years" from now WenWen will most likely be a US citizen. As a foreigner in the eyes of China, and not a Chinese national, will she be able to smoothly and issue-free inherit these properties? I'm not sure what the current policy is for foreigners owning land/properties in China.....

 

Sorry for getting a little "wordy" with this post, but just checking in with all of you to see if you've experienced anything similar, or have knowledge to share.

 

Thanks!

 

Dan (and WenWen)

[Randy W]

15. Inheritance Tax (to be legislated) - according to Wikipedia

 

 

There don't seem to be restrictions against foreigners owning anything - just on purchasing and financing. I doubt it would affect your situation.

 

It's not clear why she WOULDN'T put at least something in her daughter's name, but this would not seem to really be an inheritance issue.

 

Perhaps someone will have some knowledge to share here - I don't.

 

You use the phrase "30 years from now", and mention "current policy" practically in the same sentence. Just pointing that out.

Edited November 12, 2011 by Randy W (see edit history)

[dan1984]

Thanks for the insight, Randy. I'll have to do some more research into it all, but in looking at a number of different websites after posting this topic, that does seem to be the case - just the issue of purchasing and financing for foreigners when dealing with property in China, not an issue of actually owning property.

 

And yes, absolutely, to be honest, I'd be somewhat surprised if the apartment buildings being built are still standing come 30 years from now. All we can do though is attempt to plan as prudently as possible.

 

15. Inheritance Tax (to be legislated) - according to Wikipedia

 

 

There don't seem to be restrictions against foreigners owning anything - just on purchasing and financing. I doubt it would affect your situation.

 

It's not clear why she WOULDN'T put at least something in her daughter's name, but this would not seem to really be an inheritance issue.

 

Perhaps someone will have some knowledge to share here - I don't.

 

You use the phrase "30 years from now", and mention "current policy" practically in the same sentence. Just pointing that out.

[credzba]

We had an apartments in my wifes mothers name .. what a headache. We wanted to sell it, but my wifes father died about 2 years ago. That meant the apartment was no longer ONLY the mothers, it now also belonged (partially) to her brother, sister, and grandfather. I am not sure how that all worked, but to sell it we ultimately had to get all these other people to relinquish their claims on the apartment to the mother, then she could sell it. What would have been a "simple" sale turned into weeks long and lots of travelling to get everything done. At one point the notary office told her mother it couldn't be done (sell the apartment) and she had to bring him some gifts before it could finally be transferred.

 

There were recently some property transfer laws changed in China, such that when the parents give the property to your wife, I don't believe it belongs to you (probably fair in this case). However, say you pay for the decoration so that it can be rented, you do not accrue any ownership of the property. In America you as the spouse can argue for partial ownership based on your investment, but not currently in China. I know you never plan to separate from you wife, but something to consider.

 

My wife is away at work, I am sure there are other issues. Bottom line for us, we want to put property in our daughters name before she is married so it is 100% hers. In China it is expected that all your property will go to your children when you die, so it is very common to just transfer it early. The chinese inheritance laws are a little strange (to my foreign devil mind) and it is best to sort out ahead of time.

That said, my wife assured me that in China, after we transfer the property, the children realize it is actually their parents property, and will let us continue to rent it, sell it, or live in it so long as we live.

 

While death isn't talked about, it is built into the culture and the expectations of property.

[dan1984]

Hmmm, although not complicated by having other siblings, it seems like the most straightforward, simple, and non-problematic course of action would be to put it in WenWen's name from the start, or have it transferred at a later date - never fun when a little back-scratching needs to be done, but I guess that's China......

 

We had an apartments in my wifes mothers name .. what a headache. We wanted to sell it, but my wifes father died about 2 years ago. That meant the apartment was no longer ONLY the mothers, it now also belonged (partially) to her brother, sister, and grandfather. I am not sure how that all worked, but to sell it we ultimately had to get all these other people to relinquish their claims on the apartment to the mother, then she could sell it. What would have been a "simple" sale turned into weeks long and lots of travelling to get everything done. At one point the notary office told her mother it couldn't be done (sell the apartment) and she had to bring him some gifts before it could finally be transferred.

 

There were recently some property transfer laws changed in China, such that when the parents give the property to your wife, I don't believe it belongs to you (probably fair in this case). However, say you pay for the decoration so that it can be rented, you do not accrue any ownership of the property. In America you as the spouse can argue for partial ownership based on your investment, but not currently in China. I know you never plan to separate from you wife, but something to consider.

 

My wife is away at work, I am sure there are other issues. Bottom line for us, we want to put property in our daughters name before she is married so it is 100% hers. In China it is expected that all your property will go to your children when you die, so it is very common to just transfer it early. The chinese inheritance laws are a little strange (to my foreign devil mind) and it is best to sort out ahead of time.

That said, my wife assured me that in China, after we transfer the property, the children realize it is actually their parents property, and will let us continue to rent it, sell it, or live in it so long as we live.

 

While death isn't talked about, it is built into the culture and the expectations of property.