Core Viewpoint - The Ministry of Finance and the State Taxation Administration announced a new policy on personal housing sales, effective January 1, 2026, which reduces the value-added tax (VAT) rate from 5% to 3% for properties held for less than two years, while properties held for two years or more will be exempt from VAT. This policy aims to lower transaction costs and stimulate the real estate market, particularly the linkage between new and second-hand housing markets [3][4]. Group 1 - The new policy will impose a 3% VAT on the sale of properties held for less than two years, down from the current 5%, effectively reducing the tax burden on sellers [3]. - The exemption of VAT for properties held for two years or more has already been in place since 2024, meaning the new policy primarily impacts transactions involving properties held for less than two years [3]. - The reduction in VAT is expected to alleviate financial pressure on homeowners, thereby increasing their willingness to sell and enhancing transaction activity in the housing market [4]. Group 2 - The policy is anticipated to positively influence the second-hand housing market, especially in first-tier cities, by lowering transaction costs and encouraging market circulation [4]. - Homeowners may be more inclined to sell their old properties and upgrade to new ones due to reduced selling costs, which could lead to a more dynamic real estate market and promote overall market development [4]. - The reduction in tax costs is also expected to benefit buyers, as lower costs may lead to decreased overall housing expenses, fostering a more active housing consumption environment [4].