Beijing’s Divorce Rate Soar By 41% As Couples Exploit Tax Loophole
Nearly 40,000 Chinese couples living in Bejing have filed for during the first nine months of this year, according to the China Daily on Tuesday, a year-on-year increase of close to 41 percent - with experts speculating that couples had been deliberately avoiding a property tax imposed earlier this year.
According to statistics from the Beijing Civil Affairs Bureau, 39,075 Chinese couples got a divorce in the first three quarters of the year, surpassing the 38,197 couples that divorced during all of 2012.
Executive vice president of the Beijing Marriage and Family Construction Association, Li Ziwei, believes that the unusual rise in divorce cases had to do with the "Five regulations of the domestic real estate market" published in February, which was originally devised as a means to cool down the country's over-heated property market.
The major point from the "Five regulations", which may have sparked the sudden increase in divorces, was that married couples with more than one property, would have to pay a capital gains tax of 20 percent if sold their second property.
Singles selling their sole property are exempt from paying the tax, if they have owned a property for five years or more. So a couple that divorces and registers their properties singly stands to save a lot of money for the family.
The China Daily cites Mr. Mao and his wife as an example. The couple owned two homes in Beijing and wanted to sell one off - worth close to 1,700,000 yuan ($280,000).
To avoid the tax of nearly 300,000 yuan, Mr. Mao and his wife registered each house under their individual names and had a divorce.
"We can save 300,000 yuan in this way. It is not a small number for us. I have to work many years to earn 300,000 yuan," Mao said.
Li Ziwei noted that "this phenomenon" was not restricted to just Beijing.
"Couples in other first-tier cities, where (property) prices have rocketed in recent years, also use this method to avoid taxes. They can save tens of thousands of dollars".
In Shanghai for instance more than 44,000 couples divorced from January to September this year, according to AFP, an increase of nearly 40 percent.
"The national regulation clearly harms the stability of families. However, family harmony is the foundation of social stability. The regulation should be revised or changed if it makes families unstable," said Tang Can, a researcher from the Chinese Academy of Social Science's women's research centre.
Jiang Yongping, an expert from the Women's Studies Institute of China, warned that some "fake" divorces could lead to "real" problems.
"Some husbands may use this as an excuse to get a divorce from his wife and marry another woman," Jiang said.