First of all, please note that I have not been able to locate the related decree or notice issued by Beijing local government, therefore not able to verify the captioned statement.
Just recently, in advising a foreign client in inheriting estate apartment left by his late father, I came to learn from local notary office a piece of new rule that was said to take effect from only March of this 2016 under which a foreigner cannot accept a gift of real property unless he is eligible for purchasing a property in Beijing, no matter what relationship/kinship it is between the gift-giver and the gift-receiver.
While it is understandable for local governments to curb foreign investment in its already red-hot property market, it seems to have gone too far to bar gifting between immediate family members which will have an apparent adverse impact on estate planning for foreign clients in China.
In the above-mentioned inheritance matter, the estate apartment was bought during the marriage of the deceased with his wife who is still alive. Legally speaking, as a result of China Marriage Law, the apartment is a piece of community property, half owned by the surviving spouse. In other words, the estate left by the late father is only half of the property, available for inheritance by all statutory heirs pursuant to intestate rules of China Succession Law. As a normal practice of estate planning and for purpose of convenience of future disposal of the property, we often advise clients that it is better for the surviving spouse to inherit the whole property instead of having all heirs appearing on the new title deed.
However, in the mentioned inheritance case, for foreign tax purposes, the mom and son have agreed that the whole property will go to the son with Mom agreeing to both waive her right to inherit the estate and to gift her half of the property title to the son. By this way, the son will be receiving full title of the property in the end.
Now with the new local rule in Beijing, the gifting of the mother’s half ownership of the property is not doable because the son is not qualified to purchase property in Beijing which qualification requires that the foreigner shall prove that he or she has been living in Beijing for more than one year by virtue of either employment or study in China.
However, to the best of our knowledge, there is no such a rule in Shanghai or any other cities.
Hi Jason
Thanks for all the great information on your blog. I have a question about inheritance or adding a us citizen to the deed on a Beijing property. This property in Beijing is owned by my inlaws. My spouse, who was born in Taiwan, and I are US citizens living in the US. Can my wife add her name to the property deed? Can the inlaws draw a trust in china to pass the property to my spouse? If not, what options does she have in making sure the property goes to her?
Hi Ace, can you please let me know the address of the property? As a general rule, it is not possible to add your wife’s name onto the title deed as she is not qualified to purchase property in Beijing. However, we may need to inquire the local real estate authority in the place where the property is situated to see whether there is any exception in that local practice.
Yes, a trust or WILL will also achieve the purpose of transferring the properties to your wife. Let us explore the options via emails.
Hi, Jason,
Thanks for your informative blog information. They are very clearly written for us layman.
I have a related question to this post. I am a US citizen with permanent residency status in Hong Kong. In other words, I have a HK permanent ID card and a passport issued by Hong Kong SAR. However, my permanent abode is in US.
My parents own some commercial properties in GuangZhou and plan to put me down in their will to inherit these properties which are currently rented out. So, my questions are in several parts:
1) Am I eligible to inherit real estates in China? or am I eligible to purchase real estates in China?
2) If I do inherit these properties in the future, do I have to first open a bank account in China so that I can receive the rent and withdraw from overseas?
3) If I decide to sell the properties, for which the proceed will surely exceed the annual quota of RMB 100,000, what is the legal procedure?
Thank you.
Hi there:
1. you are eligible to inherit estate situated in China; as HK passport holder, you may be allowed to purchase property if you can prove that you reasonably need such property; as an American citizen, you need to prove you have been working here for up to one year in order to be qualified to purchase property in China.
2. you’d better to open an bank account in order to receive either rental or future sale proceeds, this can be a big problem if you don’t have one;
3. the sale is a normal sale and the sale proceeds can be wired out of China according to China foreign exchange rules, which I am not going to elaborate on here. When you wish to sell any piece, then let me know.
Hi Jason
The monthly rent is 3,300 RBM and the property is in Dongguan.
What would be the tax on that amount?
If the rent was accumulated for say 6 months (19,800 RMB), could that amount be wired in a single transmission after conversion to my country’s currency?
Colin, that is a small amount, and you can ask your tenant to send USD to you via his or her bank utilizing Chinese citizen’s annual USD 50,000 conversion quota.
Hi Jason
Thanks for your very informative blogs. I have a question regarding inherited properties in China which earn an income. Can monies earned via rent be deposited into a Chinese bank account which could then be accessed in an overseas branch of the bank?
Assume the bank account is initially opened in China by a foreign owner. Your comment would be greatly appreciated.
yes, you can. Your withdrawal from overseas is subject to a daily quota of RMB 10,000 and further annual quota of RMB 100,000. If you have cumulated a large sum of money, you should consider repatriating the money out of China by going through legal procedures here.
Hi Jason
With regards my question to you Om May 29 this year ie. a foreigner opening a bank account in China, the bank I approached advised that I could not since I only had a tourist visa. Since I do not live in China, is there another way I could repatriate annual rent money that I would receive from a rental property?
HI Colin, where is your property? how much is the monthly rental? If you don’t even have an account here, you may have to ask the tenant to apply to repatriate the rental out of China to your home country. You may entrust someone else to be your agent to receive the rental and then your agent will help you to wire the money to you after paying tax on your behalf. I believe there is way out.