Cars pass by a housing block in Binzhou, Shandong province, Feb 4, 2016. [Photo/IC]

BEIJING - China will cut deed and business taxes for home purchases in most cities in an attempt to digest the property glut, an official statement said Friday.

The Ministry of Finance said houses above 90 square meters will be levied a deed tax at 1.5 percent of the house price for first time buyers in all Chinese cities, down from the current 2 percent.

In terms of the second home purchase, tax rates will be 1 percent for those under 90 square meters and 2 percent for larger homes in cities excluding Beijing, Shanghai, Guangzhou and Shenzhen. Previously the rate was 3 percent, regardless of floor space.

In addition, sales of houses held for more than 2 years will be exempt from business tax everywhere except the above-mentioned metropolises, said the statement.

The new policy takes effect on Monday.

The tax adjustment will assist home sales and inventory reduction, and more support for the market could be expected, said a research note from Minsheng Securities.

In early February, the central bank loosened rules on down payments for home purchases in cities with no restrictions and allowed lenders and local authorities to decide on their own deposit requirement.

China's property sector took a downturn in 2014 due to weak demand and over-supply.

Sales and prices are falling and investment slowing, which has affected many sectors ranging from cement to home appliances.

The country has made de-stocking the property inventory one of this year's major economic tasks, as an ailing housing market could derail the economy, which is growing at the slowest rate in a quarter of a century.