Couples remarry after fake divorce

Loophole lets spouses avoid capital gains tax by splitting up before selling second homes

An increased number of divorced couples remarried each other in Shanghai last year, a trend that property experts say is a consequence of tax changes that led to a flurry of so-called "fake divorces" the previous year.

In March 2013, the State Council announced that those who owned more than one apartment would in future have to pay 20 percent tax on the capital gains when they sold the second home, rather than the previous 1 to 2 percent. The rule was introduced to control rising house prices.