Question: Please help me answer: I have just transferred a piece of land to another person, but I am not sure about the personal income tax that I have to bear? What is the tax rate? In which cases is personal income tax exempted from land transfer?

Answer:

1. Legal grounds

– Law on personal income tax 2007;

– Law amending and supplementing a number of articles of tax laws in 2014;

– Circular 111/2013/TT-BTC guiding the implementation of a number of articles of the Law on Personal Income Tax, the Law amending and supplementing a number of articles of the Law on Personal Income Tax and Decree No. 65/2013/ND- The Government’s CP dated June 27, 2013 detailing a number of articles of the Law on Personal Income Tax and the Law amending and supplementing a number of articles of the Law on Personal Income Tax;

– Circular 92/2015/TT-BTC guiding the implementation of value-added tax and personal income tax for resident individuals conducting business activities; guiding the implementation of a number of amendments and supplements to personal income tax specified in the Law amending and supplementing a number of articles of the Tax Laws 71/2014/QH13 and Decree 12/2015/ND- The CP shall detail the implementation of the Law amending and supplementing a number of articles of the Law on Taxation and amending and supplementing a number of articles of the Tax Decrees issued by the Minister of Finance.

2. Tax rate applicable to income arising from real estate transfer

According to the provisions of Clause 2, Article 21 and Clause 1, Article 23 of the 2007 Personal Income Tax Law, income arising from the transfer of real estate must comply with the Full Tax Schedule.

Specifically, according to the provisions of the Full Tax Schedule (Clause 7, Article 2 of the Law on Taxation Amendment 2014 amending Clause 2, Article 23 of the Law on Personal Income Tax in 2007), for income from real estate transfer, it must be 2% tax rate.

3. How to calculate personal income tax arising from real estate transfer

Thus, in your case, it is necessary to base on the provisions of Article 17 of Circular 92/2015/TT-BTC to calculate the personal income tax rate arising from real estate transfer, specifically as follows:

Personal income tax payable = Transfer price x Tax rate 2%

In case of transfer of real estate as joint ownership, the tax liability is determined separately for each taxpayer according to the percentage of real estate ownership. The basis for determining the ownership ratio is a legal document such as an initial capital contribution agreement, a will or a court division decision, etc. In case there is no legal document, the tax liability of each individual. Taxpayers are determined according to the average rate.

4. In case of personal income tax exemption

In addition, according to the provisions of Clause 2, Article 4 of the Law on Personal Income Tax of 2007 and point b, Clause 1, Article 3 of Circular 111/2013/TT-BTC, if income is earned from the transfer of houses, residential land use rights and Assets attached to residential land of an individual in case you have only one house or the right to use residential land in Vietnam will be exempt from personal income tax, but must meet the conditions specified in Clause 1 of this Article. Point b, Clause 1, Article 3 of Circular 111/2013/TT-BTC as amended by Clause 1, Article 12 of Circular 92/2015/TT-BTC. Specifically the following:

– Having only the right to own a house or the right to use a residential land parcel (including the case of houses or construction works attached to that land parcel) at the time of transfer, specifically as follows: :

+ The determination of house ownership and residential land use rights is based on the certificate of land use rights, ownership of houses and other land-attached assets.

+ In case of transfer of houses with common ownership or residential land with common use rights, only individuals who do not have the right to own houses or land use rights in other places are exempt from tax; individuals who share the same house ownership rights, residential land use rights, and other residential land use rights are not exempt from tax.

+ In case the husband and wife share the same house ownership, residential land use right and are also the sole property of the husband and wife, but the husband and wife still have separate houses and residential land, when transferring the house or residential land of the common husband and wife. if husband and wife do not have a house, their own residential land is exempt from tax; Husband or wife who have their own house or residential land is not exempt from tax.

– Having house ownership, residential land use right up to the time of transfer for at least 183 days.

The time of determining the ownership of houses and residential land use rights is the date of issuance of the Certificate of land use rights and ownership of houses and other land-attached assets. Particularly for cases of being re-granted or exchanged according to the provisions of the land law, the time of determination of house ownership or residential land use rights shall be calculated according to the time of issuance of the certificate of land use right or land use right. own houses and other properties attached to land before being re-granted or exchanged.

– Transfer of all houses and residential land.

In case an individual has the right or joint ownership of houses or residential land use rights only but transfers part of it, he/she is not entitled to tax exemption for that part of the transfer.

Therefore, before paying personal income tax on income arising from real estate transfer, you need to note whether you are exempt from personal income tax as prescribed. with state agencies, avoid paying an unnecessary fee.

Above is the advice of Khoa Tin on “Personal income tax on real estate transfer”.

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Best regards./.