Case of tax exemption during the transfer of real estate

One of the issues most concerned by the seller when transferring his real estate is the declaration and payment of personal income tax. However, the transfer of real estate does not always create the obligation to pay personal income tax. So, in which cases will the transfer of real estate be tax exempt and what are the order and procedures for requesting tax exemption? For the purposes of this article, the author will focus on the answers to the above questions.

1. Two cases are exempt from tax when transferring real estate

a. Transfer transactions are made between people related by marriage, blood and education

The disposal of real estate (including future houses, future construction works in accordance with the Real Estate Trade Law) is exempt from personal income tax if the transactions are concluded between.

  • Marital relationship: as between husband and wife; stepfathers or stepmothers and stepdaughters or sons in law;
  • Blood relationship: as between the biological father, the biological mother and their biological child; grandparents and grandchildren, and between biological siblings;
  • Nurturing relationship: adoptive father, adoptive mother and their adopted child.

In addition, in case of partition of real estate (including future houses, future construction works in accordance with the Law on Real Estate Trade) being the joint property of husband and wife as agreed or declared by the court at the time of the divorce, is also exempt from tax.

b. Single property transfer operations

Income from the transfer of houses, residential land use rights and properties attached to residential land in the event that the transferred immovable property is wholly owned by the individual is eligible for tax exemption on the income of natural persons when they meet the following conditions:

  • Own only one residential house or the right to use residential land (including the case of having houses or construction work attached to that parcel of land) at the time of transfer.

In case of transfer of condominium houses, residential land with common use rights, only natural persons who do not have the right to own houses or land use rights in other places are exempt. tax; people who jointly own a house, residential land use rights but also have another house and land use rights are not exempt from tax.

In the event that husband and wife jointly own houses, residential land use rights, which are also their exclusive property, but the wife or husband still has separate houses and residential land. For this case, when transferring houses or residential land under the right of common use, the wife or husband who does not have separate houses or residential land are exempt from tax and the husband or wife owning their own house or residential land is not exempt from tax.

  • Have the right to own a house, the right to use residential land until the time of transfer for at least 183 days.

The time to determine the ownership of the dwelling house and the land use right will be the date of issuance of the certificate of land use right and ownership of the house and other assets on the land. Except in the case of replacement or reissue, the time limit for determining land use right and house ownership should be calculated based on the time of issuance of the land use right certificate and ownership of the home and other assets on the land prior to replacement or reissue. .

  • Transfer of entire houses and residential land.

In the event that an individual has the right or ownership of houses, land use rights and transfers only a part of it, he will not be subject to tax exemption on such transaction.

2. File and modalities of declaration of tax exemption

a. File elements:

  • Personal income tax declaration form n ° 03 / BĐS-TNCN n ° 03 / BĐS-TNCN attached to circular n ° 92/2015 / TT-BTC.
  • A photocopy of the land use right certificate, proof of ownership of the house and other property on the land and the signing person agrees to take responsibility for these copies. When transferring the sale agreement for houses or structures to be constituted in the future, a photocopy of the sale and purchase agreement for houses and structures to be constituted in the future signed with the level I and II contracting authority or the real estate exchange of the client, or a photocopy of the contribution contract for the right to buy the house, the apartment signed before 08/08/2010 must be handed over.
  • Real estate transfer contract. When transferring the contract for the sale and purchase of houses or construction works to be formed in the future, a notarized contract for the transfer of the contract for the sale and purchase of houses or construction works to be formed in the future ; or the notarized contract for the transfer of the capital contribution contract for the right to buy the house, the apartment must be submitted. When transferring the contract for the sale and purchase of houses or construction work to be formed from the second time, the previous contract of sale and purchase must be presented. In case of real estate authorization, the real estate authorization contract must be submitted.
  • Documents used as a basis for determining the tax exemption.

For transfer transactions that are carried out between persons related by marriage, blood and education, the tax exemption files for each specific case are as follows:

Note: If the transferor does not have a birth certificate or household registration book, it is necessary to have a confirmation from the people’s committee at the commune level on the relationship between the transferor and the transferee as a basis. to determine the income being tax exempt.

For the sale of a single property:

On the declaration form No. 03 / BĐS -TNCN, the individual declares his income tax-exempt and clearly indicates that he is exempt from personal income tax in accordance with the regulations on single-family houses, the right to use a single residential land and is responsible under the law on the declaration of having one single house, residential land use right in Vietnam.

b. Place of filing of tax declaration files

The taxpayer must submit the tax declaration documents and the real estate transfer documents to the one-stop-shop system or the tax department of the district where the real estate is located. Documents can be lodged at the land registry office where the property is located if the one-stop-shop system is not adopted in the localities.

If the individual transfers houses formed in the future, construction work formed in the future, the tax must be declared and paid to the tax department of the district where this construction is located, or to a collector authorized by the tax authorities .


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