Is personal income tax exempted for real estate transfers in Vietnam between husband and wife in 2024?

Is personal income tax exempted for real estate transfers in Vietnam between husband and wife in 2024?

Pursuant to Clause 1, Article 4 of the 2007 Personal Income Tax Law which stipulates the subjects of tax exemption as follows:

Income Exempted from Tax

1. Income from the transfer of real estate between husband and wife; biological parents and biological children; adoptive parents and adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and grandchildren; maternal grandparents and grandchildren; siblings.

2. Income from the transfer of residential houses, ownership rights of homestead land, and properties attached to homestead land of individuals in cases where individuals possess only one residential house or homestead land.

3. Income from the value of land use rights for land allocated to individuals by the State.

4. Income from inheritance or gifts of real estate between husband and wife; biological parents and biological children; adoptive parents and adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and grandchildren; maternal grandparents and grandchildren; siblings.

5. Income of households and individuals directly engaged in agricultural production, forestry, salt making, aquaculture, and fishing, which have not been processed into other products or have undergone only preliminary processing.

6. Income from the conversion of agricultural land allocated to households and individuals by the State for production.

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From the above regulations, it can be seen that income from the transfer of real estate between husband and wife in 2024 is subject to personal income tax exemption.

Is personal income tax exempted for real estate transfers in Vietnam between husband and wife in 2024? (Image from the Internet)

What is the procedures for declaring tax exemption for income from real estate transfers in Vietnam between husband and wife?

According to the Appendix issued with Decision 2780/QD-BTC 2023, the procedure for declaring tax exemption for income from real estate transfers is as follows:

- Step 1: Individuals transferring real estate eligible for tax exemption (including residences, future formed construction works) prepare and submit tax exemption documents along with tax declaration documents at the one-stop-shop department or Tax Sub-department where the real estate is located.

In cases where local one-stop-shop regulations are not implemented, documents should be submitted directly at the land use rights registration office where the real estate is transferred.

In cases of transferring residential houses or future formed construction works, tax declaration and personal income tax payment are conducted at the local Tax Sub-department where the residences or construction works are located.

- Step 2: The tax authority receives the documents:

+ If the documents are submitted directly at the tax authority or sent by postal service: the tax authority will receive and handle the documents as regulated.

+ If the documents are submitted to the tax authority via electronic transactions, document receipt, examination, acceptance, handling, and notification of results are processed through the tax authority's electronic data system.

For real estate transfers between husband and wife, the tax authority is responsible for extracting information from the National Population Database as stipulated in Article 84 of Circular 80/2021/TT-BTC (amended and supplemented by Circular 43/2023/TT-BTC) to resolve tax exemption procedures for taxpayers.

If information about a citizen’s residence cannot be extracted from the National Population Database, taxpayers must provide documentation relevant to determining those eligible for tax exemption for each case.

- Step 3: The tax authority reviews and resolves the documents and returns the results as regulated.

How to calculate personal income tax on real estate transfers in Vietnam?

According to Clause 4, Article 12 of Circular 111/2013/TT-BTC as amended by Article 17 of Circular 92/2015/TT-BTC, the calculation of personal income tax on real estate transfers is stipulated as follows:

- Personal income tax on income from real estate transfers is determined as follows:

Personal Income Tax Payable = Transfer Price x Tax Rate

Where the tax rate for real estate transfers is 2% of the transfer price or lease price.

Therefore, the formula for calculating personal income tax on income from real estate transfers is: Personal Income Tax Payable = Transfer Price x 2% Tax Rate

- In cases where the property being transferred is jointly owned, the tax obligation is determined separately for each taxpayer based on their ownership proportion. The basis for determining ownership proportion can be legal documents such as the initial capital contribution agreement, wills, or court division decisions. In the absence of legal documents, the tax obligation for each taxpayer is determined based on an equal average proportion.