Is the income from transfer of residential houses by individuals who have only one residential house considered a taxable income in Vietnam?

Is the income from transfer of residential houses by individuals who have only one residential house considered a taxable income in Vietnam?

Based on Clause 2, Article 4 of the 2007 Law on Personal Income Tax, the regulations are as follows:

Income Exempt from Tax

1. Income from transferring real estate between spouses; biological parents and their 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 with each other.

2. Income from the transfer of residential houses, the right to use homestead land, and assets attached to homestead land of an individual in cases where the individual owns only one residential house or homestead land.

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Concurrently, according to the provisions at Point b, Clause 1, Article 3 of Circular 111/2013/TT-BTC, amended by Clause 1, Article 12 of Circular 92/2015/TT-BTC, it is stipulated as follows:

Income Exempt from Tax

1. Based on the provisions of Article 4 of the Law on Personal Income Tax and Article 4 of Decree No. 65/2013/ND-CP, income exempt from tax includes:

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b) Income from the transfer of residential houses, the right to use homestead land, and assets attached to homestead land of an individual in cases where the transferor owns only one house or one parcel of homestead land in Vietnam.

b.1) An individual transferring residential houses or the right to use homestead land is exempt from tax according to the guidelines at Point b, Clause 1 of this Article, provided that they meet the following conditions simultaneously:

b.1.1) Only owning the right to one residential house or the right to use one parcel of homestead land (including houses or structures built on that parcel) at the time of transfer. Specifically:

b.1.1.1) The determination of ownership rights over residential houses and homestead land usage rights is based on the Certificate of Land Use Rights, Ownership of Residential Houses, and other assets attached to the land.

b.1.1.2) In cases where residential houses have joint ownership or homestead land has joint usage rights, only individuals without ownership rights over other residential houses or usage rights over other homestead land are exempt from tax; individuals with joint ownership over residential houses or usage rights over homestead land who have rights to other residential houses or homestead land are not exempt from tax.

b.1.1.3) In cases where spouses have joint ownership over residential houses or homestead land which is their only jointly owned property, if the wife or husband has other separate residential houses or homestead land, the wife or husband who does not have separate residential houses or homestead land is exempt from tax during the transfer; the spouse with separate residential houses or homestead land is not exempt from tax.

b.1.2) Possession of ownership of the residential house and usage rights over homestead land for at least 183 days up to the point of transfer.

The time for determining ownership rights over residential houses and usage rights over homestead land is the issuance date of the Certificate of Land Use Rights, Ownership of Residential Houses, and other assets attached to the land. For cases of re-issuance or amendment per land laws, the determination time follows the issuance date of the original Certificate before re-issuance or amendment.

b.1.3) Transfer of the entire residential house and homestead land.

In cases where individuals have the sole right or joint right of ownership over residential houses or usage rights over homestead land but transfer only part of it, they will not be exempt from tax for the part transferred.

b.2) Exemption for the sole residential house or homestead land is self-declared by the individual transferring the property and they are responsible for its accuracy. If any discrepancy is discovered, tax will be retroactively collected and penalties imposed according to tax administration laws.

b.3) Transfer of residential houses or construction works formed in the future is not exempt from personal income tax under the guidelines at Point b, Clause 1 of this Article.

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Therefore, an individual selling their sole house will not have to pay personal income tax if they meet the following conditions:

- Sole ownership of one residential house or one parcel of homestead land (including houses or structures on the parcel) at the time of transfer;

- Possession of ownership over the residential house and usage rights over homestead land for at least 183 days up to the point of transfer;

- Must transfer the entire residential house and homestead land.

Note:

- Exemption for the sole residential house or homestead land is self-declared by the individual transferring the property and they are responsible for its accuracy. If any discrepancy is discovered, tax will be retroactively collected and penalties imposed according to tax administration laws.

- Transfer of sole residential houses formed in the future will not be exempt from personal income tax.

Is the income from transfer of residential houses by individuals who have only one residential house a taxable income in Vietnam? (Image from the Internet)

Is income from the transfer of off-plan housing considered a taxable income in Vietnam?

Based on Subpoint b.1, Point b, Clause 5, Article 2 of Circular 111/2013/TT-BTC, it is stipulated about taxable income for personal income tax as follows:

Taxable Income

According to Article 3 of the Law on Personal Income Tax and Article 3 of Decree No. 65/2013/ND-CP, taxable income includes:

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5. Income from property transfers

Income from property transfers refers to income received from the transfer of property, including:

a) Income from the transfer of land use rights.

b) Income from the transfer of land use rights and assets attached to the land. Assets attached to the land include:

b.1) Residential houses, including off-plan housing.

b.2) Infrastructure and construction works attached to the land, including construction works formed in the future.

b.3) Other assets attached to the land, including agricultural, forestry, and fishery products (such as plants and animals).

c) Income from the transfer of ownership rights of residential houses, including off-plan housing.

d) Income from the transfer of leasing rights over land or water surfaces.

dd) Income from capital contribution by real estate to establish a business or capitalize business operations according to the law.

e) Income from assigning property management rights where the assignee has the right to transfer property or ownership rights similar to that of the property owner according to the law.

g) Other income received from property transfers in any form.

Regulations on off-plan housing and construction works stated in Clause 5 of this Article are executed according to real estate business laws.

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Therefore, income from the transfer of off-plan housing is subject to personal income tax.

What is the personal income tax rate for residential house transfers in Vietnam?

Based on Clause 2, Article 12 of Circular 111/2013/TT-BTC, amended by Article 17 of Circular 92/2015/TT-BTC, the regulations are as follows:

Tax Base for Income from Real Estate Transfers

The tax base for income from real estate transfers is the transfer price each time and the tax rate.

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2. Tax Rate

The tax rate for real estate transfers is 2% of the transfer price or sublease price.

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Therefore, the tax rate for real estate transfers in general and residential houses, in particular, is 2% of the transfer price or sublease price.