When is the time to calculate personal income tax on real estate transfers in Vietnam?

When is the time to calculate personal income tax on real estate transfers in Vietnam?

Based on Article 12 of Circular 111/2013/TT-BTC as amended by Article 17 of Circular 92/2015/TT-BTC stipulated as follows:

Bases for calculation of tax on income from real estate transfer

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3. The time to calculate tax on real estate transfers is determined as follows:

- In case the transfer contract does not stipulate that the buyer is the tax payer on behalf of the seller, the time for calculating tax is when the transfer contract takes effect according to legal regulations;

- In case the transfer contract stipulates that the buyer is the tax payer on behalf of the seller, the time for calculating tax is when the procedures for registering ownership, use rights of the real estate are carried out. In case an individual transfers future housing, use rights of land associated with future construction, the time for calculating tax is when the individual submits the tax declaration dossier to the tax authority.

4. Tax calculation method

a) Personal income tax on income from real estate transfer is calculated as follows:

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

b) In case of transferring co-owned real estate, the tax obligation is determined separately for each taxpayer according to the ownership ratio. The basis for determining the ownership ratio is legal documents such as: initial capital contribution agreement, will, or court decision, etc. In the absence of legal documents, the tax obligation of each taxpayer is determined according to an average ratio.

Thus, the time to calculate personal income tax on real estate transfers is determined as follows:

- In case the transfer contract does not stipulate that the buyer is the tax payer on behalf of the seller, the time for calculating tax is when the transfer contract takes effect according to legal regulations;

- In case the transfer contract stipulates that the buyer is the tax payer on behalf of the seller, the time for calculating tax is when the procedures for registering ownership, use rights of the real estate are carried out.

In case an individual transfers future housing, use rights of land associated with future construction, the time for calculating tax is when the individual submits the tax declaration dossier to the tax authority.

When is the time to calculate personal income tax on real estate transfers in Vietnam? (Image from the Internet)

Which incomes are exempt from personal income tax on real estate transfers in Vietnam?

According to Article 4 of the Law on Personal Income Tax 2007 as supplemented by Clause 3, Article 2 of the Law Amending Laws on Taxation 2014 and amended by Clause 2, Article 1 of the Law on Personal Income Tax Amendment 2012, it stipulates 5 types of income exempt from personal income tax as follows:

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

(2) Income from the transfer of housing, homestead land use rights, and assets attached to homestead land of an individual in cases where the individual only has one residential house or homestead land.

(3) Income from the value of land use rights assigned by the State to individuals.

(4) Income from receiving inheritance or gifts which are real estate between husband and wife; biological parents to biological children; adoptive parents to adopted children; in-laws to daughters-in-law; in-laws to sons-in-law; paternal grandparents to grandchildren; maternal grandparents to grandchildren; siblings with each other.

(5) Income from the conversion of agricultural land by households or individuals assigned by the State for production purposes.

When is the tax period for personal income tax on income from real estate transfers in Vietnam?

According to the provisions of Article 7 of the Law on Personal Income Tax 2007 as amended by Clause 3, Article 1 of the Law on Personal Income Tax Amendment 2012 which stipulates the tax period as follows:

Tax period

1. The tax period for resident individuals is stipulated as follows:

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b) The tax period for each time income arises applies to income from capital investment; income from capital transfer, except for income from securities transfer; income from real estate transfer; income from winning prizes; income from royalties; income from franchising; income from inheritance; income from gifts;

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2. The tax period for non-resident individuals is determined for each time income arises and applies to all taxable income.

Thus, the tax period for personal income tax on real estate transfer income is determined for each time the income arises.