Vietnam: Do I have to pay personal income tax when selling my only house? Instructions for calculating personal income tax when selling a house?

Do I have to pay PIT when selling my only house? Instructions for calculating personal income tax? Question from Mr. An in Hue.

Do I have to pay PIT when selling my only house?

According to Clause 2, Article 4 of the 2007 Law on Personal Income Tax in Vietnam as follows:

Tax-free incomes
...
2. Incomes from transfer of residential houses, rights to use residential land and assets attached to residential land received by individuals who have only one residential house or land plot each.
...

At the same time, according to Point b, Clause 1, Article 3 of Circular No. 111/2013/TT-BTC (amended by Clause 1, Article 12 of Circular No. 92/2015/TT-BTC) as follows:

Tax-free incomes
1. According to Article 4 of the Law on Personal income tax in Vietnam and Article 4 of the Decree No. 65/2013/ND-CP, tax-free incomes include:
...
b) Income from transfer of a person's only house or residential land plot and property thereon in Vietnam.
b.1) The person that transfers the house and right to use land that is tax-free as prescribed in Point b Clause 1 of this Article must meet all conditions below:
b.1.1) The transferor owns only one house or residential land plot (with or without property thereon) at the time of transfer. To be specific:
b.1.2) The house or land plot has been under the transferor's ownership for at least 183 days before they are transferred.
The time to determine the house ownership or land use right is the date of the certificate of land use right, ownership of house and other property on land. In case the certificate is reissued or replaced under regulations of land law, the time for determining the house ownership or land use right is the date of the certificate of land use right, ownership of house and other property on land before reissuance or replacement.
b.1.3) Transferring the entire house or residential land.
If the individual has or shares the ownership of the only house or land use right and transfers part of it, the transferred part is not tax-free.
...

Thus, in case the seller has only one house in Vietnam, when selling the only house, the income earned will be exempt from personal income tax if it meets the following three conditions:

- The individual only has the right to own a house or the right to use a residential land parcel (whether with or without property thereon) at the time of transfer.

- Having the house or land use right has been possessed for at least 183 days before they are transferred.

- Transfer of all houses and residential land.

Note:

- The only house, residential land that is exempt from tax is declared and responsible by the individual transferring the real estate. If detected incorrectly, they will be handled for tax arrears and fined for tax violations in accordance with the law on tax administration.

- In case of transfer of houses or construction works to be formed in the future, they are not eligible for personal income tax exemption under the guidance at Point b, Clause 1, Article 3 of Circular No. 111/2013/TT-BTC.

Vietnam: Do I have to pay personal income tax when selling my only house? Instructions for calculating personal income tax when selling a house?

Vietnam: Do I have to pay personal income tax when selling my only house? Instructions for calculating personal income tax when selling a house?

Instructions for calculating personal income tax when selling a house?

According to Clause 4, Article 12 of Circular No. 111/2013/TT-BTC (amended by Article 17 of Circular No. 92/2015/TT-BTC), PIT on income from real estate transfer is calculated as follows:

PIT payable = Transfer price x 2% tax

Note:

- In case the transferred real estate is under a co-ownership, the tax liability incurred by each taxpayer is proportional to their portions of real estate ownership.

- The basis for determining the portion of ownership is legal documents such as the initial capital contribution agreements, the testament, or the decision on division made by the court, etc. If no legitimate documents are provided, the tax liability incurred by each taxpayer shall be evenly divided.

How to determine the time for taxing real estate transfer in Vietnam?

Pursuant to Clause 3, Article 12 of Circular No. 111/2013/TT-BTC (amended by Article 17 of Circular No. 92/2015/TT-BTC), the time for taxing real estate transfer in Vietnam is determined as follows:

- If the transfer contract does not require the buyer to pay tax on behalf of the seller, the taxing time is the effective date of the transfer contract as prescribed by law;

- If the transfer contract requires the buyer to pay tax on behalf of the seller, the taxing time is the time of registration of the right to own or right to use the real estate. In case the person receives an off-the-plan house or land use right associated with off-the-plan constructions, the taxing time is the time the person submits tax declaration documents to the tax authority.

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