Cases of selling houses which are exempted from PIT in Vietnam

Case of selling a house is not subject to PIT (Illustration).

Regarding this issue, the LAWNET shall reply as follows:

According to Clause 5, Article 3 of Vietnam's Law on Personal Income Tax of 2007 (amended in 2012), income from real estate transfers is taxable income. Specifically, the following transfer cases must pay personal income tax:

- Incomes from transfer of rights to use land and assets attached to land;

- Incomes from transfer of right to own or use residential houses;

- Incomes from transfer of right to lease land or water surface;

- Other incomes earned from transfer of real estate.

According to the aforesaid basis, the money obtained from the sale and purchase of real estate shall be subject to tax. However, the current law recognizes two cases of people selling houses without having to pay personal income tax as follows:

1. If there are close connection between parties 

According to point a, clause 1, Article 3 of Vietnam's Circular 111/2013/TT-BTC, income from real estate transfers between people who are closely related, such as: "husband and wife, parents and children; adoptive parents and adopted children; parents-in-law and children-in-law; grandparents and grand children, and among siblings" is exempt from tax.

Here, the law allows tax exemption for the transfer of real estate if the transferor and the transferee are closely related by blood.

The transfer of houses between these objects takes place very often and is mainly based on the relationship of inheriting the estate as real estate.

2. Cases of only have 1 house which is the transferred one

According to Point b, Clause 1, Article 3 of Vietnam's Circular 111/2013/TT-BTC, "incomes from transferring houses, rights to use land and property on land of the person if only one house or right to use of only one land plot in Vietnam is transfer." is exempt from tax.

Thus, individuals who own one and only one house will be exempt from tax if they sell their only house.

 If the house or rights to use land is the marital property and only property of the husband and wife, the person that has no other private house or land is eligible for tax exemption, the person that has another private house or land is not eligible for tax exemption.(Specific regulations are found in Vietnam's Circular 111/2013/TT-BTC, Point b.1.1.3 Clause 1 Article 3).

In particular, it should be noted that the determination of an individual who only owns a house at the time of transfer will be based on the current ownership in the House Ownership Certificate and the minimum time limit for the transfer. The transfer is 183 days (6 months) from the date of issuance of the house ownership certificate based on Clause 1, Article 12 of Vietnam's Circular 92/2015/TT-BTC.

Duc Dung

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