Who pays the real estate tax when a real estate transaction occurs? What are the latest changes to the real estate tax? This article will answer all of these questions along with the latest updates detailing the costs associated with real estate tax.
Table of Contents
What Changes Will There Be In Real Estate Sales Tax 2024 Compared To 2025?
Before the promulgation of the Land Law 2024, personal income tax was regulated based on Article 14 of the Personal Income Tax Law 2007 (amended and supplemented in 2014). The content of the law clearly states that taxable income arising from the purchase or transfer of land and real estate is determined based on the transfer price of each part. This means that personal income tax was previously calculated based on the total value of each part of the land transfer, not on the total value of that real estate.
However, the latest update in Article 247 of the 2024 Land Law stipulates that personal income tax arising from the transfer of land use rights shall be determined based on the price specified in the land price list. This method of calculating personal income tax arising from real estate trading relationships will be applied to calculating personal income tax from the beginning of 2025.
Thus, from January 1, 2025, personal income tax arising from real estate transfer and sale activities will be divided into separate cases as follows:
- The income subject to personal income tax is calculated from the transfer price of each part in case an individual transfers land use rights. In this case, the taxable income is calculated based on the land price specified in the land price list.
- In case the value and related costs of real estate transactions cannot be determined, the taxable income is calculated equal to the real estate transfer price.
- In case the land price cannot be determined or the real estate transaction value on the contract is lower than the land price prescribed by the Provincial People’s Committee at the time of considering the transaction value, the total personal income tax value is calculated based on the Government’s regulations.
- Taxable income from real estate trading activities is calculated from the time the contract comes into effect according to the provisions of law.
What Are The Taxes And Fees When Buying And Selling Real Estate?
Land trading is a common transaction that serves many purposes from building houses to offices. To avoid obstacles in administrative paperwork, let’s learn about the types of fees that arise when participating in real estate trading, the fee levels and the obligations of the fee payer according to the law:
Who Pays Real Estate Sales Tax?
The first tax is the Real Estate Sales Tax stipulated in the Personal Income Tax Law issued in 2007. When an individual generates income from the sale of a house or transfer of real estate, that income is subject to tax and is calculated as personal income tax. This tax is calculated according to the current tax rate. You need to update the latest information on tax rates at the time of the transaction to avoid unnecessary omissions. The subject of this tax is the land seller because when the transaction occurs, the seller is the party receiving money from the real estate transaction.
Personal Income Tax
In addition to real estate sales tax, individuals must also pay Personal Income Tax as stipulated in Clause 5, Article 2 of Circular 111/2013/TT-BTC. Based on the content of the circular, there are only 2 cases exempted from the responsibility to pay taxes arising, including:
- In case of transferring land use rights with people having marital, blood and foster relationships.
- The transferor has only one house or plot of land.
How to calculate real estate sales tax (personal income tax from real estate sales):
Personal income tax payable = transfer price x tax rate 2% (2% on purchase or lease price)
In case two or more people co-own real estate, the tax liability is calculated separately for each person based on the ownership ratio of that real estate.
Registration Fees When Buying and Selling Real Estate
Based on the provisions of Clause 1, Article 3 of Decree 10/2022/ND-CP, the registration fee arising from real estate transactions is regulated by the People’s Committee of the province/city at the time of the transaction. You need to update the latest information when participating in real estate transactions because the regulations on this type of fee may be different at each time. How to calculate the registration fee for each case:
- In case of land sale: Registration fee = 0.5% x total land area x price of 1m2 of land (In which, price of 1m2 of land is regulated by the Provincial People’s Committee)
- In case of selling a private house/apartment: Registration fee = 0.5% x total area x price of 1m2 x remaining quality percentage (In which, price of 1m2 of land and remaining quality percentage are determined by the Provincial People’s Committee)
Notary Fees When Preparing Real Estate Purchase and Sale Documents
The notarization fee for land use rights transfer contracts is determined based on the total contract value. Specifically:
Fees for Issuing Certificates of Land Use Rights and House Ownership Rights
In addition to the real estate tax, the fee for issuing a certificate of land use rights and house ownership, commonly known as a red book, is also an expense required by the state. This fee will be adjusted according to each locality and follows the principle that the fee of a centrally-governed urban area is higher than the fee of other areas. Specifically, the fee includes the following items:
- Issuing certificates of land use rights and ownership of assets attached to land;
- Certificate of registration of land changes; extract of cadastral maps
- Update documents; cadastral records data.
Fee for Appraisal of Land Use Right Certificate Application
In addition to the above taxes and fees, land buyers also need to pay an additional fee for appraisal of land use right certificate applications. This fee is calculated based on the total area of the land plot, the complexity of each type of application, and considering the purpose of land use and specific conditions of each locality. The appraisal fee only applies to certain cases such as first-time issuance of a certificate, new issuance of a certificate, exchange, re-issuance or change of information in the certificate. You need to determine which case the real estate transaction falls into to pay the corresponding fee accordingly.
The article has compiled complete information on real estate purchase and sale taxes and related costs for people conducting real estate transactions. To learn more about the latest real estate information and updates on real estate law, visit Wiki BDS now.
