How to Calculate Income Tax for Individuals Transferring Their Pre-Sale Real Estate after July 1, 2021?
The National Taxation Bureau of Kaohsiung, Ministry of Finance received a call from Ms. Li, who bought a pre-sale real estate in September 2021, and recently wanted to transfer it to another person, how to calculate the house and land transactions income tax?
The Bureau said that since July 1, 2021, individuals trading in pre-sale real estate, according to Paragraph 2, Article 4-4 of the Income Tax Act, are required to file individual house and land transactions income tax return, where the transaction proceeds is the amount paid by the transferee and the acquisition cost is the amount paid by the transferor. If the deductible expenses are without supporting documents, they will be calculated at 3% of the transaction proceeds, subject to a ceiling of $300,000. The taxable income shall be calculated by using the transaction proceeds - acquisition cost - deductible expenses.
For example, on July 1, 2021, Mr. Jia signed a contract to purchase a pre-sale real estate from Construction Company A for a total amount of NT$10 million and paid NT$3 million for the construction. On April 30, 2022, Mr. Jia signed a pre-sale real estate contract with Mr. E, the transferee, for a total purchase price of NT$11 million, with Mr. E paying NT$4 million to Mr. Jia and the remaining NT$7 million to Construction Company A. Thus, Mr. Jia’s taxable income from selling the pre-sale real estate is NT$880,000 [the transaction proceeds of NT$4 million - acquisition cost of NT$3 million - deductible expenses of NT$120,000 (without presenting supporting documents, based on the transaction proceeds of NT$4 million × 3%)]. The tax rate applicable is 45% because the holding period is within 2 years. As a result, Mr. Jia’s tax payable is NT$396,000.
The Bureau reminded that the date of transaction and acquisition of the pre-sale real estate is the date when the agreement is made. People trading in pre-sale real estate should remember to file the individual house and land transactions income tax return within 30 days from the day after the transaction date to protect their rights. If you have any questions, you can call the toll-free service number 0800-000321.
Contact: Mrs. Shen, Revenue Assessor of the Second Legal Affairs Division
TEL: 07-7256600 ext.8703
Reference URL：https://www.mof.gov.tw/Eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=7cc94bda21994a7bb5556946654cf829