If House and Land Are Repurposed or Transferred Within Five Years After Purchase, the Originally Deducted or Refunded Tax Amount for Residential Purpose Shall Be Recovered
The National Taxation Bureau of Taipei (hereinafter referred to as NTBT), Ministry of Finance, has announced that individuals who have applied for tax deductions or refunds on the purchase of residential-purpose house and land following the sale of the same purpose house and land will be required to repay the tax deducted or refunded if the aforementioned house and land purchased are repurposed or transferred within five years after the purchase.
NTBT explained that, as prescribed in Article 14-8 of the Income Tax Act and Article 20 of the Directions for Filing the Income Tax on House and Land Transactions, the tax deduction or refund, for an individual who has sold his(or her) previously owned house and land (with registered household residency and used for residential purpose) and purchased another house and land for self-use residence, are applicable only when the purchase of the new house and land occurs within two years from (either before or after) the transfer registration date of the old house and land. Moreover, the purchased house and land should not be used for leasing, business operations, or professional practices. To prevent speculative behavior, the law prescribes that if the purchased house and land are transferred or repurposed within five years, the taxpayer shall pay back the deducted or refunded tax amount.
NTBT provides the following example: In April 2021, Person A registered the acquisition of Property X (a house and land for residence). In October of the same year, Person A sold Property X and then purchased Property Y (also a residential-purpose house and land). When declaring the individual house and land transaction income tax for property X, Person A reported tax payable of NTD 900,000 for selling Property X and claimed the same amount as tax deduction, for the purchase of Property Y. NTBT later discovered that Property Y had been leased to a third party, Person B, in 2022, and therefore re-assessed tax deduction (for the said transaction income) to 0. Although Person A claimed that Property Y was not leased, the Bureau’s investigation uncovered the relevant lease contract, along with the rental payment certificate. Furthermore, evidence showed that Person B registered his household residency at Property Y in 2022. Consequently, the original tax deducted was recovered.
NTBT would like to remind individuals who wish to apply for tax deductions or refunds on the purchase of residential-purpose house and land in regard to the sale of previously owned house and land of the same purpose, they or their spouses and minor children must have their household registered at both the “sold” and “repurchased” houses, and must demonstrate the houses are not used for leasing, business operations, or professional practices. To protect their interests and rights, the purchased house and land should not be repurposed or transferred within five years after the transaction. Otherwise, the tax collection authority will recover the originally deducted or refunded tax amount.
(Contact person: Section Chief Ms. Chien from the Department of Legal Affairs; Telephone: 2311-3711 Ext. 2031)
Reference URL：https://yzcpa.com.tw/en/backstage/gerent/index.php