Instructions for declaring personal income tax from real estate transfer of individuals: how to calculate tax, time of tax calculation, documents, deadline for submission, how to prepare personal income tax declaration – With specific examples.
I. Legal basis
- Decree No. 125/2020/ND-CP;
- Circular No. 111/2013/TT-BTC;
- Circular 92/2015/TT-BTC;
- Circular No. 80/2021/TT-BTC;
- Penal Code No. 100/2015/QH13;
- Amended and supplemented Law No. 12/2017/QH14.
II. How to declare personal income tax from real estate transfer of individuals
1. How to calculate personal income tax from real estate transfer activities of individuals
Personal income tax on income from real estate transfer is determined by the formula:
| Personal income tax payable | = | Transfer price | x | Tax rate (2%) |
In which: Transfer price is the price recorded on the transfer contract at the time of real estate transfer (land use rights without construction works on land, land use rights attached to construction works on land, land lease rights, water surface tax).
Note:
In case the price is not stated on the contract or the transfer price is lower than the price prescribed by the Provincial People’s Committee, the transfer price is the price prescribed by the Provincial People’s Committee at the time of real estate transfer.
2. Time to calculate personal income tax from real estate transfer activities of individuals
- In case there is no agreement that the buyer pays tax on behalf of the seller, the time for calculating personal income tax is the time when the real estate transfer contract takes effect;
- In case there is an agreement that the buyer pays tax on behalf of the seller, the time for calculating personal income tax is the time when the buyer completes the procedures for registering ownership and right to use real estate;
- In case an individual receives a transfer of real estate that is a future housing or land use rights associated with a future construction project, the time for calculating tax is the time the individual submits the tax declaration to the tax authority.
3. Personal income tax declaration from real estate transfer activities of individuals
- Personal income tax declaration form No. 03/BDS-TNCN according to Circular No. 80/2021/TT-BTC;
- A copy of the certificate of land use rights, house ownership rights or ownership of constructions on the land and the individual transferring must sign a commitment to take responsibility on that copy;
- Real estate transfer contract. In case of real estate authorization, attach real estate authorization contract (notarized);
- Documents proving capital contribution activities according to the provisions of law (in case of real estate transfer by individuals contributing capital to enterprises but temporarily not calculating personal income tax);
- In case of exemption from personal income tax when transferring, it must be accompanied by documents proving that the individual is eligible for tax exemption (transfer between spouses, biological parents and biological children, adoptive parents and adopted children…; transfer of an individual with only one house and one land use right).
>> FREE DOWNLOAD: Form No. 03/BDS-TNCN.
4. Place to submit personal income tax declaration from real estate transfer activities of individuals
Pursuant to Clause 5, Article 21 of Circular No. 92/2015/TT-BTC dated June 15, 2015 of the Ministry of Finance, the place to submit personal income tax declaration dossiers from real estate transfer activities is stipulated as follows:
- In case of submitting tax declaration dossiers together with real estate transfer dossiers at the one-stop-shop department of the People’s Committee at district level (county, town, city under province) or the Tax Department where the real estate is transferred;
- In case an individual transfers a house, apartment, or future construction project, he/she must declare and pay personal income tax at the Tax Department where the future construction project is located.
5. Deadline for submitting personal income tax declaration from real estate transfer activities of individuals
No later than the 10th day from the date of tax liability (from the effective date of the transfer contract)
6. Deadline for paying personal income tax from real estate transfer activities of individuals
The deadline for paying personal income tax is the deadline stated on the tax payment notice of the tax authority.
7. Instructions on how to make a personal income tax declaration 03/BDS-TNCN (TT80/2021/TT-BTC)
7.1. Important information to fill out personal income tax declaration form 03/BDS-TNCN includes:
- Information of the transferor;
- Information of the transferee;
- Type of real estate transferred;
- Characteristics of the real estate transferred;
- Income, real estate transfer price.
7.2. How to make personal income tax declaration form 03/BDS-TNCN:
- Sections [4] – [12]: Print the full name of the transferor, fill in the tax code and ID card information for Vietnamese individuals/passport information for foreign individuals, fill in the address and contact information of the transferor;
- Section [13] – [17]: Fill in information of the organization or individual declaring on behalf of the other person, otherwise leave blank;
- Section [20] – [29]: Fill in the tax agent’s information in case of tax declaration through a tax agent, otherwise leave blank;
- Section [30]: Fill in information on the land use rights certificate, house ownership certificate, etc., including document number, issuing agency, date of issue;
- Section [31]: Fill in information on real estate sale and purchase contracts in case of housing or future construction works, including document number and contract signing date;
- Section [32]: Fill in the notarized transfer contract information including document number, notarization agency, notarization date;
- Section [33] – [35]: Print the full name of the transferee, fill in the tax code and ID card information of the transferee;
- Section [36]: Fill in information about inherited real estate and gifts, if any;
- Section [37] – [40]: Select 1 of 4 types of real estate to transfer;
- Section [41]: Fill in land information in case of land use rights transfer;
- Section [42]: Fill in information about housing and construction works in case of transfer of right to use/ownership of housing and construction works;
- Section [43]: Fill in information about assets attached to land in case of transfer of land use rights with assets attached to land;
- Item [44]: Select the type of income from real estate transfer item [44.1];
- Item [45]: Fill in the transfer price according to the transfer contract;
- Item [46]: Multiply the transfer price by the tax rate of 2%;
- Section [47]: Only fill in tax-exempt income for cases exempted from personal income tax according to regulations in Clause 1, Article 53 of Circular 80/2021/TT-BTC;
- Item [48]: Take tax-free income and multiply it by the tax rate of 2%;
- Item [49]: Take the arising personal income tax [46] minus the exempted personal income tax [48].
7.3. Illustrative example of how to prepare personal income tax declaration form 03/BDS-TNCN
On September 23, 2022, Mr. Nguyen Van A signed a contract to transfer land use rights according to certificate No. 123 issued by Binh Thanh District People’s Committee on January 10, 2010 to Ms. Tran Thi B.
Transfer contract No. 19 notarized at Notary Office fdiinvietnam.com on September 24, 2022. Mr. A is not exempt from personal income tax from real estate transfer.
- Transfer price is 5,000,000,000 VND;
- Personal income tax payable = 5,000,000,000 VND x 2% = 100,000,000 VND.
➜ Prepare personal income tax declaration form 03/BDS-TNCN (TT80/2021/TT-BTC):
III. Some questions about declaring personal income tax from real estate transfer by individuals
1. Will an individual be fined if he/she does not declare and pay personal income tax from the sale of the house?
In case an individual submits a tax declaration more than 10 days late from the effective date of the transfer contract, he/she will be subject to penalties, tax collection, tax assessment, and late payment interest (0.03%/day) according to the Law on Tax Administration and Article 13 of Decree No. 125/2020/ND-CP. However, the penalty for an individual violator is half that of an organization.
2. Can an individual only submit a personal income tax return but not pay personal income tax from real estate transfers?
Individuals who incur personal income tax obligations from real estate transfers must pay in full. Because when carrying out procedures to transfer land use rights to the transferee, the real estate management agency must have proof of personal income tax payment by the transferor.
3. In case of co-owned real estate, how is personal income tax calculated and paid?
In case the real estate is co-owned, the tax liability will be determined according to the real estate ownership ratio of each individual or determined according to the average ratio.
4. If a competent state agency discovers an act of declaring a transfer price lower than the actual price, what will be the penalty?
Depending on the nature and severity of the act of declaring a transfer price on the contract lower than the actual price, administrative sanctions or criminal proceedings will be imposed. Each specific case is stipulated in Article 17 of Decree 125/2020/ND-CP and according to the provisions of the Penal Code No. 12/2017/QH14 dated June 20, 2017 amending and supplementing a number of articles of the Penal Code No. 100/2015/QH13 dated November 27, 2015.