When calculating the amount of income derived from the sale of a house and land acquired after January 1, 2016, individuals shall deduct the original cost and all necessary expenses. Expenses incurred during the possession of the house and land, or expenses not directly related to the transaction, shall not be listed as transaction expenses and deducted from the income amount.

The National Taxation Bureau of Kaohsiung, Ministry of Finance, expressed that, according to Paragraph 1 of Article 14-4 of the Income Tax Act, “Income or losses derived from transactions of house and land incurred by an individual..., where the house and land were originally acquired at a price, the amount of the income shall be the transaction price after deduction of the original cost and all expenses necessary for acquisition, improvement, and ownership transfer of that house and land...” However, expenses such as house tax, land value tax, management fees, cleaning fees, and loan interest from financial institutions shall not be deducted from the transaction income or loss.

The Bureau provides the following example: Ms. Wang acquired a property in January 2021 and sold it in September 2024. Since the property was held for more than 2 years but less than 5 years, the house and land transaction income tax will be levied at 35%. The declared transaction price was NTD 12,000,000, the original acquisition cost was NTD 8,000,000, the necessary expenses were NTD 700,000, and the deductible ownership transfer expense was NTD 300,000, resulting in an income amount of NTD 3,000,000 （= NTD 12,000,000 - NTD 8,000,000 - NTD 700,000 - NTD 300,000）. However, during the investigation, the Bureau discovered that Ms. Wang had mistakenly declared the house taxes incurred from 2021 to 2024 （NTD 60,000） and loan interest from financial institutions （NTD 40,000） as necessary expenses related to the transaction of the house and land. The Bureau therefore removed these expenses and recalculated the income amount, which was NTD 3,100,000, and charged an additional tax amount of NTD 35,000 （NTD 100,000 x 35%）.

The Bureau would like to remind individuals not to deduct house tax, land value tax, management fees, cleaning fees, and loan interest from financial institutions incurred after acquiring ownership of the house and land from the transaction. If there are further questions, taxpayers are welcome to dial the free service hotline 0800-000-321 for more information or go to the Bureau’s website （https://www.ntbk.gov.tw） to make an inquiry online through the national tax smart customer service “National Tax Assistant”.

Provided by: First Individual Income Tax Section
Contact person：Mr. Feng. 　Phone number: （07）7256600 ext. 7270
Contributor：Ms. Lee. 　　　 Phone number: （07）7256600 ext. 7222