Taxpayers Shall Pay Attention to the Applicability of Preference Tax Rate for Transactions of Self-use House and Land

National Taxation Bureau of Kaohsiung, Ministry of Finance expressed that individual house and land transactions income tax has been implemented for 6 years since January 1, 2016. The Bureau has recently received inquiries about the applicability of preference tax for self-use residential house and land within the taxation scope of individual house and land transactions income tax.

The Bureau explained that, according to Subparagraph 1 of Paragraph 1 of Article 4-5 and Item 8 of Subparagraph 1 of Paragraph 3 of Article 14-4 of Income Tax Act, self-use house and land transactions income tax are exempt from income tax, if the amount of taxable income is less than NTD4 million. As for the excess part, a preferential tax at the rate of 10% will be charged. The appliable conditions are as follows:

Applicable Conditions		Legal Basis
1	The individual, his (her) spouse, or their minor children have lived in, maintained their household registration at the self-use house, and have owned the house for 6 consecutive years.	Subparagraph 1 of Paragraph 1 of Article 4-5 of Income Tax Act
2	The house and land have never been used for lease, business operation, or professional practice in the last 6 years before its sale.
3	The individual, his (her) spouse, or their minor children have never applied for the preference in the previous 6 years before the sale.

The Bureau further explained with an example: Party A purchased Property A with a total amount of NTD4 million on February 1, 2016; and the total of necessary expenses (deed tax, stamp tax and scrivener fee) was NTD250,000. A then sold the property for NTD10 million on May 1, 2022 and the total of necessary expenses was NTD300,000. Moreover, during A’s possession of the property, the land increased by NTD100,000. From February 2016 to May 2022, A’s household was registered in Property and A had lived in the premise for 6 consecutive years. Moreover, within 6 years prior to the transaction, the property was not leased or provided for business purpose or practice; and, with respect to the house and land transactions income tax, A, A’s spouse and minor never used the preference tax for self-use residential house and land. In this case, the preference tax for self-use residential house and land is applicable to Property and the total of tax payable was NTD135,000 {〔The selling price of NTD10 million – Cost of NTD4.25 million (acquisition cost of NTD4 million + NTD250,000 as the necessary expenses for acquiring the property) – transfer fee of NTD300,000 – NTD100,000 as the increase in the land price - self-use house and property tax exemption of NTD4 million〕×10%}.

The Bureau reminded all taxpayers that, to protect the self-use demand and avoid speculation, the individual, his (her) spouse, or their minor children shall comply with the aforesaid conditions when selling self-use house and property in order to use the preference tax for self-use residential house and land. Citizens who have any questions are welcome to dial the free service hotline 0800-000-321 for more information.

Contact: Ms. Li, Revenue officer of the Second Examination Division

TEL: 07-7256600 ext.7257