Tips to Reduce Taxes When Selling Your House Within 5 Years – Complete Guide for Tax Savings

Did you sell your house last year? Be sure to include it in your May income tax return! In addition, to combat short-term real estate speculation, the government will implement a unified real estate tax and land 2.0 starting from July 2021. As long as the house is sold by- within 5 years of purchase, there will be a heavy tax of 35~45. % will be forced. However, people who are forced to sell their homes can use a lower tax rate of 20% if they meet eight conditions and related requirements, including unemployment, job transfer, retirement his resignation involuntarily, etc.

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If the house is sold less than 5 years after purchase, the heavy tax of 35-45% is exempted under 8 circumstances. Real estate market diagram / provided by real estate agency

The consolidated real estate income tax was revised on July 1, 2021. The resale tax rate within 2 years of the transaction is 45%; the resale rate within 2 to 5 years is 35%. apply a tax rate lower than 20%.

The sale of a house due to a job transfer must meet two requirements to be exempt from heavy taxes

As people may be forced to sell their properties due to work assignments, the Ministry of Finance said that there are individuals or their spouses who are buying houses in their workplace.transmissionorComply with involuntary resignation as prescribed by laws and regulationswho have to leave their original place of work and sell real estate held for less than 5 years, they can pay real estate and land income tax ​​​​​​at a lower tax rate of 20% .

The Ministry of Finance and the Northern Territory Tax Bureau previously reminded people that due to factors such as transfers and involuntary retirement, they must sell properties held for less than 5 years.2 requirements must also be metthe minimum tax rate of 20% applies to the combined real estate and land income tax, including: I or my spouse pay real estate income tax“End home registration” and “stay”and“Not for rental, commercial or business use”.

The government is cracking down on real estate speculation, and tax version 2.0 on real estate and land​​​​ will impose a large tax integration of 35 to 45% on those who sell houses within five years for arbitrage. Photo / Ministry of Finance website

Six other situations are also exempt from heavy taxes

In addition to the two situations above, there are six exceptions that may exempt you from heavy taxes.

1. Others cross the border to build a house

2. Implemented according to law

3. Medical expenses must be paid due to a serious illness or accident

4. Obtaining a general protection order to escape from a domestic violence partner

5. Part of the co-owned property was sold by other co-owners without permission

6. Due to the inability to repay the principal and interest of the mortgage loan on the acquired property​​​​

In the above 6 situations, the 20% tax rate can also be applied to real estate and land income tax.

The 20% tax rate is not applicable to those who have not completed household registration.

Additionally, please note that it does not apply if you have not completed home registration. The Ministry of Finance gave an example The bureau paid 20% of the tax rate applicable to the transfer. registration of a home in real estate, and the real estate has been held for more than 2 years but not more than 5 years.

The applicant was dissatisfied and applied for a review, claiming that he was originally living in the house and was transferred to place B due to company policy arrangements. Therefore, the sale of the property should be be taxed at the 20% tax rate applicable to the transfer The bureau decided that neither Mr. A nor his spouse had If you apply for house registration at the property and rent the property without ‘ stay in the building, it does not comply with the provisions of the notification of the Ministry of Finance and may be taxed at a tax rate of 20%, and will be reviewed and rejected.

The Ministry of Finance also reminds you that if a person sells property within the scope of property and land income tax, regardless of the gains or losses, and whether the sale is voluntary or involuntary part, the period of possession and the applicable conditions of the application. real estate should still be determined in detail tax rate, and paying ​​the real estate and land tax within 30 days from the day after the registration date of property transfer to avoid penalties.

Listing fees for pre-sale homes and existing homes are different

Yongqing real estate expert Chen Junhong reminds that not only the sale of existing houses, but also the resale of pre-sale houses must declare and pay real estate tax according to the law. Additionally, when calculating profits, the exact allowances for pre-sale homes are different from those for existing homes. When declaring the real estate and land tax together, the transfer tax can be used to derive the income without any supporting documents.

• The calculation method for deductible expenses for existing house transactions is 3% of the “total selling price of the house”, with an upper limit of NT$300,000;

• The deductible costs for pre-sale houses are calculated as 3% of the “total sale price – total purchase price + payment already made”, with the same upper limit of NT$300,000.

As regards the property and land tax payable on pre-sold houses, it is the same as that for general housing transactions. The maximum tax rate of 45% is levied on the profit income based on the period of ownership.

Chen Junhong said that the combined real estate and land tax imposes a heavy tax on the sale and purchase of houses in the short term. If the owner resells the pre-sold house within 2 years, the tax rate will be income as high as 45. %. Chen Junhong gives an example, if the owner buys a pre-sale house for a total price of 10 million yuan before June 30, 2023, and sells the pre-sale house for a total price of 11 million yuan within two years, and that 1 million yuan is paid for the project, the deductible expenses are 3% of “1 million yuan (total selling price of the house – total purchase price) + 1 million yuan (paid)”, that is 60,000 yuan .Therefore, the amount of real estate and land tax to be paid is 45% of “1 million yuan (total sales price – total purchase price) – 60,000 yuan (deductible expenses)”. that’s 423,000 yuan.

Yongqing House arranges the knowledge of real estate and land tax filing for pre-sale houses and existing houses.

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• Yahoo Finance Special Correspondent Ye Yiru: With more than 20 years of experience in mainstream financial media, from the Web1.0 bubble in 2000 to the Meta Yuanverse Web3.0, he has seen the rise and fall of Taiwan’s large and small business organizations, and has get to know five international financial organizations. crisis We believe that finance is life and that it is everywhere No matter how difficult financial knowledge is, we should explain it in a simple way. Everyone, young and old, should manage money If you don’t manage money, money won’t care about you.