2 cases are ineligible for personal income tax exemption in house trading

Trading among marital relations, bloodlines, nurture

By the Point a, Clause 1, Article 3, Circular No. 111/2013/TT-BTC, Incomes from the transfer of real estate (including houses and construction works to be formed in the future as provided by the law on real estate business) are ineligible for personal income tax exemption. In particulars:

• Between spouses;
• Parents and their children;
• Adoptive parents and their adopted children; 
• Fathers-in-law or mothers-in-law and daughters-in-law or sons-in-law;
• Grandparents and their grandchildren; 
• Or blood siblings.

For real estate which is created by the wife or the husband during their marriage and regarded as their common property, upon divorce, if such real estate is divided according to agreements or court rulings, the income from such property division is exempt from tax.
 

Transferors have a single-house or land-use rights in Vietnam

By Point b, Clause 1, Article 3, Circular No. 111/2013/TT-BTC, incomes from the transfer of houses or rights to use residential land and assets attached to residential land received by individuals who have a single house or land use rights in Vietnam (only residential land are exempted from taxes).

Individuals must satisfy 03 following conditions for personal income tax exemption:

Condition 1: At the time of transfer, they have the right to own a single house or to use a single land lot

At the time of transfer, they have the right to own a single house or to use a single land lot (including land attached to houses or construction works), specifically as follows:

- The right to own houses or use residential land shall be determined based on house ownership certificates or certificates of the right to own houses and other assets attached to land.

- Other individuals sharing the ownership of the house or the right to use the land lot who own another house or have the right to use another land lot are not entitled to tax exemption.

- In case a husband and a wife jointly own a house or jointly hold the right to use a residential land lot, which is their only common property, but the husband or the wife also has another house or residential land lot as his/her personal property, when the house or residential land lot being their common property is transferred, only the person who owns no other houses or residential land lots is entitled to tax exemption; the other who already has his/her own house or residential land lot is not entitled to tax exemption.

Condition 2: Have house or land use rights been possessed for at least 06 months

- Have the house or land use right has been possessed for at least 183 days before they are transferred.

- The time for determining the house ownership or land use right is the date of the certificate of land use right, ownership of the house, and other property on land.

Note: In case the certificate is reissued or replaced under regulations of law land, the time for determine the house ownership or land use right is the date of the certificate of land use right, ownership of house and other property on land before reissuance or replacement.
 

Condition 3. The entire house or residential land lot is transferred

- In case an individual has or shares with others the right to own a single house or use a single residential land lot but only part of such house or residential land lot is transferred, he/she will not be entitled to tax exemption for the transferred part

Responsibility of individuals:

- Individuals having houses or residential land on transfer shall declare the right to own or use a single house or residential land lot and take responsibility for the truthfulness of their declaration.

- Those detected to make untruthful declarations are subject to retrospective tax collection and a fine for violations of tax law.