The calculation of who pays gift tax is very different between land tax increase and deed tax – Free Finance

The Taipei National Taxation Bureau stated that the calculation of gift tax is very different depending on who pays the land tax and deed tax when donating real estate. (Photo by reporter Zheng Qifang)

[Reporter Zheng Qifang/Taipei Report]The Taipei National Taxation Bureau of the Ministry of Finance stated that Article 19 of the Implementation Rules of the “Legitimate Tax Law” stipulates that the deed tax or land value-added tax paid for the transfer of real estate gifts can be deducted from the total amount of the gift; however, it is worth noting What is interesting is that the calculation of gift tax is very different depending on who pays the land tax and deed tax. It is more cost-effective for the donee to pay it.

The Taipei National Taxation Bureau explains that the tax payer for the land increment tax paid for donated land and the deed tax paid for donated houses is the donee. If the donee pays it himself, it can be deducted from the total amount of the gift, and a smaller gift tax will be paid. If the donor contributes funds to pay on his behalf, according to the provisions of Article 5, Paragraph 1 of the “Legitimate Tax” Law, in the case of a gift, it should be calculated into the total amount of the gift, and then deducted from the total amount of the gift in accordance with the regulations. Compared with the amount paid by the donee, The donor must pay more gift tax.

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For example, mother A donated a house to her daughter Y in 2023. The current value of the land announcement and the current assessed value of the house total 12 million yuan, that is, the total gift is 12 million yuan. Mr. Y should pay 2 million yuan in land tax and deed tax. 120,000 yuan. If the land tax and deed tax are paid by Mr. Yi, the total amount of the gift can be deducted by 2.12 million yuan, and the gift tax amount will be 744,000 yuan[(12 million – tax exemption amount of 2.44 million – 2.12 million) × 10%].

In comparison, if the land tax increase and the deed tax are paid by Mr. A, 2.12 million yuan should be included in the total gift amount and then deducted in the same amount, the amount of gift tax payable will increase to 956,000 yuan {〔(12 million + 2.12 million) – 2.44 million – 2.12 million]×10%}. Therefore, the Taipei National Taxation Bureau reminds parents who plan to gift real estate to their children that they should also pay attention to who will pay the land tax and deed tax.

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