Previously, the ministry of finance issued a bulletin on personal access to income-related items subject to personal income tax (hereinafter referred to as the proclamation) in the official network, referring to “the personal income tax calculated on the basis of the `fortuitous income ' item, if the owner of the home grants to another person the property rights free of charge
In several of these cases, personal income tax will not be levied, for example if the child inherits the property in accordance with the law or if the parents grant it to the child, the parties are not required to pay personal income tax. Inheritance of property has been a subject of concern to many, and there are three main ways for children to acquire property from their parents: free gift, legal inheritance and sale. For the current period, journalists will take as an example a 100 square metre set of houses valued at $2 million, comparing the differences between the three types of transfer to see which is the most cost-effective。
(note: there may be a slight difference between municipalities, the amount being the actual one
Succession
Tax exemption
Up to 0. 8 per cent for notary fees
If the house is a direct inheritance, the deed tax, the value added tax and their surcharges and individual taxes are all exempt, and the citizen is required to pay only a personal notary fee. How much does it cost? Journalists were informed by the guangdong department of justice that, when the beneficiary benefits less than $500,000, the amount received is not more than 0. 8 per cent; the amount of more than $500,000 to $2 million, the amount of more than 0. 3 per cent; the amount of more than $2 million to $5 million, the amount of more than 0. 1 per cent; the amount of more than $5 million to $10 million, the amount of less than 0. 07 per cent; and the amount of more than $10 million, the amount of less than 0. 065 per cent. If it can be proved that it was a unilateral grant or grant, the fees charged will be halved。
In the case of a $2 million house, the beneficiary would have paid only $8,500 in notary fees. It should be noted that inheritance of property is divided into two forms: intestate succession and legal succession. In the case of legal succession, it is only necessary to produce the death certificate and the relationship between the heir and the heir; in the case of succession, it is also necessary to submit the original of the will of the heir (which must be notarized). Thus, if the grantee is required to certify the will, maintenance agreement, etc., a notary fee of at least $210 (or more) is payable。
Grants
The resale is 20% tax unless it's the only house
Is it more cost-effective to give? In the case of houses valued at $2 million, for example, if the two parties had taken the house in the form of a gift, the grantee would still be required to pay 3 per cent of the total price of the house (based on the total price assessed); in addition, each of the parties would have to pay 0. 05 per cent of the stamp duty, and the notary fee would still be unavoidable. As a result, the total costs add up to approximately $70,000 in taxes and fees for $2 million。
Moreover, there is a legacy of this situation. According to the general state tax administration, 20 per cent of the personal income tax is payable on the basis of the “transfer proceeds of property” project for the purpose of re-selling the property granted. If the $2 million house is sold at the original price, the personal income tax alone is paid at $400,000。
However, according to the circular of the ministry of finance, the state tax administration and the ministry of construction on issues relating to the collection of personal income tax on income from personal housing (fiscal word [1999]) no. 278) exempts persons from personal income tax if they have transferred their own housing for more than five years and are the sole household owner. According to the circular of the state tax administration on tax administration in respect of the transfer of houses by individuals, the term “sole dwelling of the family” means that the taxpayer within the same province, autonomous region and municipality directly under the central government owns only one dwelling (with spouses)。
Sale
Five years and only tens of thousands
Therefore, if the parents are alive and want to give the house to the children or other immediate family members, it would be more cost-effective to choose the trade than the gift. In general, the taxes and fees arising from a housing transaction are assessed on the basis of whether the property certificate is two years old, five years old and only property。
In summary, however, buyers are required to pay taxes of 90 square metres and the following: 1 per cent for the first house purchase assessment, not 2 per cent for the first time; stamp duty: 0. 05 per cent of the house price; transaction fee: $3/m2; surveying fee: $1. 36/m2; registration fees for tenure and evidentiary fees: the general situation is within $200. (the rates may vary slightly from city to city)
Vendors are subject to taxes: stamp duty: 0. 05 per cent of the house price; transaction fee: 3 yuan per square metre; turnover tax: 5. 56 per cent of the full amount (the ordinary property is deductible for up to 2 years); personal income tax: 1 per cent of the house price (the only ordinary house is deductible for up to 5 years)。
Thus, if the parents sell a house worth 2 million yuan and 100 square metres to the child, assuming that the house has reached the end of five years and is the only one, the tax for the child to buy the house will be approximately $20,000, and the parents, as sellers, will only have to pay about a few thousand yuan, plus less than 30,000 yuan, which is far cheaper than the cost of the gift。
Thus, all three types of transfer are considered to be the most cost-effective, but the requirements for meeting the conditions of succession are higher and both the grantees and the grantees must have a legal inheritance relationship or a legal heir to the will. In contrast, gifts, although exempted from personal income tax, are not more cost-effective than trade transactions because of residual problems。
Know-the-d
There are a few situations in which a tax can be waived
According to the proclamation, there are a number of circumstances in which personal income tax may be waived: first, the owner of the home gives property rights free of charge to his spouse, parents, children, grandparents, ... Grandparents, grandchildren, grandchildren, siblings; second, the owner of the home gives property rights free of charge to a dependant or a dependant with whom he has a direct maintenance or maintenance obligation; and third, the legal heir, will heir or bequest of the owner of the home property rights dies; and third, the legal heir, heir or bequest to the home property rights。
In fact, as early as 2009, these cases were exempt from taxes. It is now clear again that the “other income” project was eliminated following the 2018 tax changes and that the relevant documentation also needs to be adjusted. Some of the items that were originally taxed on “other income” are taxed on “fortuitous income” and the tax rate remains unchanged at 20 per cent。
