In recent days, the ministry of finance and the general tax administration have issued an announcement that residents who buy new housing will be entitled to tax reimbursement benefits if they meet the conditions. What are the conditions that need to be met in order to benefit from a “tax refund” benefit? How is the tax refund calculated? This was interpreted in a letter from the general tax administration。
In support of the need for individual replacement housing, according to the proclamation of the general tax administration of the ministry of finance on individual income tax policies in support of repurchase of housing (no. 30 of 2022), the general tax administration administration has issued the proclamation of the general state tax administration on personal income tax policies in support of repurchase of housing in respect of administrative matters. It is read as follows:
I. When will taxpayers benefit from a tax refund policy
Between 1 october 2022 and 31 december 2023, taxpayers who sell their own homes and repurchase them in the market within one year of the sale of the current house are reimbursed the personal income tax they have paid for selling the existing house。
Example 1: the taxpayer sold a housing unit in december 2022, and in july 2023 repurchased a housing unit in the same city. Since the sale and purchase of a dwelling took place between 1 october 2022 and 31 december 2023, the policy time frame was met。
How is the amount of tax refund paid by taxpayers calculated
During the period from 1 october 2022 to 31 december 2023, taxpayers eligible for tax refunds refunded the full amount of the personal income tax paid to them when the amount of their new home is greater or equal to the amount of the transfer of the current house; and when the amount of their new home is smaller than the amount of the transfer of the current house, the personal income tax paid to the current dwelling is refunded in proportion to the amount of the transfer of the current house. The formula is:
If the amount of the new housing purchase is greater than or equal to the amount of the current housing transfer, the amount of the tax refund = personal income tax paid at the time of transfer of the existing housing
2. If the amount of the new housing purchase is less than the amount of the current housing transfer, the amount of the tax refund = (the amount of the new home purchased is the amount of the current housing transfer) multiplied by the amount of personal income tax paid at the time of the transfer。
Of these, vat is not included in the amount of the transfer of the original dwelling or in the amount of the new home purchased。
Example 2: in december 2022, yang sold a house for the transfer of 2. 4 million yuan and paid personal income tax of 40,000 yuan. In may 2023, it repurchased a housing unit in the same city at a new cost of $3 million. It is assumed that yang fulfils the other conditions of the individual income tax policy for the purchase of new housing, and since the amount of the new home purchased is greater than the amount of the transfer of the current home, the amount of the tax refund that young may apply is 40,000 yuan for personal income tax paid at the time of the transfer of the current home. If yang buys new housing for 1. 5 million yuan, he can apply for a refund of 25,000 yuan (150 ÷2. 4 x 40,000 yuan). (assuming all value added tax (vat) prices above)
3. How should taxpayers calculate the amount of their tax refund if they sell housing owned by multiple persons
For the sale of housing owned jointly by more than one person or new home purchased jointly by more than one person, the amount of the current transfer of the taxpayer's home or the amount of the new home purchased shall be determined in accordance with the taxpayer's share of the property。
Example 3: lee and pony jointly own a housing unit, each accounting for 50 per cent of the home ownership. In january 2023, two persons transferred the house at a price of $2 million, each paying $20,000 in personal income tax. In may of the same year, li repurchased a housing unit in the same city at a cost of $1. 5 million, and when he applied for a tax refund, his current housing transfer amounted to $1 million (200 x 50 per cent = 100) and his new home was bought at $1. 5 million, the amount of which was refunded = personal income tax paid at the time of the transfer = $20,000。
In july of the same year, ponys and others jointly purchased a housing unit in the same city at a cost of $2 million, which accounted for 40 per cent of the property. Upon applying for reimbursement of tax, the amount of the current housing transfer is 1 million yuan (200 x 50 per cent = 100) and the amount of the new housing purchase is 800,000 yuan (200 x 40 per cent = 80), and the amount of the refund = (the amount of the new purchase = the amount of the current housing transfer) = 80/100 x 2 = 16,000 yuan. (assuming all value added tax (vat) prices above)
Iv. How can the timing of the sale and repurchase of housing be determined
The time of sale of an existing house is determined by the time the individual income tax is paid at the time the taxpayer sells the house. If the new home is second-hand, the time of purchase of the house is determined by the time the taxpayer has taxed or registered in the real estate certificate. The tax authorities pre-fill the above-mentioned tax-related information for the taxpayer, who can check the time indicated on the tax clearance certificate obtained at the time of the tax payment. In the case of a new home, the time of purchase is based on the time of filing a contract for a transaction in the urban-rural construction sector, which the taxpayer may fill out on the basis of a contract for a transaction。
Where should taxpayers eligible for policy benefits file an application for tax refund?
The taxpayer is entitled to a personal income tax refund policy for the purchase of housing by the resident. The tax refund must be applied to the competent tax authority for the collection of personal income tax on the transfer of current housing, i. E. The tax authority in which the taxpayer pays the personal income tax when selling the house. The tax authorities operate a system of flats for the registration of real estate and, in general, taxpayers are required to pay personal income tax on the transfer of existing housing at places such as the local government service hall or the real estate trading hall and, therefore, to file an application for tax refund at the government service hall or the real estate trading hall, as prescribed by the local tax authorities, if otherwise provided。
What is the material to be provided by taxpayers to apply for personal income tax refunds from residents for replacement housing
Taxpayers apply for a personal income tax refund for the purchase of a new dwelling. In addition to submitting to the competent tax authorities the application form for a personal income tax refund for the purchase of a new dwelling, they need to provide the following information: (i) identity documents for the taxpayer; (ii) contracts for the sale of a house in which the dwelling is in existence; (iii) contracts for the sale of a house, certificates of real estate rights and copies thereof for the purchase of a new house as a second-hand house; and (iv) contracts for the transaction of a house and copies thereof for the filing (on-line) by the housing department for the purchase of a new home。
What services do tax authorities provide to facilitate taxpayers' access to tax policies
To facilitate taxpayers ' access to tax policy, the tax authorities have launched a series of service initiatives. The first is to streamline the submission of information and provide pre-filling services. On the basis of the tax-execution information on the sale of existing and newly purchased dwellings, the provision of pre-filling services to taxpayers on application forms, the information to be carried by the taxpayer in processing tax refunds, mainly for the purpose of checking the information on the application forms, the tax authorities retain only copies of the certificates of real estate rights for the new second-hand homes or copies of the contracts for the transaction of houses for the new houses. Second, tax refunds are automatically calculated on the basis of information prefilled by the system, reported and confirmed by taxpayers. Third, advocacy and training are provided through multiple channels and methods to alert and assist eligible taxpayers to apply for tax refunds and to benefit from tax policies in a timely manner。
8. What should be done to the tax refunds already received when the individual income tax policy for the purchase of housing by the taxpayer is followed by the cancellation of the transaction contract
If the taxpayer is no longer eligible for the reimbursement policy due to the cancellation, cancellation or invalidity of the contract for the transaction of the new home, the tax refund shall be paid to the competent tax authorities on its own initiative within 15 days of the day following the termination, cancellation or invalidity of the contract; if the taxpayer is late in paying the refund, the tax authorities shall, in accordance with the law, pay the arrears. The tax authorities will strengthen the administration of tax reimbursement clearance and the recovery of taxes upon cancellation of contracts through the sharing of relevant information with the housing and urban-rural construction sectors。
What should taxpayers pay attention to when applying for tax refunds
The individual income tax policy, which supports the purchase of new housing by residents, is designed to encourage residents to buy new housing and improve living conditions. Taxpayers are required by law to submit their applications in accordance with the requirements of the law, to fill out and check the application forms carefully, and to be responsible for the authenticity, reliability and integrity of the content and accompanying information. The tax authorities shall apply the relevant provisions of the law of the people's republic of china on the administration of the collection of taxes and its implementing regulations to cases where false information is provided and information is fraudulently obtained。
