Tax Expenses Due on the Sale & Transfer of Immovable Property

The transfer of an immovable property, including the purchase of land, land with building or a condominium unit owned by a natural person, including an alien juristic person, is subject to the following costs and taxes.

1. Transfer Fee

The transfer fee is usually collected at the rate of 2% of the appraised value of property by the Land Department. The appraised value may often be much less than the actual amount paid. This is often split 50:50 between buyer and seller.

2. Stamp Duty

Stamp duty shall be collected at the rate of 0.5% of the actual purchase price or the appraised value of the Land Department, whichever is the higher.

3. Withholding Tax

Withholding tax is a tax payable by the seller of an immovable property to the Land Department, immediately at the occurrence of purchase. The collection of withholding tax can be divided into 2 cases as follows:

• 1) Withholding Personal Income Tax: The computation shall be based on the appraised value of the Land Department.
• 2) Withholding Corporate Income Tax: The computation shall be based on the appraised value or the actual purchase price, whichever is the higher.

The rate used is currently 1%. This does not apply if the land or property is sold by way of shares in a limited company, where ownership has effectively remained the same.

4. Specific Business Tax

Specific business tax is collected from the sale of immovable property for trade or profit purposes at the rate of 3.3% of the appraised value or the actual purchase price, whichever is the higher.

Sale of immovable property subject to specific business tax:

• The sale of land subdivision which is registered under the regulations regarding the land subdivision.
• The sale of a condominium unit which is registered under the Condominium Act.
• The sale of a building, which is constructed for sale or indicated as constructed for sale, including the sale of land where the building, e.g. shop houses, commercial building, house or townhouse is situated, whether or not the sales are made separately.
• The sale of the immovable property that does not fall within the descriptions of 1, 2 or 3 but is the land plot in the same manner as statutory land subdivision, the sale of a condominium or the sale of divided building, or the sale of the property without being divided, but clearly could be divided after sale.
• The sale of immovable property, which is used for conducting business, in order to move to a new location, except for the sale of land used for agriculture but not including on such land, e.g. the sale of a field for growing rice, crop or plant.
• The sale of the immovable property that does not fall within the descriptions above, but is made within 5 years from the date of acquisition of such immovable property.