Part 1 Calculating the land value increment tax
I. Calculating the total land increments value
It entails taking the current value declared in the land property transfer proceedings at the time of deeds transfer, minus the current value declared in the previous transfer (or an originally designated land value), times the current consumer price index, in which any land improvement cost shall be subtracted from.
1. Declaring the current transfer value: The current value declared in the transfer proceedings may be taken from either one of the following two cost factors.
(1)Total contract price: The cost as it appeared in the property closing contract between the buyer and seller, referring to the actual property closing cost.
(2)Present land value: The present land value per square meter released by government land administration authorities on January 1 once a year times the acreage of property to be transferred. Nevertheless, if the total contract price assessed falls below the present land value, the property can either be acquired by government authorities as per the declared total contract price, or have a land value increment tax levied as per the present land value.
2. The present value declared in the previous transfer, or an original decreed land value:
(1)It entails either the present value declared with tax authorities in the previous transfer of a land, or based on the original decreed value assessed by government authorities if the land has never been transferred.
(2)The adaptation of either the present value declared in the previous transfer or the original decreed value subject to adjustment based on the latest consumer price index for the Taiwan region.
3. Cost of land improvements consists of the following categories:
(1) Cost of land improvements.
(2) Development surcharge already paid.
(3) Cost of land rezoning.
(4) Published present value on a fixed percentage of land donated at no charge from land used on public facilities, because of the change of land use.
II. Formula for calculating theamount of Land Value Incremental Tax payable
1. Tax rate on regular land
The tax rates on regular land under the land value increment tax come in 3 classes.
Calculation Formula for Land Value Increment Tax to be levied | Classification | Tax rate |
| Class 1 | Amount of tax to be levied =Total amount of Land Value Increment 【less than 100% of the originally set land price or the reported value of last transfer (adjusted per general consumer price indices of Taiwan Area)】× tax rate (20%) |
| Class 2 | Amount of tax to be levied =Total amount of Land Value Increment 【more than 100% but less than 200% of the originally set land price or the reported value of last transfer (adjusted per general consumer price indices of Taiwan Area)】×【Tax rate (30%) –[ (30% - 20%) × reduction rate ]】– accumulated difference 【 The originally set land price or former transfer value（ adjusted per general consumer price indices of Taiwan Area） × A】.
Note: Owner held land less than 20 years, no reduction rate, A=0.10.
Owner held Land longer than 20 years, reduction rate is 20% and A=0.08
Owner held land longer than 30 years, reduction rate is 30% and A=0.07
Owner held land longer than 40 years, reduction rate is 40% and A=0.06 |
| Class 3 | Amount of tax to be levied =Total amount of Land Value Increment 【more than 200% of the originally set land price or the reported value of last transfer (adjusted per general consumer price indices of Taiwan Area)】 × 【Tax rate (40%) –[ (40% - 20%) × reduction rate] 】– accumulated difference 【 The originally set land price or former transfer value（ adjusted per general consumer price indices of Taiwan Area ）× B】
Note: Owner held land less than 20 years, no reduction rate, B=0.30.
Owner held land longer than 20 years, reduction rate is 20% and B=0.24
Owner held land longer than 30 years, reduction rate is 30% and B=0.21
Owner held land longer than 40 years, reduction rate is 40% and B=0.18 |
Fast Calculation Table for Revised Tax Rate | Classification | Tax rate |
Class 1 | a×20% | a×20% | a×20% | a×20% |
Class 2 | a×30%-b×10% | a×28%-b×8% | a×27%-b×7% | a×26%-b×6% |
Class 3 | a×40%-b×30% | a×36%-b×24% | a×34%-b×21% | a×32%-b×18% |
Remarks:
a= Total amount of Land Value Increment
b= Originally set land price or the reported value of last transfer (adjusted per consumer price index. )
* Note
Reduction tax rate ＝ Original tax rate －【(Original tax rate – Min. tax rate) × reduction ratio】
1. If held more than 20 years, reduction ratio is 20%
Class 2 tax rate: 28%＝30%－【(30%-20%) × 20%】 and the original accumulative
difference 10% reduced to be 8% at the same time
Class 3 tax rate: 36%=40%-【(40%-20%) × 20%】 and the original accumulative
difference 30% reduced to be 24% at the same time
2. If held more than 30 years, reduction ratio is 30%
Class 2 tax rate: 27%=30%-【(30%-20%) × 30%】 and the original accumulative
difference 10% reduced to be 7% at the same time
Class 3 tax rate: 34%=40%-【(40%-20%) × 30%】 and the original accumulative
difference 30% reduced to be 21% at the same time
3. If held more than 40 years, reduction ratio is 40%
Class 2 tax rate: 26%=30%-【(30%-20%) × 40%】 and the original accumulative
difference 10% reduced to be 6% at the same time
Class 3 tax rate: 32%=40%-【(40%-20%) × 40%】 and the original accumulative
difference 30% reduced to be 18% at the same time
III. Filing Deadline
At the time a land ownership is to be transferred, the buyer and seller are required to declare a present land value in a formal transfer proceedings with local land administration authorities no later than 30 days from the date of contract. A late filing will be subject to a land value increment tax assessed by government land authorities based on the present published land value on the date the proceeding is received at the land administration authorities.
Part 2 Tax-saving tips on land value increment tax
I. Privileged Rate for self-use residential land | Classification | Tax rate |
| Criteria of eligibility | - The parcel of land in question has not been rented or used for business purposes in the last full year before transfer.
- The land property is currently registered under the name of title owner him/herself or his/her spouse or lineal descendant or ascendant or entitled to member of the house maintenance is living on the land with household registration duly entered.
- Urban land does not exceed three acres and non-urban land does not exceed seven acres.
- The title owner may apply for and enjoy this privileged rate of land value increment tax only once in his/her lifetime.
- The sale of self-use residential land will not qualify for the above-mentioned privileged rate if the attached building has been completed for less than one year and its value does not exceed 10%of the announced present value of the land.
|
| Mandated documentation | - Photocopy of household registration.
- Proof of document on building improvements.
|
| Filing deadline | - At the time of declaration made for land property transfer in general cases of property closings.
- On/before the due date indicated in the tax payment notice, if no specific deadline is specified in the current land value declaration from.
- Within a 30-day period starting from the following day a land administration notice has been received on a singular declaration or one that does not require declaring the current value for land transfer.
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| Where to file | At the local tax collection agency where the land is located. |
| Tax savings | Be eligible to the privileged rate of 10% tax rate |
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