VAT is a circulation tax levied based on the value added generated by the goods (including taxable services) during the transfer process as the basis for tax calculation. So what is land value-added tax ? How to calculate? How to hand over? What is the tax rate? Do you have to pay for second-hand commercial housing? Let’s learn about it together below.
What is land value-added tax?
Land value-added tax is a tax that is levied in accordance with the prescribed tax rate based on the value-added amount obtained by taxpayers to transfer state-owned land use rights, buildings and their attachments on the ground (hereinafter referred to as the transfer of real estate). It does not include the act of transferring real estate free of charge through inheritance and gift.
How to calculate land value-added tax?
1. The formula for calculating land value-added tax is: the land value-added tax should be paid = value-added amount × tax rate
The "value-added amount" in the formula is the balance after the income obtained by the taxpayer transferring real estate minus the deduction amount of the item. The income obtained by taxpayers from transferring real estate, including monetary income, in-kind income and other income.
2. Deduction items for calculating the value-added amount:
(1) The amount paid for obtaining the land use right;
(2) The cost and expenses of developing the land;
(3) The cost and expenses of new houses and supporting facilities, or the appraisal price of old houses and buildings;
(4) Taxes related to the transfer of real estate;
(5) Other deduction items stipulated by the Ministry of Finance.
How to pay land value-added tax?
1. In the case of non-real estate development projects, if an enterprise transfers land or factory buildings, the land value-added tax will be implemented in a relatively simple way. If the transfer income is significantly low, the tax authorities will make adjustments based on market prices.
2. In terms of deduction projects, if you are transferring houses and land together, there are two options:
(1) Choose to evaluate the reset price of the factory, and then add the cost of obtaining the land in the factory, plus the taxes related to the transfer, and the sum of the three parts is used as the deduction project.
deduction item = appraised price of houses and buildings + amount paid for land use rights + taxes paid during the transfer process
(2) If your factory is purchased, provide the invoice for purchase, and the amount of the house is based on the invoice amount. At the same time, based on the invoice amount, based on the invoice amount, the invoice amount can be added 5% per year based on the time from invoice issuance to transfer, and then the tax related to the transfer is added (Note: In this case, the land cost cannot be added, because the amount of the house invoice contains the land price by default), and the sum of the two parts is used as the deduction item.
deduction item = invoice amount × (1+holding year × 5%) + taxes related to transfer of real estate
(3) If you simply transfer the land, if you have already carried out development and construction:
deduction item = land price paid when obtaining the land use right, relevant fees paid + tax paid in the transfer process + cost required for developing the land × (1+20%)
What is the land value-added tax rate?
At present, there are three ways to collect the land value-added tax rate:
1. If you can provide a home purchase invoice, the amount deducted by the item will include the amount contained in the valid invoice when obtaining the real estate, the amount of 5% added per year from the purchase year to the transfer year based on the amount contained in the invoice.
2. For house and building price evaluation reports that cannot be provided but can provide real estate appraisal agencies with the real estate appraisal invoices assessed in accordance with the reset cost appraisal method, the amount of the deduction includes the amount proof of the amount paid when obtaining the state-owned land use right, the house and building prices assessed by the intermediary agency (excluding the land appraisal value) and other fees.
3. For those who cannot provide a certificate of purchase invoice and cannot provide a house and building price assessment report, the tax authorities may adopt an approved collection method and impose land value-added tax at 1% of the full amount of the second-hand house transaction price. Experts believe that since land value-added tax adopts a progressive deduction method and is more complicated when calculating specific deduction items, this tax may choose to collect land value-added tax at 1% of the full amount of the transaction price of the second-hand house transferred during the market implementation process.
Do you also have to pay land value-added tax for second-hand commercial housing?
Not all second-hand commercial housing needs to pay land value-added tax. Second-hand commercial housing is divided into ordinary residential housing and not ordinary residential housing. The specific payment depends on the policy. According to the policy provisions of land value-added tax: For residents who transfer non-ordinary houses, those who have lived for more than five years will be exempted from land value-added tax. At the same time, for residents who transfer non-ordinary houses, those who have lived for more than five years will be exempted from land value-added tax. Second-hand commercial housing below
requires land value-added tax:
1. If you have lived for three years and less than five years, the land value-added tax will be levied at half the price;
2. If you have lived for three years, the land value-added tax will be levied according to regulations.
In addition, according to the policy regulations, affordable housing is affordable housing and is regarded as ordinary housing, so no land value-added tax is required.
