House & Land Capital Gains Tax (Individuals, Taiwan) — Key Points & Formulas
Covers the differences between System 1.0 (from 2016) and System 2.0 (from July 2021), applicable tax rates, self-use incentives, formulas, and simple examples.
1) Policy Timeline
- From 2016-01-01 (System 1.0): Sales of house/land acquired on or after 2016 are taxed under the integrated “house & land” regime. Assets acquired before 2016 generally follow the older separated regime.
- From 2021-07-01 (System 2.0): Expanded scope to include pre-sale homes, house-use rights, certain indirect offshore transfers, etc., and strengthened short-term holding taxation.
2) Individual Tax Rates (Taiwan Tax Residents)
| Holding Period | Rate | Notes |
|---|---|---|
| ≤ 2 years | 45% | Short-term trading |
| > 2 years and ≤ 5 years | 35% | Mid-term holding |
| > 5 years and ≤ 10 years | 20% | Long-term holding |
| > 10 years | 15% | Very long-term holding |
| Meets 6-year self-use requirements | Tax-free up to NT$4,000,000; 10% on the excess | Limited to once every 6 years |
3) Self-Use Home Incentive (Individuals)
- Owned and actually occupied continuously for 6 years before the sale.
- No leasing and no business/professional use.
- Household registration (hukou) at the property for the owner, spouse, or minor children.
- Not used within the past 6 years.
Common disqualifiers: registration without actual residence, or any short-term leasing during the period.
4) Calculation Formulas
Taxable Income = Sale Price − Acquisition Cost − Allowable Expenses − Land Value Increment Amount
Tax Payable = Taxable Income × Applicable Rate (or Self-Use Incentive)
Common Deductible Costs / Expenses
- Acquisition cost: purchase price, deed tax, stamp tax, scrivener fees, etc.
- Transfer-related: broker fee/commission, scrivener fees, notarization fees.
- Necessary repairs and improvements (must be supported by proof and meet requirements).
- Land value increment amount (calculated/assessed per rules).
Practical Notes
- Holding period is generally counted from the “acquisition date” to the “registration transfer date.”
- Pre-sale homes: holding period starts from the contract acquisition date; assignment/transfer is taxable.
- The self-use incentive is limited to once every 6 years and does not override short-term high rates unless qualified.
5) Examples
Example A | Regular Sale (Not Self-Use)
- Acquisition cost: NT$10,000,000
- Sale price: NT$14,600,000
- Expenses: NT$600,000; Land value increment amount: NT$0
- Holding: 4 years → rate 35%
- Taxable income = 14.6 − 10.0 − 0.6 = NT$4,000,000
- Tax payable = 4,000,000 × 35% = NT$1,400,000
Example B | Meets 6-Year Self-Use
- Same facts, taxable income ≤ NT$4,000,000 → tax-free
- If taxable income is NT$5,500,000 → first NT$4,000,000 tax-free, excess NT$1,500,000 × 10% = NT$150,000
6) Common Special Cases Under System 2.0
| Case | Key Point |
|---|---|
| Pre-sale homes / house-use rights | Included in scope; holding period generally starts from acquisition of the contract/right. |
| Trusts | Transfers by the trustee may be treated as a sale by the settlor; holding period may follow the settlor under certain rules. |
| Gifts / inheritance | Inheritance is generally not taxed here; a gifted asset sold later is treated as newly acquired for holding-period purposes. |
| Joint development & allocation | Allocation can be treated as a sale/acquisition event; income and cost recognition applies accordingly. |
| Indirect offshore transfers | Transfers of shares that indirectly dispose of Taiwan real estate may be taxable under the expanded rules. |
7) Filing & Practical Reminders
- Generally must file within 30 days starting from the day after transfer registration; late filing may trigger tax and penalties.
- Keep evidence: sale/purchase contracts, payment proofs, invoices for broker & scrivener fees, repair/improvement receipts, and land value increment assessment information.
- Planning tip: short-term rates are steep—compare the tax impact of holding beyond 2 / 5 / 10 years.