Land Value Increment Tax

Part 1 Calculating the land value increment tax

I. Calculating the land value increment tax

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.

(I) 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.

(II) 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 transfer.
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.

(III) 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 the Amount of Land Value Incremental Tax Payable

(I) Tax rate on regular land

The tax rates on regular land under the land value increment tax come in 3 classes.

1. First Class at a 20% tax rate 
   Tax Payable=Total Amount of Value Increment (After adjustment is made pursuant to the consumer price index, the increment cannot exceed 100% of the original decreed value or the assessed present value of last transfer) x the applicable tax rate of 20%.
2. Second Class at a 30% tax rate
   Tax Payable=Total Amount of Value Increment (After adjustment is made pursuant to the consumer price index, the increment is in excess of 100% but less than 200% of the last transfer) x the applicable tax rate of 30% -Cumulative Difference (original decreed value or assessed present value of last transfer as adjusted by the consumer price index x 0.10)
3. Third Class at a 40% tax rate
   Tax Payable=Total Amount of Value Increment (After adjustment is made pursuant to the consumer price index, the increment is in excess of 200% of the original decreed value or the assessed present value of last transfer) x the applicable tax rate of 40% - Cumulative Difference (original decreed value or assessed present value of last transfer as adjusted by the consumer price index x 0.30)

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 proceeding 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

Privileged Rate for self-use residential land
Tax-saving breakdown
Tax rate applicable for use as self-use residential land
Criteria of eligibility

1. The parcel of land in question has not been rented or used for business purposes in the last full year before transfer.
2. The land property is currently registered under the name of title owner him/herself or his/her spouse or lineal descendant or ascendant or member of the house entitled to maintenance is living on the land with household registration duly entered.
3. Urban land does not exceed three areas and non-urban land does not exceed seven areas.
4. The title owner may apply for and enjoy this privileged rate of land value increment tax only once in his/her lifetime.
5. 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

1. Photocopy of household registration.
2. Proof of document on building improvements.

Filing deadline​

1. At the time of declaration made for land property transfer in general cases of property closings.
2. Or on/before the due date indicated in the tax payment notice, if no specific deadline is specified in the current land value declaration from.
3. Or 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.

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.