Basically, the documents, procedures, and conditions for transferring and donating are all the same. However, the main difference lies in the taxes and fees payable when transferring or donating.
1. The difference between transfer and donation
1.1 Regarding personal income tax rates
If it is proven that they are one of the tax-exempt relationships, both parties will be exempt from personal income tax if they transfer or donate.
However, in cases where tax is not exempt, the tax rate payable will be different. Specifically:
- When transferring land use rights
Personal income tax payable = 2% x Transfer price
- When donating land use rights
Pursuant to Article 16 of Circular 111/2013/TT-BTC, the personal income tax payable is determined as follows:
Personal income tax payable = 10% x (Valuation of property donated is considered land use right - 10 million VND)
In which, the value of the property donated is the land use right based on the land price list (the value of the property donated is the land price in the land price list).
1.2 Regarding registration fees
According to Clause 10, Article 10 of Decree 10/2022/ND-CP, if you are in one of the following relationships, when donating real estate, you will be exempted from registration fees:
- Husband and wife
- Biological father, biological mother and biological child
- adoptive father, adoptive mother and adopted child
- Father-in-law, mother-in-law and daughter-in-law
- Father-in-law, mother-in-law and son-in-law
- Grandfather, grandmother and grandchild
- Grandfather, grandmother and grandchild
- brothers and sisters
Thus, if it is proven that it belongs to one of the above (family) relationships, when donating, the parties will be exempted from registration fees. If the transfer is made, even if it is a family relationship, the registration fee will not be exempted.
According to Article 8 of Decree 10/2022/ND-CP, the current land registration fee collection rate is 0.5%.
2. The most cost-effective way to transfer real estate to family members
As analyzed above, to optimize costs when transferring real estate to relatives, it is best for the parties to make a donation contract.
Currently, in the case of a normal transfer, the parties will have to pay 2.65% of the tax fee on the transfer value. Specifically, the taxes and fees that are required to be paid (except in cases of exemption) include:
- 2% personal income tax
- 0.5% registration fee
- 0.15% of the appraisal fee for transfer documents
If it is proven that the transferor is a family member, the parties must still pay 0.65% of the transfer value. Meanwhile, if done as a gift, 0.15% of the dossier appraisal fee will be paid.
