Are Parents Required To Pay Taxes When They Gift Land To Their Children?

It is a prevailing practice in contemporary times for parents to bestow land upon their offspring. Consequently, a pertinent question arises: are parents required to pay taxes when they gift land to their children? NT International Law Firm aims to address this matter comprehensively in the subsequent article.

Overview of land gifting

• Concept

Land gifting, as defined in Article 459 of the 2015 Civil Code, is a contractual agreement between parents and their children, whereby the parents voluntarily transfer ownership of their land to their children without seeking any compensation in return, and the children accept the gift willingly.

• Formality Requirements

According to Article 459 of the 2015 Civil Code, land donation contracts must be made in writing and must undergo notarization, authentication, or registration as per the legal requirements. This ensures the validity and enforceability of the land gifting agreement.

The prerequisites of land gifting

According to Article 188 of the 2013 Land Law, the rights associated with the conversion, transfer, lease, sublease, donation, inheritance, and mortgage of land use rights and capital contribution with land use rights can only be exercised when certain conditions are met.

General Conditions

• Certificate of Land Use Rights: Land users must possess a Certificate of Land Use Rights, except in the following cases:

  • Inheritors of land use rights, housing ownership, and other land-related assets who are foreigners or Vietnamese residing abroad are not subject to this requirement.

• Land Use Rights for Agricultural Land: Land users can only exercise their rights to transfer, lease, sublease, donate, mortgage, or contribute capital to land use rights when they have a Certificate. For the conversion of agricultural land use rights, land users must obtain a decision to allocate or lease land from the State before exercising their rights.

• Undisputed Land: The land must not be in dispute with adjacent lands or with another individual.

• Land Use Term: Land use rights cannot be distrained to ensure judgment enforcement during the land use term.

Additional Conditions

• Fulfillment of Financial Obligations: Land users who are delayed in fulfilling their financial obligations or are debited from their financial obligations must complete their financial obligations before exercising other rights.

• Compliance with Land Law: The person with the right must comply with all other applicable provisions of the 2013 Land Law.

Registration Requirements

To carry out actions such as transferring, converting, leasing, subleasing, donating, inheriting, mortgaging land use rights, or contributing capital with land use rights, the person with the right must register at a land registration agency. The registration takes effect from the moment it is recorded in the cadastral book.

The prerequisites of land gifting

Are parents required to pay taxes when they gift land to their children?

No, parents who give their children land do not have to pay taxes under the Personal Income Tax Law of 2007. This is because income from the transfer of real estate between family members, including parents and children, is exempt from personal income tax. This exemption also applies to income from the transfer of housing, residential land use rights, and assets related to residential land of individuals who only own a house or a single plot of residential land.

In addition to the above, the following types of income are also exempt from personal income tax:

• Income from the value of land use rights of individuals when the State allocates land for use
• Income from receiving inheritance or gifts of real estate between family members
• Income of individuals and households directly involved in making salt, agricultural production, forestry, aquaculture, and fishing
• Income from conversion of agricultural land of households or individuals that the State has allocated for production
• Income from deposits at credit institutions or interest from life insurance contracts
• Income from remittances
• The wages worked at night or from overtime are paid higher than the wages worked during the day according to the provisions of law
• Pensions are paid by social insurance
• Income from scholarships
• Income from compensation
• Income from charity funds
• Income received from foreign aid
• Income of individuals who own ships or have the right to use ships and of individuals working on ships in providing services and goods directly serving offshore exploitation and fishing activities
• Income from salaries and wages of Vietnamese crew members working for foreign shipping companies or Vietnamese shipping companies that transport internationally

Are parents required to pay taxes when they gift land to their children?

Can parents give their children land to be exempted from registration fees?

Exemption from Registration Fees for Land Transfers between Family Members

In Vietnam, registration fees are waived for the transfer of houses and land between family members, including:

• Husbands and wives
• Parents and children
• Adoptive parents and adopted children
• Parents-in-law and sons-in-law
• Parents-in-law and daughters-in-law
• Grandparents and grandchildren
• Siblings

This exemption applies to cases where the transferor has been granted a Certificate of Land Use Rights, Ownership of Houses, and Other Assets Attached to Land by a competent State agency.

Implications for Parents Donating Land to Children

In accordance with the aforementioned regulations, parents who donate land use rights to their children are exempt from registration fees.

Summary of Tax and Fee Implications

When parents give their children land, they are not subject to personal income tax or registration fees under current Vietnamese law. However, upon registering the land transfer, additional fees such as surveying fees, document appraisal fees, and land change registration certification fees may apply.

Can parents give their children land to be exempted from registration fees?

NT International Law Firm – Consulting on procedures of land gifting

At NT International Law Firm, we have a dedicated team of staff who specialize in offering consulting services for gifting land use rights. Our experts and lawyers possess extensive experience in this field and possess a deep understanding of the specialized knowledge required in land law regulations. We are fully committed to providing comprehensive support in resolving trusted issues and ensuring that our customers receive the utmost benefits.

NT International Law Firm has addressed the question of whether parents will have to pay taxes when gifting land to their children. If you have any further questions or concerns regarding land or real estate, please contact our law firm immediately for expert legal advice.

If you require any legal assistance, please feel free to reach out to us via phone at 090 252 4567 or through email: info@ntpartnerlawfirm.com. At NT INTERNATIONAL LAW FIRM, our team is committed to offering you prompt and personalized advice.

You also might be interested in: The 2013 Law on Land