Insights

Ningbo divorce real estate transfer taxes who bear

Ningbo Author：LuXu WANG

The divorce agreement Rio fixed the house to one party, and it seems that the dust has settled, but when going to the real estate registration center to handle the transfer, the tax issue often pulls the two parties back to the negotiating table. Deed tax, value-added tax, personal income tax, stamp duty, registration fee, which should be paid, who should be paid, and whether it can be saved depends on the source of the property, the method of acquisition, the number of years of holding and the path of divorce.

The legal nature of the division of divorce property in 1..

In the event of divorce, the property is changed from the name of the husband and wife to the name of one party, and the legal nature is the division of the joint property of the husband and wife, rather than the sale of the property by one party to the other. This directly determines the tax applicable rules and ordinary second-hand housing transactions there is a fundamental difference.

Difference in taxes and fees for the analysis of production and sale.

In the sale of ordinary second-hand housing, the buyer usually needs to pay deed tax, the seller may need to pay value-added tax, personal income tax, stamp duty and so on. Divorce property is a division of common property, and many taxes can be exempted or reduced when they meet the conditions. However, the exemption is conditional, and not all divorced property transfers are automatically tax-free.

Transfer basis determines the processing path.

In the case of divorce by agreement, both parties shall go to the real estate registration center with the divorce agreement, divorce certificate, identity certificate and other materials; in the case of divorce by litigation, it shall be handled with the effective judgment or mediation letter. There may be differences in material requirements, tax review, and processing efficiency for different paths.

2. deed tax: divorce analysis is usually exempt.

According to Article 1 of the Announcement on the Connection of Preferential Policies after the Implementation of the Deed Tax Law (Announcement No. 29 of 2021 of the Ministry of Finance and the State Administration of Taxation), if the ownership of land and housing is changed due to the division of common property due to divorce, the deed tax shall be exempted, and the announcement shall be implemented from September 1, 2021. This is the biggest tax benefit for divorced property transfers and ordinary sales. The State Administration of Taxation Anhui Provincial Taxation Bureau 12366 consultation hot questions (October 2020), Tianjin Municipal Taxation Bureau, Inner Mongolia Autonomous Region Taxation Bureau and other 12366 have made it clear that "after divorce housing ownership changes do not levy deed tax". Source: Knowledge Base 123

66Hot Q & A Document Collection.

Conditions for exemption from deed tax

the premise of exemption from deed tax is that the property belongs to the joint property of the husband and wife and is divided by agreement or judgment at the time of divorce. If the property itself belongs to one party's personal property before marriage, the divorce may not be exempted by the agreement to add name or change ownership. The specific implementation caliber varies slightly from place to place, and should be confirmed with the local real estate registration center and tax authorities before handling.

The re-division of one party's premarital property after adding its name.

If the property was originally the personal property of one party before marriage, and the name was added after marriage to become common ownership, and then divided to the original property owner in the event of divorce, the tax authorities may regard it as a compound act of one gift and one division, and the deed tax treatment is controversial. In practice, it is necessary to combine the local caliber with the history of real estate registration.

Application of 3. value-added tax and personal income tax

whether the divorce property is subject to value-added tax and personal income tax depends on whether the property involves a foreign transfer. If the change of ownership is only between husband and wife or between the original co-owners, VAT and personal income tax are generally not involved. If the property right of the house is given to the spouse free of charge, the individual income tax shall not be levied (according to the notice of the Ministry of Finance and the State Administration of Taxation on the issue of individual income tax on the individual free donation of houses, Caishui [2009] No. 78).

It is only triggered when the property is transferred to the outside world.

If one party acquires the property after divorce and immediately sells it to a third party, it is a second-hand housing transaction and needs to pay value-added tax and personal income tax according to ordinary transactions. At this time, preferential policies such as five-year-old and two-year-old are applicable.

Full five only and tax concessions

if the party acquiring the property subsequently sells it and meets the conditions for self-use for more than five years and is the only home for the family, it can be exempted from personal income tax. As a result, the number of years the property is held and the property in the name of the party acquiring it after the divorce will affect the tax burden on future sales.

4. stamp duty, registration fee and notary fee

divorce property transfers usually involve smaller registration fees and stamp duty. Registration fees are charged on the basis of real estate registration standards; stamp duty is levied on the basis of the transfer of ownership, and the amount is usually not high. Notary fees are also incurred if notarization of the divorce agreement is involved.

Differences in registration fee standards across regions

real estate registration fees are charged by piece, residential and non-residential standards are different, and the charging standards vary slightly from place to place. Ningbo area of the specific fees to the local real estate registration center publicity. You can check the latest charging standards through official channels before handling.

Whether the notary fee is necessary

it is not necessary to notarize the transfer of property by agreement divorce, but some registration centers or loan banks may require the divorce agreement to be notarized. Notary fees are charged in proportion to the value of the property, and the specific rate can be consulted by the notary office. In the case of divorce proceedings, the effective judgment or conciliation statement itself has executive power and generally does not need to be notarized.

The tax difference between 5. agreement divorce and litigation divorce.

From the perspective of taxes and fees, there is no essential difference between agreement divorce and litigation divorce in the division of real estate, and preferential policies such as exemption from deed tax can be applied. However, in practice, the judgment or mediation of divorce proceedings usually has a stronger publicity effect, and there is less resistance when handling the transfer.

The Influence of Unknown Agreement in Divorce Agreement

if the divorce agreement only states that the property belongs to a certain party, but does not specify the transfer period, tax commitment, loan repayment, etc., the two parties are likely to argue again when handling the transfer. It is recommended to state in the agreement: property ownership, transfer period, tax payer, loan repayment liability, liability for breach of contract.

Advantages of litigation divorce

divorce proceedings through the court judgment or mediation to determine the ownership of the property, with enforcement. If one party does not cooperate with the transfer, the other party may apply to the court for enforcement, and the registration center usually proceeds with a notice of assistance in enforcement. This is particularly important in the case of one of the parties to the divorce agreement.

6. tax liability agreement and execution

the divorce agreement or judgment may stipulate which party shall bear the tax, but the agreement only binds the husband and wife, not the tax authorities. If the agreement is borne by one party but the other party advances, the advance party may recover from the other party in accordance with the agreement.

Recovery of taxes and fees paid in advance

if one party first advances the taxes and fees that should have been borne by the other party, it shall retain evidence such as payment vouchers, bank flow, text of the agreement, etc., and, if necessary, sue for recovery. The basis of the right of recovery is the agreement in the divorce agreement or the burden clause in the divorce judgment.

Coordination of Taxes and Property Discount

in the overall division scheme of the property, the tax burden can be coordinated with the discount and compensation of the property. For example, it is agreed that the party acquiring the property shall bear all the transfer taxes and fees, and at the same time reduce the discount compensation payable by it accordingly. Such an agreement needs to be explicitly written into the agreement to avoid post-mortem disputes.

7. case proof

(The following is an example) I have dealt with an agreed divorce case in Ningbo: a set of housing agreements shared by both parties during their marriage was owned by the woman, and the divorce certificate was also received. The man refused to cooperate with the transfer afterwards on the grounds that "most of the house was funded by me at the beginning. The woman took the divorce agreement to sue for performance, the court found that the agreement was legal and valid, ordered the man to assist in the transfer of ownership within a time limit, and made it clear in the judgment: in the process of handling according to law, the taxes and fees borne by each party shall be borne by each party, and one party can recover from the other party with the bill after paying in advance. In such cases, the amount of tax is usually small, but the friction cost of "card you" is very high-so it has been repeatedly stressed that the tax burden should be written in the agreement.

As for the "divorce analysis of property is not exempt from deed tax", the policy level has been nailed to death. Announcement No. 29 of 2021 of the Ministry of Finance and the State Administration of Taxation clarifies that the change of property ownership of the common property due to divorce is exempt from deed tax (implemented from September 1, 2021); Caishui [2009] No. 78 clarifies that the free gift of housing property rights to the spouse is not subject to personal income tax. The State Administration of Taxation Anhui Province Tax Bureau 12366 Consultation Hot Questions Answers (October 2020) also directly states that "no deed tax will be levied on changes in housing ownership after divorce". Source: Knowledge Base 12366 Hot Q & A Document Collection. What needs to be reminded is that these concessions are aimed at the specific situation of "divorce and division of common property". If the source of the property or the division method does not meet the legal conditions, taxes and fees may still be incurred, and it cannot be taken for granted that "divorce is free".

8. Risk Alert

  • think of divorce transfer automatic tax exemption: exemption of deed tax has legal conditions, the source of real estate or division method does not meet the tax may still produce taxes.
  • The divorce agreement did not agree on the burden of taxes and fees: the two parties disputed the sharing of taxes and fees during the transfer, resulting in delays in procedures and even litigation again.
  • Ignore the tax burden of selling after acquisition: selling the property in a short period of time after acquisition may trigger VAT and personal tax, which needs to be planned in advance.
  • No voucher for advance payment of taxes and fees: one party cannot prove it after advance payment, and it is difficult to recover.
  • The agreement cannot oppose the administrative organ: the obligation to pay taxes and fees is stipulated by law, and the internal agreement of the husband and wife cannot change the subject of tax obligation.

9. FAQ

do I have to pay deed tax for the transfer of divorced real estate?

If the husband and wife change the ownership of the common property due to divorce and division, the deed tax shall be exempted (Ministry of Finance and General Administration of Taxation Announcement No. 29 of 2021). However, if the property itself does not belong to the common property or the division method does not meet the requirements, the exemption may not apply.

Does divorce have to pay personal income tax?

Divorce property itself generally does not involve personal income tax; property rights free gift to the spouse is not taxed (tax [2009] No. 78). However, if the property is sold to a third party after acquiring it, it is a second-hand housing transaction, and personal income tax must be paid in accordance with the regulations, and preferential treatment can be enjoyed if the conditions are met.

Who will pay the taxes?

A divorce agreement or judgment may agree on the manner in which taxes and fees are borne, but the agreement binds only the husband and wife. In the actual processing, the tax shall be paid by the legal tax payer, and the advance party may recover from the other party by agreement.

Is a lawsuit divorce less taxing than a negotiated divorce?

There is no essential difference in taxes and fees themselves, and concessions such as deed tax exemption can be applied. However, the judgment of divorce litigation is enforceable, and the degree of cooperation is usually higher when handling the transfer.

Practical Experience of 10. Lawyers

when the house is changed from the name of both parties to the name of one party, the legal nature is the division of common property, rather than one party selling the house to the other party, which determines its tax rules and ordinary second-hand housing sales are fundamentally different. Many people wait until they go to the real estate registration center to handle the transfer of ownership before discovering the tax problem, and bring the two sides back to the negotiating table, so it is best to take it into account at the agreement stage, first find out the source of the property, the way of acquisition and the holding period, and then judge how the various taxes apply.

In the transfer of property, deed tax can usually be exempted (according to the Ministry of Finance and the State Administration of Taxation Announcement No. 29 of 2021); Whether value-added tax and personal income tax are involved depends on the specific situation of the house and the caliber of local policies. Stamp duty, registration fees and possible notarization fees are usually not large enough to be reserved. Agreement divorce and litigation divorce are also different in handling basis. Transfer of ownership by effective judgment or mediation agreement is different from transfer of ownership by divorce agreement. The process and required materials are different. Which road should be aligned in advance so as not to make up for the documents and delay the time. The tax and fee policy will also vary with the age of the house, whether it is the only house and other factors, and it is best to take the caliber of the processing window as the standard.

Who should bear the taxes and fees, it is best to write clearly in the agreement, do not leave such vague statements according to the provisions of the state, otherwise the door will have to wrangle. After writing it out, bind it to the transfer time and payment node, and agree on how the party that does not cooperate will be held responsible. The experience in practice is that it is much easier to negotiate the assessment, taxes, transfer and payment into a timetable than to delay one item at a time. Don't take taxes and fees as a trivial matter. The difference of tens of thousands of yuan often becomes the last fuse. If you put the account in front, you won't overturn the car at the closing stage.

The key to the issue of taxes and fees for the transfer of divorced property is to distinguish between the act of property analysis and the act of buying and selling. If the ownership of the joint property of husband and wife is changed due to divorce and division, the deed tax is usually exempted, but the value-added tax, personal income tax, stamp duty and registration fee still need to be judged according to the specific circumstances. It is recommended that the divorce agreement or litigation be clearly agreed: property ownership, transfer period, tax burden, loan settlement and liability for breach of contract. If one party refuses to cooperate, the judgment or mediation statement of divorce litigation is enforceable, and the transfer of ownership can be handled by the notice of assistance in execution. Be sure to confirm the latest caliber and required materials to the local real estate registration center and tax authorities before handling, so as to avoid repeated rush due to incomplete materials.