Sales of condominiums subject to four different taxes

Buying a condo may seem rela¬tively straightforward. There is usually a helpful sales agent ready to assist in completing the documentation for you to sign on the dotted line. When it comes time to sell, however, it is important that you equip your¬self with a basic understanding of the costs associated with a sale, so that you can take these into consideration when agree¬ing a price.

The sale of a con¬dominium is subject to four different kinds of taxes and fees that are each paid to the relevant government office: government transfer fee, specific business tax (SBT), stamp duty and withholding tax. Under the law, only the govern¬ment transfer fee is shared equally between the buyer and the seller, and the remaining taxes are the responsibility of the seller.

The calculation of the govern¬ment transfer fee is quite straightforward, with the amount payable 2 per cent of governmentappraised value irrespective of the actual selling price. Nevertheless, the sale of a condominium between March 29, 2008, and March 28, 2009, is eligible for a fee reduction of 0.01 per cent in the governmentappraised value.

The SBT is a special levy on certain business transactions. It applies to the sale of a condo¬minium by an individual at the rate of 3 per cent of the governmentappraised value or sale pro¬ceeds, whichever is higher. This tax is payable if the condomini¬um is sold within one year of acquisition if the individual has registered the condominium as his or her official residence in the government householdreg¬istration system or if the condo¬minium is sold within five years of acquisition in other cases.

The sale of a condominium by a company is generally subject to SBT at the rate of 3 per cent of either the sale proceeds or the governmentappraised value, whichever is higher.

An additional local tax of 0.3 per cent is collected at the same time and on the same basis as the SBT.

For the period from March 29, 2008, to March 28, 2009, the rate of the SBT and local tax applicable to condominium sales, either by individuals or companies, has been temporari¬ly reduced to 0.11 per cent.

The stamp duty is applied to all condominium sales that are not subject to SBT. The rate is 0.5 per cent of governmentappraised value or the selling price, whichever is higher.

In next month's article, we will complete our review of taxes and levies applicable to condo¬minium sales.