Taiwan’s Ministry of Finance has clarified how profit-seeking enterprises should offset real estate transaction losses when properties sold in the same year are subject to different tax rates based on their holding periods.
Taiwan’s Ministry of Finance issued a notice on 28 August 2026 clarifying the treatment of real estate transaction losses for profit-seeking enterprises selling properties subject to different tax rates during the same year.
Under Articles 4-4 and 24-5 of the Income Tax Act, enterprises selling houses or land acquired after 1 January 2016 must calculate transaction income or loss after deducting relevant costs, expenses or losses from total income. The resulting taxable income is subject to separate tax rates of 45%, 35% or 20%, depending on the property’s holding period.
Where an enterprise sells multiple properties subject to these rules in the same year, a loss from properties taxed at one rate must first be offset against transaction income from other properties taxed at the same rate. Any remaining loss may then be offset against transaction income from properties subject to different tax rates in that year.
The National Taxation Bureau of the Central Area also clarified the treatment of land value increment tax under the Land Tax Act. Except for the portion corresponding to the total amount of land appreciation that was not deducted from real estate transaction income, the land value increment tax paid cannot be recognised as a cost or expense.
After deducting the total amount of land appreciation calculated using the publicly announced land value under Article 30, Paragraph 1 of the Land Tax Act, the remaining transaction income is excluded from the enterprise’s business income.
For a building first constructed by a profit-seeking enterprise and sold together with the underlying land after completion, the calculated real estate transaction income, after deducting the total amount of land appreciation based on the publicly announced land value, is included in taxable business income.
Where that remaining amount is negative, it is treated as zero. However, if the real estate transaction income itself is negative, the loss may be deducted from the enterprise’s business income, while the total amount of land appreciation cannot be deducted.
