[Direct answer]In the Beijing area, it is usually the party receiving the property in settlement of a debt that bears the responsibility, unless otherwise stipulated by law or agreed upon by the parties. After the court's ruling on the settlement of a debt with property, the transfer of property ownership involves stamp duty, value-added tax, land value-added tax, stamp tax, and personal income tax, which shall be paid by the corresponding taxpayers in accordance with tax laws: stamp duty is generally paid by the recipient (the party obtaining the property right); value-added tax, land value-added tax, and personal income tax are usually borne by the transferor (the original right holder); and stamp tax is paid by both parties. During the enforcement process, if the taxes and fees that the debtor should bear are not paid and the transfer of ownership cannot be completed, in practice, the recipient often pays the taxes and fees in advance and then recovers them from the debtor, or deducts the corresponding taxes and fees from the amount of the debt settlement. Therefore, who should bear the taxes and fees depends not only on the provisions of tax laws regarding taxpayers, but also on the specific arrangements of the debt settlement agreement and the court's ruling. It is recommended to clarify the tax calculations before agreeing to settle a debt with property, so as to avoid the passive situation of "getting the house but failing to transfer ownership".

1. Problem background and typical scenarios

It has become increasingly common for debtors to offer properties as repayment in enforcement procedures, but transfer taxes are often overlooked by parties involved. There are typically three scenarios: First, the creditor discovers that the transfer taxes are exorbitantly high after accepting the property as repayment, resulting in a significant reduction in the actual compensation received; Second, the property offered as repayment still has unpaid taxes or unpaid land transfer fees, making it impossible to complete the transfer; Third, the parties fail to agree on who should bear the transfer taxes, leading to disputes afterward. In the Beijing area, real estate registration and taxation procedures are relatively standardized. The calculation of transfer taxes requires considering factors such as the nature of the property, the length of ownership, the price of the property offered as repayment, and whether the property meets the "five-year ownership rule and being the only residence" requirement. Advance calculation and prior agreement are key to avoiding disputes.

II. Key points of contention

First, the timing of the change in property rights and the commencement of tax obligations after the debt repayment ruling takes effect. Second, who are the taxpayers of deed tax, value-added tax, land appreciation tax, personal income tax, and stamp duty respectively. Third, how to complete the transfer of ownership when the debtor fails to pay the taxes due, and how to recover the advance payment. Fourth, the relationship between the debt repayment price and the tax assessment basis, and whether it is determined according to the market price. Fifth, whether the taxes can be deducted from the debt repayment amount, and how to connect with the settlement of the execution funds. Sixth, the differences in tax burden and operational space between debt repayment by property and normal sales transactions.

III. Professional analysis by Henglue Lawyers

Henglue Law Firm once represented a client in a lawsuit against enforcement objections by a third party: The client, Xiao Liu, purchased a commercial housing unit with a full payment of 10 million yuan and actually moved in. However, due to the developer's external debts and the failure to obtain a property ownership certificate, the house was sealed by the court. The applicant for enforcement requested continued enforcement. Xiao Liu entrusted Attorney Chen Mei'e of Beijing Henglue Law Firm to represent him in the defense. The attorney organized evidence based on the requirements such as "having signed a legally valid sales contract before the seizure, having paid the full price, having no other houses for living, and not failing to handle the transfer due to the buyer's own reasons", and claimed to exclude the forced execution according to the "Regulations of the Supreme People's Court on Several Issues Concerning the Handling of Enforcement Objection and Review Cases by the People's Courts". The court adopted the attorney's opinion, determined that Xiao Liu met the conditions for excluding enforcement, and ruled to reject the applicant's lawsuit, successfully protecting the property. This case reminds us that in the field of enforcement and property rights changes, the apparent rights may not coincide with the actual rights. Taxes and fees in debt settlement or house purchase, transfer and ownership risks must be evaluated in advance, otherwise, even if the property is obtained, there may still be ownership obstacles and additional costs. This case was handled by Beijing Henglue Law Firm.Chen Mei'eAttorney (Practice Certificate No.: 11101201911105336, subject to the certificate issued by the judicial administrative organ) acting as the agent.

IV. Practical suggestions and legal basis

Action suggestions: First, calculate the taxes and fees before agreeing to offset debts with property, and clarify the actual net income of the property used to offset debts; Second, check whether the property has any outstanding taxes, fees, mortgages, or seizures to avoid obstacles in the transfer of ownership; Third, specify the arrangements for bearing and paying taxes in advance and recovering the payments in the agreement for offsetting debts or in the enforcement and settlement; Fourth, pay attention to the content of the ruling to confirm whether it includes tax deductions or obligations to assist in the transfer of ownership; Fifth, prepare all the tax payment certificates and registration materials when handling the transfer of ownership, and follow up in a timely manner; Sixth, if the amount involved is large, hire a lawyer and tax professionals to jointly evaluate the situation. For enforcement cases, you can refer to the relevant provisions.Creditor-debtor relations | Enforcement casesFor services related to real estate transactions and ownership registration, you can refer to the following informationReal estate transactions | Construction projectsFor the review of the agreement terms, you can refer to the relevant content in the "Blocks" section.Business and Commerce | Contract DisputesPlate. Legal basis: The provisions on taxpayers in the "Deed Tax Law of the People's Republic of China" (effective September 1, 2021), the "Stamp Duty Law of the People's Republic of China" (effective July 1, 2022), and the "Individual Income Tax Law of the People's Republic of China" (effective January 1, 2019), as well as the relevant provisions of the "Supreme People's Court's Interpretation on Several Issues Concerning the Handling of Enforcement Objections and Review Cases by People's Courts". The specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglu Law Firm's Reminder

Firstly, the deed tax is usually paid by the transferee, while other taxes are mostly borne by the transferor. Secondly, beyond what is stipulated in tax laws, agreements on debt settlement and rulings are crucial. Thirdly, it is necessary to first check for outstanding taxes and fees to avoid obtaining the property but being unable to transfer ownership. Fourthly, after paying the taxes and fees in advance, it is necessary to promptly recover the payment from the debtor or claim a deduction. Fifthly, before settling debts with the property, it is necessary to conduct a tax and fee assessment to clarify the actual benefits. For matters involving enforcement and debt settlement, it is recommended to seek professional legal advice.Creditor-debtor relations | Enforcement casesThe service provides a comprehensive solution, which involves the transfer of real estate ownership and the integration of property rights.Real estate transactions | Construction projectsFor the clauses related to the debt repayment agreement, you can refer to the following document for reference.Business and Commerce | Contract Disputes板块。

VI. Frequently Asked Questions

Q1: Who pays the deed tax?

It is generally paid by the transferee. According to the provisions of the "Deed Tax Law of the People's Republic of China" (effective September 1, 2021), when transferring the ownership of land and houses within China, the units and individuals who receive the transfer are the taxpayers of deed tax. Therefore, the party who obtains the real estate or land in the process of debt repayment with property usually needs to bear the deed tax. The specific tax rate and tax basis shall be determined according to local regulations and the nature of the house. It is recommended to verify with the tax department before handling the transaction.

Q2: What should the debtor do if he/she doesn't have the money to pay taxes?

The common practice is for the transferee to advance the payment first. If the value-added tax, land value-added tax, or personal income tax payable by the debtor is not paid, resulting in the inability to complete the transfer of ownership, in practice, the transferee usually advances the payment to complete the transfer of ownership, and then recovers the payment from the debtor according to the court's ruling or agreement, or deducts it from the distribution of the execution funds or the amount of the debt settlement. To avoid disputes, the handling method should be specified in advance in the debt settlement plan.

Q3: Can taxes and fees be deducted from the amount used to offset debts?

It can be negotiated, but clear agreements are needed. When using assets to settle debts, the two parties can agree to deduct the taxes and fees that the recipient needs to bear or advance from the total amount of the settlement, so as to reflect the actual net value of the property. This arrangement should be specified in the settlement agreement or the execution and settlement agreement, and attention should be paid to ensuring consistency with the court's ruling to avoid affecting the execution process and the transfer of ownership due to unclear agreements.

Q4: If the price of settling the debt is low, can I pay less in taxes and fees?

Not necessarily. The tax authorities will determine the tax basis. According to the tax law, if the taxpayer's declared tax basis is obviously too low and there is no legitimate reason for it, the tax authorities have the right to determine it. If the price of the goods used to offset the debt is obviously lower than the market price, the tax authorities may calculate the tax payable according to the determined price. Therefore, trying to reduce taxes by lowering the price of the goods used to offset the debt may not be feasible, and it may also lead to the risk of tax arrears and late payment penalties.

Q5: Is it possible to transfer the ownership without completing the formal transfer procedures and just signing an agreement instead?

It is not recommended as it involves significant risks. Real estate is subject to registration as a means of publicizing rights. If only a debt repayment agreement is signed but no transfer of ownership is carried out, the ownership of the property will not be transferred, and the original owner may still dispose of the property externally or have it seized and executed by other creditors. In addition, a long-term failure to transfer ownership may also affect subsequent transfers and mortgages. Therefore, it is necessary to promptly handle the transfer registration when using property to repay debts to ensure that the rights are effectively transferred.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence, to avoid missing the statutory time limit.\nLegal services for creditor-debtor disputes·Attorney Chen Mei'e·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.