[Direct answer]Who should bear the transaction taxes for second-hand houses? Firstly, it depends on the contract provisions. If both parties explicitly agree that all taxes will be borne by one party in the tax-inclusive clause, such agreement is generally valid, and the court usually respects the parties' autonomy of will. If there is no agreement or the agreement is unclear, the taxpayers shall bear the legal obligations, that is, the buyer shall bear the deed tax, and the seller shall bear the value-added tax and its surcharges, as well as the personal income tax. According to Article 1 of the "Deed Tax Law of the People's Republic of China" (effective on September 1, 2021), the transferee shall be the taxpayer of the deed tax when transferring the ownership of houses within the territory of China; the "Provisional Regulations of the People's Republic of China on Value-Added Tax" (amended in 2017) and the "Individual Income Tax Law of the People's Republic of China" (amended on August 31, 2018) respectively establish the taxpaying obligations of the seller for value-added tax and income tax. After Beijing abolished the standards for ordinary and non-ordinary residential houses, individual sales and purchases of houses over two years are exempt from value-added tax. Before signing the contract, the parties shall estimate and write it into the contract according to the latest policies. In case of disputes, the parties may refer to the relevant provisions for settlement.Real estate transactions and construction projectsColumn.

I. Problem background and typical scenarios

Such disputes often arise in several situations: First, the contract only states that "taxes shall be borne by each party in accordance with the law" or "the actual price", without specifying specific taxes such as value-added tax and personal income tax. When settling accounts, both parties have different opinions on the price difference; Second, the agent verbally promises that the house is "fully owned and unique" and the taxes are very low, but after the actual filing, it is found that it does not match the promise, and the tax burden increases sharply; Third, the seller requires a net price and transfers all taxes to the buyer, but the buyer later regrets it; Fourth, the tax policies change during the transaction process, such as changes in the preferential conditions for deed tax and adjustments to the exemption period for value-added tax, resulting in a gap between the estimated and actual taxes paid at the time of signing the contract; Fifth, when reselling houses obtained through housing reform, affordable housing, inheritance or donation, the lack of original value certificates leads to disputes over the determination of personal income tax. In Beijing, when handling similar transactions, it is common to check the file with the real estate registration department before signing the contract, and then clarify the house's age, original value, and family housing situation before determining the tax terms.

II. Key points of dispute

Focus One: The validity of the tax-inclusive clause. In judicial practice, it is generally believed that the agreement on tax and fee burdens does not change the identity of the statutory taxpayers, but as a civil burden allocation agreement, it is generally valid. The administrative responsibility for failing to actually declare and pay taxes still lies with the statutory taxpayers. Focus Two: The interpretation of the "net price" clause should be based on the full text of the contract and the negotiation records to determine whether all taxes and fees are included. Focus Three: If the seller conceals the nature or age of the property and results in an increase in taxes and fees, the buyer may claim compensation for breach of contract in accordance with Article 500 of the Civil Code of the People's Republic of China (effective January 1, 2021). Focus Four: In principle, the risk of policy adjustments should be borne by the taxpayers themselves, except where the contract explicitly locks in the taxes and fees. Focus Five: The intermediary shall bear responsibility for errors in tax fee estimation, and shall be liable for losses caused by failure to report the information truthfully. Focus Six: The settlement and offset methods for the difference between the actual taxes and fees and the agreed amount. The specific determination shall be based on the currently effective laws, regulations, and judicial rulings. For transactions involving commercial contract arrangements where the seller is an enterprise, reference may be made to relevant provisions.Business and contract disputes in enterprisesColumn.

III. Professional analysis by Henglue Lawyers

From the practical experience of lawyers from our firm in handling second-hand housing tax disputes, the root of most disputes lies in the contract signing stage rather than the litigation stage. In common cases, if the contract only stipulates that "the parties shall bear the tax liabilities in accordance with the law" without listing the specific types of taxes, it is easy for the parties to renege on their obligations when facing high VAT or personal income tax payments. In court judgments, the court tends to support clear tax-inclusive clauses, allocate tax obligations according to the law when the clauses are unclear, and support differential compensation when one party conceals key information such as "the property being held for less than two years" or "not being the sole owner". Common pitfalls include: trusting the verbal tax estimates provided by real estate agents without including them in the supplementary agreement; applying the "fully owned and only one property" exemption from personal income tax on a household basis, which does not apply if the seller owns other properties; calculating personal income tax on the original value of the inherited or gifted property when reselling it, but the heirs often do not know where the original value documents are, resulting in full taxation based on the difference between the purchase and sale prices; and the buyer paying the seller's taxes without obtaining settlement receipts. The usual practice of our firm's lawyers is to provide a tax estimate list before signing the contract, and to include the results of the property verification, the amounts of various taxes, the obligation to make up the difference, and the breach of contract liability in the supplementary agreement, so that disputes can be traced back to clear evidence afterwards.

IV. Practical suggestions and legal basis

Action suggestions: 1. Before signing the contract, both parties should jointly visit the real estate registration department to verify the registration time of the property deed, the acquisition method, and the seller's family housing status. 2. Include the tax burden in the contract or supplementary agreement item by item, specifying the amounts of each tax type, the responsible party, and the adjustment rules in case of policy changes. 3. Have the seller make a commitment clause regarding tax-free conditions such as "fully owned for five years and being the sole owner" and "fully owned for two years", and stipulate compensation for any price differences. 4. Clearly define the liability for compensation for errors in calculating the brokerage fee and taxes. 5. Keep the tax payment receipt for deed tax, the value-added tax invoice, and the personal income tax payment certificate as evidence for settlement and legal protection. The key points for drafting relevant clauses can be referred to for reference.Special services and other casesThe column. In terms of legal basis, Article 1 of the "Deed Tax Law of the People's Republic of China" (effective September 1, 2021) stipulates that the transferee is the taxpayer of deed tax, and Article 3 stipulates that the tax rate is 3% to 5%. Individuals purchasing houses shall implement the current tax preferential policies; Article 1 of the "Value-Added Tax Law of the People's Republic of China" (amended in 2017) stipulates the tax obligation of value-added tax for the sale of real estate; Article 22 of the "Individual Income Tax Law of the People's Republic of China" (amended on August 31, 2018) stipulates that the tax rate for the transfer of property income is 20%; Article 500 of the "Civil Code of the People's Republic of China" regulates the liability for breach of contract, and Article 509 requires the parties to fully perform their contractual obligations.

5. Henglue Law Firm's Advice

Risk Alert: First, it is better to be specific rather than general when stipulating tax and fees. Simply writing "to bear them in accordance with the law" is the most common source of disputes; Second, although the tax-inclusive clause is valid, it does not change the statutory declaration obligations. Sellers still need to pay attention to their own tax compliance; Third, tax policies are subject to adjustment at any time. The longer the interval between signing the contract and transferring ownership, the greater the risk of inaccurate estimates. It is necessary to stipulate adjustment rules to cover potential losses; Fourth, if the buyer pays the taxes in advance, it is necessary to keep records and obtain the tax payment certificate. Otherwise, it will be difficult to provide evidence during settlement. If there are disputes over the difference in tax payments, it is advisable to first negotiate based on the contract. If no agreement can be reached, it is necessary to sue in time. You can consult a lawyer first for advice.Beijing Henglu Law FirmThe official website evaluates the claimed amount and the completeness of the evidence in similar columns.

VI. Frequently Asked Questions

Q1: Can I win a lawsuit over disputes about taxes and fees on second-hand houses?

The outcome primarily depends on the contractual provisions and evidence. If the contract explicitly stipulates who should bear the tax obligations, the court will usually make a judgment based on the agreement. If the agreement is unclear, the tax obligations will be allocated according to the law: the deed tax shall be borne by the buyer, and the value-added tax and personal income tax shall be borne by the seller. If one party conceals the age of the property, the original value, or the family's housing situation, resulting in an increase in the tax burden, they may claim compensation for breach of contract. If the intermediary makes a miscalculation and fails to fulfill the obligation of truthful reporting, they may also be held accountable. The more complete the contract documents and communication records are, the greater the chances of winning the case. It is recommended that lawyers review the contract terms before suing.

Q2: What evidence should be prepared for a tax-related lawsuit?

The following documents and materials should be prepared: the sales contract and supplementary agreement, the intermediary service contract; the registration information and the real estate ownership certificate; the deed tax payment certificate, the value-added tax invoice, and the personal income tax payment receipt; the seller's commitment record regarding tax-free conditions such as "owning only one house for more than five years" and "owning a house for more than two years"; the chat records and audio recordings of the intermediary's estimates and verbal commitments; and the payment and settlement receipts. These evidences are used to reconstruct the parties' agreements, the actual tax burden, and the causes of the price difference, and are the core elements in determining the party responsible for the taxation.

Q3: How much does it cost to litigate against tax and fee disputes?

The litigation fees are charged in stages according to the amount of the litigation request. The difference in the subject of the dispute is usually not large, and the fees are relatively controllable. The attorney's fees are negotiated based on the amount of the dispute and the complexity of the case. For disputes with a small difference, it is advisable to first resolve them through mediation or complaints to the intermediary association, which is more cost-effective. For disputes with a large difference or involving multiple concealments, it is recommended to entrust a lawyer to assert rights systematically. It is advisable to first estimate the amount of the dispute and the strength of the evidence, and then decide on the litigation or negotiation path.

Q4: How long does it take to litigate a tax dispute?

Cases subject to simplified procedures are generally concluded within three months, ordinary procedures generally do not exceed six months, and second-instance trials take about three months. Cases involving policy basis verification, original value investigation, or interpretation of multiple contracts will take longer. Tax disputes are relatively simple in nature, and the key is to ensure that the contract terms and tax payment vouchers are complete and the evidence is sufficient. Cases with complete evidence generally have shorter processing times, and suing as soon as possible can help avoid the loss of vouchers.

Q5: Are intermediaries liable if they miscalculate the tax fees?

It depends on the fault of the intermediary. According to Article 962 of the Civil Code of the People's Republic of China, the intermediary shall truthfully report to the client the matters related to the conclusion of the contract. If the intermediary intentionally conceals important facts or provides false information that damages the client's interests, he shall not request payment of the remuneration and shall bear the liability for compensation. If the intermediary fails to fulfill the obligation of professional and prudent estimation and causes losses in taxes and fees, he may claim compensation, but the scope of compensation liability shall be related to the contract agreement and the degree of fault. The specific scope of compensation liability shall be subject to the current effective laws and regulations and judicial judgments. For related service disputes, please refer to the relevant provisions.Property sales and construction projectsColumn.

The above Q&A is mainly based on the judicial practice in Beijing. There may be differences in the interpretation of the law in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Legal services for real estate transactions·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.