How to pay tax on the sale of inherited immovable property?

In practice, there are often questions from residents of the region according income from the increase in value when selling property, including inherited property.

We focus on cases of sale of property by residents of the Republic of Kazakhstan.

Thus, in accordance with the tax legislation, income from the increase in value in the sale of property by an individual arises from the sale of houses, country houses, garages, objects of personal subsidiary farming located on the territory of the Republic of Kazakhstan on the right of ownership for less than a year from the date of registration of the ownership right.

 When selling property that is owned for more than a year from the date of registration, the income from the increase in value does not arise for residents of the Republic of Kazakhstan.

In the case of the sale of property received in the form of inheritance, the income from the increase in value is the positive difference between the price (value) of the sale of the property and the market value of the property being sold at the date of the ownership right. (paragraph 6 of Article 331 of the Tax Code)

Such market value must be determined by the taxpayer no later than the deadline set for submitting an individual income tax return for the tax period in which such property is sold. The market value is determined in the valuation report, which is conducted by an independent appraiser under a contract with the seller of real estate in accordance with the legislation of the Republic of Kazakhstan on valuation activities.

For example, if a property is sold in 2020, the market value in the valuation report must be determined by March 31, 2021 and at the date of the ownership right.

If, for any reason, there is no market value at the date of the right of ownership of the property, or if the deadline for determining the market value is not met, the income from the value gain will be the positive difference between the price (value) of the sale of the property and the estimated value.

In this case, the estimated value will be determined by the State Corporation "Government for Citizens", as of January 1 of the year in which the ownership of the sold property arose. For example, if the ownership of an apartment arose in 2020, the estimated value is determined on January 1, 2020.

Thus, if an individual has a positive difference during the sale, there is an obligation to submit an individual income tax return  (form 240.00) by March 31, following the reporting tax period and the payment of individual income tax at the rate of 10% no later than ten calendar days after the deadline for the declaration submitting.

Example, the apartment was sold in 2020 for 15 million tenge, the market value is determined on time and on the date of registration of ownership in the amount of 10 million tenge, then the income from the increase in value is determined in the amount of 5 million tenge and is subject to taxation at the rate of 10%, the IPN is in the amount of 500 thousand tenge.

 

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