Dividing jointly owned land in Taiwan may incur gift tax, tax bureau warns

The Taipei National Taxation Bureau has clarified that dividing jointly owned land can trigger gift tax obligations if specific conditions are met. The bureau stated that if co-owners receive land of unequal value after division, and there is no agreement for compensation between them, the difference in value will be subject to gift tax.

According to the bureau's explanation, when jointly owned land is divided, the co-owner whose received land value increases compared to their original share will be considered the recipient. The tax authorities will levy gift tax on the increased amount. Conversely, the co-owner whose received land value decreases will be considered the donor. However, regulations allow for the land value increment tax paid by the recipient to be deducted from the total gift amount.

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If co-owners receive land of unequal value after division without compensation, the difference is subject to gift tax.

For example, if two individuals, A and B, divide jointly owned land in 2025, and A's received land value increases by NT$8 million while B's decreases by the same amount, without any compensation agreement between them, B will be deemed to have gifted NT$8 million to A. B must then declare this gift tax, with a deduction for any land value increment tax paid by A.

The Taipei National Taxation Bureau reminds co-owners to comply with gift tax regulations when dividing jointly owned land. Failure to declare the tax on value increases or decreases, in the absence of compensation agreements, could result in penalties and back taxes.

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The tax applies to the co-owner whose land value increases, with potential deductions for land value increment tax paid.