20% Tax on Real Estate Profits: Will House Prices Go Up Again?

The real estate transfer tax of 20% on profits, when applied, will have a major impact on the real estate market, especially the price level of real estate - Photo: NGOC HIEN

The Ministry of Finance is studying the choice of two tax calculation methods, including the option of calculating a 20% tax on profits from real estate transfers. This policy is expected to increase the state budget's revenue from personal income tax, but also raises concerns about its feasibility, especially the determination, correct calculation, and full calculation of costs from real estate transfers.

In practice, calculating transfer tax will be complicated.

According to the Ministry of Finance, in cases where there is a database that accurately determines the purchase price and costs related to the transfer of real estate, the method of collecting personal income tax from real estate transfer is calculated by the tax rate formula (proposed 20%) multiplied by taxable income.

In cases where the purchase price and costs related to the transfer of real estate cannot be determined, personal income tax is determined on the total real estate transfer price multiplied by the tax rate of 2%.

Evaluating the proposal to impose a 20% tax on real estate transfer profits, Mr. Dinh Minh Tuan - Southern region director of Batdongsan - said that the Ministry of Finance's study of the 20% tax on the difference between the purchase price and the selling price is to suit the reality of the market and optimize the amount of personal income tax paid to the state budget.

However, Mr. Tuan said that in reality, the implementation seems easy and simple but will encounter problems.

In which, Mr. Tuan said that for tax authorities, determining the input costs of a real estate transaction is relatively complicated, especially for houses purchased for decades with expenses such as real estate purchase costs, brokerage costs, renovation costs, repair costs, interest costs, etc. If the above costs cannot be determined, there will be cases where the house purchased and sold has little actual profit but pays up to 20% of the difference.

With the market having sharp declines like the recent period, Mr. Tuan said that many projects selling at a loss or with strong price reductions may not be able to apply the 20% tax rate but may still apply 2%, which is very disadvantageous for the people.

As for the group of investors, Mr. Tuan said that investors only care about the profit on a real estate product, so when calculating the 20% tax plus a 1-3% brokerage fee, the output selling price will add exactly this cost. This increases the real estate price or in some cases, notarizing two prices causes a loss of revenue to the budget.

As for the group of real home buyers, Mr. Tuan said it will be more difficult to access houses because the nature of the house price will increase.

Therefore, Mr. Tuan believes that tax policy needs to create motivation for market development instead of restricting transactions and liquidity, creating fear from both buyers and sellers.

Risk of increased real estate hoarding

According to Associate Professor Dr. Pham The Anh (National Economics University), if the main purpose of taxation is to prevent hoarding, avoid creating ghost towns and reduce inequality, while helping to increase supply, reduce prices and make the banking system healthy, then high taxation on transfer profits will risk increasing hoarding, with little chance of lowering real estate prices.

Dr. The Anh said that in this case, the tax burden will be shared between the buyer and the seller.

As for the tax based on holding time as previously proposed, this policy mainly targets "price brokers" and short-term traders.

Dr. The Anh said that taxing the second house or land plot onwards every year is the "best policy" because it will increase supply, reduce hoarding, reduce prices, and reduce distortions in the labor market,education and career choices. At the same time, the state will have a stable source of revenue to replace taxes that are having a major impact on production and labor motivation such as corporate income tax and personal income tax.

Dr. The Anh warned that if high taxes on transfer profits or taxes based on holding time are applied but are counterproductive, causing real estate "price inflation" and increasing hoarding, the above "best policy" is at risk of not being used.

Personal income tax should only be calculated when the transaction is profitable.

Talking to Tuoi Tre Online , Mr. Tran Manh Chi - Deputy General Director of Dong Tay Property Company - said that the nature of real estate transfer tax is personal income tax from real estate trading activities, meaning that there must be income to be subject to tax. The current calculation is to apply a tax rate of 2% on the selling price, leading to many cases of losses that are also subject to tax.

Therefore, in the case of calculating tax on profits, Mr. Chi said that it is necessary to correctly and fully calculate the arising costs such as bank loan interest, brokerage, even depreciation... so that paying tax on profits from transfer activities is real, consistent with the nature of personal income tax.

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Source: https://tuoitre.vn/danh-thue-20-loi-nhuan-bat-dong-san-lieu-gia-nha-lai-tang-20250506122705195.htm