Real Estate Transfer Tax: Double Impact and Long-Term Expectations

Photo caption — Illustration photo: Tuan Anh/VNA

The goal is to limit speculation, encourage long-term holdings and increase revenue for the budget. However, many opinions say that a healthy real estate market is not a market controlled by heavy taxes, but one with good liquidity, transparent operations and fairness for both investors and people with real needs. Real estate transfer tax is said to have two-sided effects, but if the policy is reasonable, it will have long-term effects.

Squeezing speculation or strangling the secondary market?

Recently, in the draft Law on Personal Income Tax (amended), the Ministry of Finance proposed a method of calculating personal income tax on real estate transfers based on the net profit - selling price minus purchase price and related costs. Accordingly, the proposed tax rate is 20% on taxable income, calculated for each transfer. In case the purchase price and costs cannot be determined, the tax will be calculated directly on the selling price with a progressive tax rate according to the holding period: 10% if less than 2 years and 6% from 2-5 years; 4% from 5-10 years; 2% if over 10 years or inherited assets.

Experts say this proposal is considered a significant effort to tighten short-term speculation and increase transparency in transfer pricing, forcing sellers to fully declare cost prices as well as actual costs, helping the data system reflect true values.

However, many experts believe that if the tax policy is not properly designed, it will cause the secondary market - which currently plays an important role in liquidity - to stagnate. Small investors will be pushed out of the market, and real estate businesses, banks and the financial market will also be affected.

Dr. Nguyen Van Dinh, Chairman of the Vietnam Association of Realtors (VARS), said that it is necessary to clearly define the policy's objectives. Although there may be initial negative reactions, this is necessary to ensure the market develops sustainably, healthily and serves real needs, not to continue to foster speculative and profiteering activities. This tax rate will force many investors, especially those with the goal of "surfing", to reconsider their investment strategies.

In reality, the new tax policy will certainly cause a decrease in transactions in the real estate market, affecting the entire market system, from business activities of enterprises to investors. In the short term, when projects with high selling prices will be more difficult to transact due to reduced demand.

This will be one of the inevitable consequences that the market will have to face if the tax policy is issued at the present time. However, according to Mr. Dinh, the issuance of tax policy is necessary to regulate the market in a healthier direction. For example, this forces investors to reconsider their pricing strategies. From there, opportunities to adjust the price level in the market may appear...

Need a clear, public and transparent roadmap

A recent survey conducted by Batdongsan.com.vn with 1,000 people looking for real estate showed that up to 95% of survey participants bought real estate mainly for investment purposes rather than for living. Among them, the number of people who own real estate intending to sell within 1 year accounts for a large proportion. This shows that currently, Vietnamese people are very interested in investing in real estate but the holding period is short and they tend to "sell when the price is right", flexibly shifting capital flows to other assets that are more profitable at each time.

Mr. Dinh Minh Tuan - Southern Regional Director of Batdongsan.com.vn commented that calculating tax based on profit would be more reasonable in principle but it would be difficult to determine the exact real profit because there would be many related costs such as brokerage commissions, interior renovation, loans... without invoices or valid documents to be deducted from tax. Faced with this situation, Mr. Tuan is afraid that if it is not clearly regulated, taxpayers will have to pay higher tax rates than in reality.

Adjusting the real estate transfer tax is still considered necessary to ensure balance and increase revenue for the budget. However, with the proposed rate of 10-20% on the profit, it is necessary to design a public, transparent, reasonable mechanism as well as a suitable roadmap to avoid causing shock to the market, creating a large burden for the people - experts of Batdongsan.com.vn analyzed.

Lawyer Le Cao - Managing Attorney of FDVN Law Firm commented that a legal regulation can only be most effective when it is consistent with reality. Therefore, before promulgation, tax policies need to be carefully consulted and comprehensively evaluated to anticipate and resolve situations that may arise in reality.

In addition to establishing reasonable tax rates, specific regulations are needed to avoid disputes in the process of determining factors such as reasonable costs, purchase price - sale price, holding period, etc. At the same time, the law should also have exceptional provisions to ensure fairness for special cases.

“The core of real estate market management, including tax policy, is to build a transparent and unified real estate data system nationwide. Currently, many shortcomings still exist such as real estate registered under other people's names, non-transparent money flows into real estate, or interest groups manipulating the market, causing serious distortion of real estate values,” said Lawyer Le Cao.

Therefore, according to this lawyer, data transparency is one of the prerequisites. When a clear data-based management platform is established, transactions will be easily tracked, and real estate values will approach real value. At that time, the market will operate more sustainably, people will also have easier access to real estate that meets their real needs, and speculative phenomena that disrupt the market will be limited. A detailed, transparent management system not only helps control transactions but also acts as a "shield" to limit disputes and risks that may arise in the future.

Source: https://doanhnghiepvn.vn/kinh-te/thue-chuyen-nhuong-bat-dong-san-tac-dong-hai-mat-va-ky-vong-dai-han/20250728054844445

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