In a draft statement to be submitted to the government, the Ministry of Finance (MOF) suggested "considering collecting PIT from real estate transfers based on the duration of ownership as practiced in some countries. The specific tax rates should be determined appropriately to reflect the actual conditions of the real estate market." 

This proposal aims to institutionalize policies and directions to regulate the market, preventing speculation and real estate bubbles.

To implement the taxation, the policies on land and housing must be improved and synchronized. The success of the taxation policy will also depend on the readiness of information technology infrastructure on land and real estate registration.

Therefore, the ministry believes that the suggested idea of collecting tax based on property ownership duration is not feasible. It has recommended that MOF conduct further research to perfect policies before application.

Currently, individuals transferring properties have to pay tax of 2 percent of transaction value, regardless of ownership duration.

In September 2024, in a document sent to the Government Office reporting on the real estate price situation, the Ministry of Construction (MOC) stated it would propose a policy to help ease speculation by taxing individuals owning many properties and transferring properties many times within a short time for profit. 

The proposal was made in the context of continued sharp increases in real estate and housing prices since the beginning of the year.

Last year, the National Assembly's supervisory delegation proposed early completion of the research, amendments and enactment of new tax laws which impose higher taxes on those using large areas of land and multiple houses, thus improving the management and use of land.

VietNamNet, which conducted a mini survey on the idea of taxing second and subsequent homes, and on abandoned properties, found that the percentage of people opposing the idea was a little higher than the people agreeing to the idea: 52 vs 48 percent.

Nguyen Quoc Hung, Vice Chair and Secretary General of the Vietnam Banking Association, said that, while taxing second homes is necessary, there must be overall assessment about the current situation before applying the tax.

"We still cannot determine exactly how many people own lots of villas. We also don't know how many people own dozens of apartments. Only when we accurately assess the current situation, a reasonable solution can be proposed. If we impose tax right now, it may affect the real estate market," said Hung.

He noted that taxing real estate is a complex issue, but it is a must. It necessary to gradually promote this through media and market assessment.

Investors need to understand that not all real estate investments are profitable and therefore, not buy and ‘hoard’ houses in anticipation of price increases to make profit. At present, people with idle money and investors rush to buy real estate as they believe that prices will increase and will never go down.

"The government has requested to develop 1 million social housing units. I believe that the market will see increases supply of homes for sale and rent. Soon in the time to come, the real estate market will return to its true nature. As such, I think taxing second homes is feasible,” he said. 

“However, taxation cannot be implemented immediately as it still requires further research and evaluation," Hung explained.

A report of a real estate research unit showed that in 2023, 15 percent of property investors bought and then sold real estate within three months, 36 percent kept real estate for 3-6 months, and 35 percent 6-12 months.

This means that only 16 percent of investors in Vietnam kept real estate for 1-2 years or longer.

To prove the necessity of taxing second homes, he cited laws in Singapore and Taiwan (China).

In Singapore, properties bought and sold within one year are taxed 100 percent on the margin between buying and selling prices. The tax rates are 50 percent if properties are bought and sold after two years, and 25 percent after three years.

In Taiwan (China), real estate transactions conducted within the first two years after the purchases are taxed 45 percent. The tax rates are 35 percent within 2-5 years, 20 percent within 5-10 years and 15 percent after 10 years.

Hong Khanh