The second real estate tax pilot proposal has raised concerns among investors, especially at a time when the market is quiet. Many predict that the market will become more and more difficult, and real estate prices will drop when liquidity is low.
Proposal to pilot the second real estate tax collection
In the Report to the Government on the formulation of a Resolution on pilot mechanisms and policies to create motivation for the development of Ho Chi Minh City, the People’s Committee of Ho Chi Minh City recently proposed related to the implementation of the decision on tax policy added to the land use right and property ownership on the land of the second or more real estate of the people (except for the sole immovable property).
The purpose of this regulation is to pilot the property tax policy as a practical basis for developing general policies in the future. At the same time, increasing stable and sustainable revenue for the local budget, limiting speculation on abandoned houses and residential land in current real estate projects, which wastes resources.
Also related to property tax, the Minister of Finance has just signed a decision approving the Action Program to implement the tax system reform strategy to 2030.
Accordingly, the Ministry of Finance conducts research to complete improvements in the direction of increasing the regulation level for land and supplementing tax collection for houses in order to encourage the effective use of houses and land, contributing to limiting housing speculation and ensuring the safety of the land ensure to mobilize of a reasonable and stable source of revenue for the state budget, in line with Vietnam’s socioeconomic conditions and international practices.
At the same time, develop tax policies in the direction of simple, easy-to-understand, easy-to-identify objects subject to property tax, payable tax amount, synchronized with the provisions of land law and relevant laws.
Previously, the Ministry of Finance had offered 2 options on the non-taxable threshold for houses of VND 700 million or VND 1 billion.
Specifically, the Ministry of Finance offers two options on the tax threshold for houses of over 700 million VND or over 1 billion VND. The tax rate is 0.3% or 0.4%.
Information on real estate tax is proposed in the context that the market is in a difficult position. Public opinion is also particularly interested in this proposal because of the significant impact of real estate tax on buyers, investors and businesses.
What do experts say about the proposal?
Giving his opinion on Ho Chi Minh City’s proposal to pilot the second real estate tax collection, Mr. Tran Khanh Quang, General Director of Viet An Hoa Real Estate Company, said that Ho Chi Minh City’s tax proposal in the current context not reasonable now. Because, a real estate market is facing many difficulties, such a proposal appeared.
Mr. Quang also pointed out unreasonable points. First, the real estate market is not transparent. In order to be transparent in the market, real estate must be digitized, with clear statistics on transactions and transaction values on the market.
This proposal also cannot be implemented because it is necessary to distinguish the limit on the number of properties owned. For a property worth 10 times larger than a small property, the tax on the amount, the owner of the small property will face limitations.
According to Mr. Quang, if this proposal goes into practice, it will have a strong impact on the market. First, this proposal makes real estate investors more inclined to avoid paying property taxes. Next, the cash flow into real estate will flow out of Ho Chi Minh City. The revenue will be less because people will find ways to avoid taxes. For example, they will ask relatives to name real estate. It is also difficult to collect property taxes.
In addition, buyers also tend to avoid investing in real estate in HCMC. In particular, this proposal also has a great psychological impact on investors. In the past, the proposal to stipulate the term of apartment ownership also confuses apartment owners.
Mr. Quang emphasized: “If the real estate tax collection is applied, it needs to be implemented synchronously in many provinces and cities, but should not be piloted only in Ho Chi Minh City. The mass application also ensures fairness.”
He also said: “Another point related to the tax policy when it is piloted in Ho Chi Minh City is that it will not be possible to limit the situation of speculation. Real estate in Ho Chi Minh City is many, with similar characteristics, meet real housing needs so it will be difficult to speculate. People who don’t buy this product can buy other products. But for real estate in remote provinces, the similarity is low and there is a clear comparison of properties. In the provinces, the situation is more speculative than in Ho Chi Minh City”.
The fact that Ho Chi Minh City wants to pilot a second real estate tax to avoid speculation creates great interest in public opinion, especially investors. Because in fact, in the context of the market is difficult to liquidate, goods are expensive, and the ability to exit goods is poor, the burden increases for investors. This proposal of Ho Chi Minh City can make the market more quiet, real estate prices may continue to decrease.
In addition, a part of public opinion also approves of taxation to limit speculation in order to pull down real estate prices.