The proposal to impose a second property tax is drawing significant public attention. This policy is expected to bring greater transparency and sustainability to the real estate market while curbing speculative activities. The article below will clarify key concepts related to the second property tax, its intended purposes, and forecast its potential impact on investors and the market as a whole.
What Is the Second Property Tax?
Currently, Vietnam’s legal documents do not provide a specific definition or regulation regarding the second property tax. However, in simple terms, this refers to a tax imposed on individuals or organizations that own two or more properties, with higher tax rates applied to the second and subsequent properties.
At present, several major countries around the world have implemented second property taxes to curb real estate speculation. For example, in Singapore, any individual purchasing a second home must pay a 20% tax on the property’s value, with the rate increasing progressively for the third, fourth properties, and so on. Foreigners looking to own property in the island nation are subject to a tax rate as high as 60%.
Does Vietnam Impose a Second Property Tax? When Will the Second Property Tax Be Applied?
Currently, Vietnam has not issued specific regulations regarding the second property tax. However, in certain localities such as Ho Chi Minh City, the idea of taxing second properties is under consideration.
According to proposals, Ho Chi Minh City may raise the registration fee for second properties from 0.5% to 2% of the transaction value. At the same time, there are discussions about increasing the non-agricultural land use tax for residential land. Additionally, some proposals suggest taxing second properties based on their total area to ensure fairness.
Experts have also proposed a 20% tax on the capital gains — the difference between purchase and selling prices — similar to the current corporate income tax, as a way to promote fairness and prevent tax evasion.
However, as of now, these are merely proposals under review by relevant authorities and have not yet been officially enacted or implemented. Therefore, the method of calculating the second property tax and its timeline for application remain undetermined.
Currently, individuals owning real estate in Vietnam are subject to several types of taxes and fees, including:
Registration Fee:
The registration fee is a type of fee that land users must pay to be granted or transfer the ownership certificate (commonly known as the “red book”). The fee is calculated based on land price tables issued by the Provincial/City People’s Committee at specific times.
For residential land, the registration fee is calculated using the following formula:
Registration Fee = 0.5% × Total Land Area × Land Price per m²
For residential houses and apartment units, the registration fee is calculated using the following formula:
Registration Fee = 0.5% × (Total Floor Area × Price per m² × Remaining Quality Percentage as issued by the Provincial People’s Committee)
For houses and apartment units, the registration fee is calculated as follows:
Registration Fee = 0.5% × (Total Floor Area × Price per m² × Remaining Quality Percentage as issued by the Provincial People’s Committee)
Personal Income Tax on Real Estate Transfers:
Personal income tax on real estate transfers is determined based on the transaction value at the time of each transfer, and is typically calculated using the land price listed in the official Land Price Table. The current regulation imposes a 2% tax rate on the total transfer value.
However, certain cases are eligible for personal income tax exemption, such as transactions involving spouses, direct blood relatives, and other special family relationships.
Notarization Fee for Real Estate Transactions:
Depending on the value of the asset or the contract, the notarization fee for processing real estate purchase or sale documents ranges from VND 50,000 to VND 70 million. Details are as follows:
Land Use Right Certificate Issuance Fee (commonly known as “Pink Book” issuance fee):
This fee varies depending on the specific regulations of each locality. However, a general principle applies: centrally governed urban areas typically have higher issuance fees than other regions.
Appraisal Fee for Red Book Application Dossier:
The appraisal fee for a land use right certificate application may differ based on several factors, including the land parcel’s size, the complexity of the documents, the intended land use, and whether it is a first-time issuance, a new issuance, or a reissuance.
What Impact Would a Second Property Tax Have on the Real Estate Market?
The proposal by regulatory authorities to impose a second property tax has drawn considerable attention from the real estate market, especially among property investors. According to some investors, if the proposal is approved, it could result in investors bearing multiple layers of taxes and fees—costs that would ultimately be passed on to end buyers through higher housing prices. This, in turn, could reduce market liquidity. Additionally, the rental housing market may also be affected, as landlords are likely to raise rents to offset the increased tax burden.
From another perspective, several real estate experts believe that introducing a second property tax is both necessary and urgent. They argue that when a wealthy segment of the population holds multiple properties over the long term, it reduces the overall housing supply and artificially inflates property values. The consequence is an increasingly wide socioeconomic gap—where the rich get richer, and low-income individuals find it ever more difficult to afford housing, especially in major cities and urban areas.
Imposing a second property tax can help regulate the real estate market, prevent price inflation and speculation, and rebalance both supply and housing prices—making it more feasible for low-income individuals to own a home.
In addition, experts agree that while the second property tax is necessary, it should be implemented with a clear and gradual roadmap to avoid disrupting market supply and demand, as well as related sectors such as construction and building materials.
Frequently Asked Questions About the Proposed Second Property Tax
How Is the Second Property Tax Calculated?
As mentioned above, Vietnam has not yet issued any specific regulations regarding the second property tax—it remains a proposal currently under review. Therefore, the method for calculating the second property tax has not been officially determined.
Will the second property tax be as high as 46%?
Recently, there have been rumors suggesting that the second property tax could be as high as 46%, or even 50%. However, in reality, the second property tax remains merely a proposal and has not yet been approved. As such, the calculation method and implementation timeline have not been clearly defined.
The article above has provided essential information regarding the second property tax. As of now, this tax is still under discussion, and no official regulations have been issued.
We will continue to update you with the latest developments on real estate taxation, as well as other related topics such as market trends, legal advice, and feng shui consultations.
