HCMC – The Ministry of Finance has scrapped a proposal to levy a 20% capital gains tax on each real estate transfer.
In the latest draft of the amended Personal Income Tax Law, currently under review by the Ministry of Justice, the Ministry of Finance has finalized its tax plan for real estate transfers.
Accordingly, personal income tax for residents on income from real estate transfers will be calculated as the transfer price multiplied by a 2% tax rate.
The taxable amount will be determined at the time the transfer contract takes effect or when the property ownership or land use rights are registered. This is also the tax calculation method currently in effect.
The ministry has also withdrawn its proposal to calculate personal income tax based on the holding period.
It said that maintaining the current tax calculation method is meant to ensure feasibility and alignment with present management practices. However, the authorities will study and develop a roadmap to eventually shift to taxing income based on the difference between buy and sale prices.
Previously, the Ministry of Finance proposed a 20% tax rate on income from real estate transfers, calculated on each transaction (selling price minus purchase price and related costs).
If the purchase price and costs could not be determined, the tax would have been applied directly to the selling price based on the holding period: 10% for under two years, 6% for two to five years, 4% for five to 10 years, and 2% for over 10 years or for inherited properties.
Individuals inheriting property but engaging in speculation would have been taxed as real estate business operators.
