HCMC – The HCMC Real Estate Association (HoREA) has proposed increasing the income level of apartment lessors subject to value added tax (VAT) and personal income tax (PIT) from VND100 million to VND200 million to encourage the development of the apartment-for-lease market.
The taxable income threshold of VND100 million for apartment owners in the Ministry of Finance’s Circular 40 has caused controversies, the local media reported.
According to HoREA, the VAT and PIT rate of 5% each for apartment owners is high.
For example, a two-bedroom apartment with an area of 75 square meters in HCMC’s outlying districts has been sold at some VND3.5-4 billion. If it is leased, its owner can earn VND144-180 million per year.
Thus, it will take 19-24 years to recover capital, while apartment owners have to pay loan interest and apartment maintenance costs. As a result, the apartment-for-lease market will be less attractive.
In addition, apartment lessors should be offered family allowance policies like other taxpayers.
The pilot of a plan to tax apartments for lease in HCMC’s District 11 has put many apartment lessors at a disadvantage, especially amid the fourth Covid-19 wave.
HoREA also cited the example of developed countries in Europe and Northern America, wherein some 70% of their population rents apartments rather than buying them. The trend should be encouraged in Vietnam as it matches the economic restructuring policies.
Moreover, the 2014 Housing Law encourages organizations, households and individuals to develop apartments for lease. However, they still have made up a small proportion in the total property supplies and met part of the demand from foreigners, workers and immigrants.