During the 10th session of the 15th National Assembly’s group discussions on the amended Personal Income Tax Law, several delegates proposed higher taxes on frequent real estate flippers to curb speculation. Others suggested taxing second and third homes to prevent land hoarding and price inflation.
Legal expert Nguyen Thi Son, Director of the Institute of Legal Science and International Business
Many Transactions Priced in Gold
Commenting on these proposals, legal expert Nguyen Thi Son, Director of the Institute of Legal Science and International Business, emphasized the need for careful consideration of taxing individuals owning multiple properties. She argued for a comprehensive understanding of the factors driving property price increases over the years.
While the law mandates Vietnamese Dong (VND) for real estate transactions, Son noted that many deals are unofficially priced in gold or foreign currencies. “When gold and foreign currencies rise, property prices tend to follow suit. This market dynamic, rather than speculation alone, drives price increases,” she explained.
Son considers current tax regulations on real estate transactions between individuals and businesses adequate. Taxation should target income-generating activities, avoiding the assumption that all multiple property owners are speculators.
Proposals to tax second and third properties
Few Buy Property Without Using It
In reality, owners of multiple properties typically rent them out if not for personal use. Unused properties deteriorate quickly, causing losses. Rental contracts already incur VAT and personal income tax, totaling around 10% of the contract value, contributing to state revenue.
Vietnam’s growing tourism and foreign investment attract expatriates and travelers seeking rentals. This demand fuels individual investment in properties for hospitality services, generating VAT and corporate or personal income tax.
Cultural and personal preferences also play a role. Many Vietnamese prioritize convenience early in life, seeking quieter locations later. Families often save to buy additional homes for their children, making multiple property ownership common.
A Broader Perspective Needed
Son questioned, “Tax evasion and fraud are already addressed by criminal law. Why generalize the actions of a few to shape policies for the entire market?” She advocates for a more inclusive approach in property tax policy, ensuring fairness for legitimate buyers without speculative intent.
Taxing Frequent Real Estate Traders: A Path to Fairness?
When property taxes are strategically implemented, they can serve as a powerful economic lever, deterring speculative bubbles and fostering a more stable real estate market.
Taxing Frequent Real Estate Traders: A Path to Fairness?
When property taxes are strategically implemented, they can serve as a powerful economic lever, effectively deterring speculative investors from artificially inflating the market.
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