Personal income tax can be imposed on profits from real estate transactions in accordance with the frequency of transactions, the time of purchase and resale of real estate. The faster this time occurs, the higher the tax rate and vice versa.
The Ministry of Finance proposes to tax personal income from real estate transfers based on ownership period - Photo: NGOC HIEN
That is one of the quite new contents in the Ministry of Finance's submission on the proposal to build a replacement Personal Income Tax Law project.
Accordingly, the Ministry of Finance proposed to study the application of personal income tax on profits from real estate transfers based on holding time, following the experience of some countries, to limit speculation and bubbles.
Tax only on profits
Speaking to Tuoi Tre, Mr. Nguyen Van Duoc, General Director of Trong Tin Accounting and Tax Consulting Company Limited, supported the view that there should be solutions to limit real estate speculation. However, in Vietnam's conditions, it is necessary to consider many aspects to be able to choose the most reasonable solution, avoiding causing many consequences for the market.
According to Mr. Duoc, the tax authority is applying Circular 111, which stipulates that if an individual owns a single house but does not own it for 183 days, he or she will not be exempt from tax when transferring it. This is also one of the solutions to prevent speculation and tax evasion when transferring real estate.
However, real estate is a special commodity. Therefore, to prevent speculation, many solutions can be used, not necessarily the solution of taxing real estate transactions based on ownership period.
"We should go back to the nature of real estate transfer tax. It is a tax on the income that the real estate transferor receives, meaning there must be income to be subject to tax," said Mr. Duoc.
According to Mr. Duoc, previously the tax authority also stipulated that the transferor could choose one of two methods: 25% on the difference between the selling price and the purchase price or 2% on the selling price. However, the tax authority later converted everything to the 2% calculation on the selling price, leading to many cases of losses that were also subject to tax.
Up to now, the tax authority has had better management tools, and real estate prices have also approached market prices. Therefore, the policy should be considered to return to calculating real estate transfer tax on actual income generated. That is the best way to manage, avoiding creating inequality when losses are also subject to tax as in the past," Mr. Duoc suggested.
Sharing the same view, Mr. Nguyen Van Dinh, Vice President of Vietnam Real Estate Association, said that having income means selling profitably, then having to pay tax to ensure fairness to the people. Tax is calculated on the difference between selling price and buying price or selling price minus buying price, then deducting arising costs such as bank loan interest.
In order to limit real estate speculation, many countries also only tax profits from real estate transactions. "Obviously, only profits must be taxed. That is the principle of tax calculation. At that time, if the property is sold within the first few months after purchase, a high tax rate will be applied to the profit earned by the seller. If it is sold 3 - 5 - 7 years later, the tax rate will be lower," said Mr. Dinh.
Have new data collected correctly and sufficiently
Expert Nguyen Thai Son also said that the plan proposed by the Ministry of Finance is one of the solutions to eliminate speculation, buying and selling, pushing up real estate prices, making it impossible for those with real needs to buy a house. However, there are cases where people are forced to sell their real estate due to urgent circumstances and suffer losses because they are "classified" as speculators and are forced to pay high taxes.
"In my opinion, we need to consult, discuss carefully, and consider many aspects. If we use tax tools to increase the cost of speculative behavior to limit this behavior, we must consider a tax rate suitable to the conditions in Vietnam, and not apply a rate that is too high and unrealistic," said Mr. Son.
Dr. Vu Dinh Anh, an economic expert, said that applying a higher tax rate when the holding period is shorter, in theory, can help limit speculation and "surfing" of real estate. "But how will this solution be implemented? Will the management agency have data and be able to accurately monitor the purchase and sale prices?..." - Mr. Anh raised the question.
According to Mr. Anh, the real estate market cannot be considered as just buying for living, but this market must have speculation. Real estate speculation is actually a short-term investment; like financial investment, buying and selling real estate is not for use but for profit. Real estate speculation is an inevitable and important factor of the real estate market.
"This market is dynamic thanks to speculative activities. Therefore, we need to deal with real estate speculation according to its nature and role. Real estate speculation is not bad, so we cannot find ways to eliminate it" - Mr. Anh said and believed that there should be solutions to help this market develop healthily, not just focus on revenue.
Policy must be synchronized with technology infrastructure
Experts propose to tax personal income in case the seller makes a profit after deducting valid expenses - Photo: NGOC HIEN
According to the Ministry of Finance, in order to limit real estate speculation, many countries impose taxes on profits from real estate transactions in accordance with the frequency of transactions and the time of buying and selling real estate. The faster this time occurs, the higher the tax rate. For example, in Singapore, land bought and sold in the first year is taxed at 100% on the difference in purchase value; after 2 years, the tax rate is 50%; after 3 years, it is 25%...
If applied in Vietnam, according to the Ministry of Finance, the specific tax rate needs to be studied and determined appropriately, reflecting the actual operation of the real estate market. At the same time, the application of personal income tax policy on real estate transfers based on holding time also needs to be synchronized with the process of perfecting policies related to land and housing as well as the synchronization and readiness of information technology infrastructure for land and real estate registration.
* Professor Dang Hung Vo (former Deputy Minister of Natural Resources and Environment):
Will limit the situation of buying and selling again
The Ministry of Finance's proposal to tax personal income from real estate transfers based on ownership time has been applied and succeeded by many countries. Whoever buys real estate, holds it for a short time and transfers it quickly has a higher commercial value and must pay more tax.
However, in the Vietnamese market, it is necessary to overcome the situation where buyers and sellers agree to declare a lower transaction price on the contract than in reality or the difference between the previous purchase and the next sale is insignificant. There must be stronger tools to force buyers and sellers to declare the correct transaction value on the contract, then the above tax tool will be effective and feasible in Vietnam.
If applied, this policy will reduce commercial liquidity for resale cases, increase liquidity for residential purchases, and help stabilize the real estate market.
* Mr. Tran Manh Chi (Deputy General Director of Dong Tay Property Company):
Need to calculate enough reasonable and valid costs
The Ministry of Finance’s proposal to impose personal income tax on real estate transfers based on ownership period, instead of applying 2% of the transfer price, will have a major impact on the real estate market. Speculators who buy and sell real estate in a short period of time will consider that if the tax rate is too high, there will be no profit.
However, if applying the method of calculating tax based on ownership period, personal income tax will be levied on real estate transfer activities when the buyer makes a profit.
We are moving towards transactions being made through banks, and the tax department is also controlling the declaration of transactions according to market prices. Therefore, the inspection of transactions on purchase and sale prices will be determined by the authorities based on the transactions and invoices.
In case the buyer buys a house or land for sale in a short period of time, it is necessary to determine the personal income tax payable when there is a profit, that is, revenue minus actual, reasonable and valid expenses.
In this, interest costs, brokerage costs and other legitimate costs should be calculated as the basis for determining profit. If the transaction takes place in a short period of time, the seller makes a profit, calculating tax at a higher rate will be appropriate.
In reality, there are many cases where people buy a house to live in or as an asset for their children, but for unavoidable reasons such as illness, debt, relocation... they are forced to sell the house, even at a loss, but still have to pay personal income tax, which is unreasonable.
Source: https://tuoitre.vn/nguoi-co-nhieu-bat-dong-san-can-nhac-ve-thue-luot-song-20241127223815472.htm
Comment (0)