Vo Hong Thang, R&D deputy director of DKRA Vietnam, said it is necessary to develop a more specific roadmap before imposing the second home tax.
It might take 2 or 3 years before the market is ready for such a tax, and even then it should only be applied in big cities like HCMC, Hanoi, Da Nang and Can Tho, Thanh Nien newspaper quoted Thang as saying.
Thang argued that an effective tax payer database should be completed first to clearly identify those who own more than one property.
The U.S. and China have specific regulations on the amount and type of real estate an individual can own before paying extra property taxes, he noted.
At first, Vietnam should tax properties in central business districts where real estate owners are well-off, he proposed, adding that a progressive tax rate would be best, for example: 2% for the second home, 5% the third, and 10% the fourth.
“In the U.S., despite the property tax, many people still own many houses to rent. Tax rates should be appropriate to limit speculation and the number of properties left unused,” he argued.
“And the charges should not be too high to avoid suffocating the real estate market,” he said. “If the intervention in the market is too rough, it will negatively affect dozens of other industries.”
Thang emphasized that tax rates should be lower than the profit margins of leasing houses, noting that many people, especially salaried employees and retirees, buy houses to rent in order to help cover their living costs.
Tran Minh Hoang, deputy secretary general of the Vietnam Association of Realtors, said for the plan to work, first home buyers must also be granted a preferential policy.
He said that now is not the right time to levy the tax because the real estate market is frozen and additional expenses for buyers could cause a panic and sink the market.
“It's uncertain whether or not the tax would push property prices down, so it is necessary to carefully consider the tax rate,” he continued.
“In many countries, the tax rate on second homes and onwards is a slightly higher to prevent speculation, and avoid flooding the real estate market with money, Hoang elaborated. “Therefore, the tax should be applied throughout the country, not only in HCMC,” Hoang said.
Real estate expert Nguyen Hoang said the second home tax would help reduce real estate speculation, but the main purpose would be to increase budget revenues, while also partly helping to make real estate transactions more transparent.
“Collecting a second home tax is now possible because the database of resident information is basically complete,” he pointed out. “However, taxation needs to be specific, clear and fair across regions, for example, between the inner city and the outskirts, urban areas and rural ones, properties used for residence and for production or business.”
Another real estate expert said the second home tax may become a burden for relevant stakeholders because real estate is already subject to many taxes and fees such as land use, corporate income tax, property transfer tax, and registration fees.
HCMC authorities have been saying recently that the city's income could be increased by collecting taxes for land use and real estate ownership on property owners who own more than one piece of real estate. The idea is to prevent speculation, the abandonment of property and the waste of resources.
Taxing second homes is common practice in many other countries, but Vietnam currently levies no property tax on second properties.
Dang Hung Vo, a former deputy minister of natural resources and environment, estimated since the doi moi (Renewal) economic reforms began in the 1980s, land prices have multiplied 300-400 times.
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