Will people who own two or more properties be taxed?

The Ministry of Finance has just completed a thematic report on real estate tax policy, which includes a proposal to tax individuals who own two or more houses or plots of land.

While many wealthy individuals and real estate businesses are worried, most economic experts believe that this proposal is appropriate to curb real estate speculation and increase government revenue.

The rich are wondering...

Mr. Nguyen Van Hai (Thanh Xuan District, Hanoi) is planning to buy another apartment to rent out. The proposed high tax on second and subsequent properties has caused him considerable concern. “We already have to pay many types of taxes, such as personal income tax, extraordinary income tax, and many others. If we have to pay additional taxes on owning multiple properties, it will become double taxation,” Mr. Hai worried.

Anxiety is a common sentiment among many wealthy individuals who aspire to own multiple properties. The proposed tax on multiple property owners is also predicted to significantly impact this recovering market.

Dr. Bui Quang Tin, a lawyer, acknowledged that if this proposal is approved, it will lead to double taxation. However, he stated that the proposal aligns with international practice and ensures tax fairness. "Those with more assets and higher incomes will certainly have to pay more taxes than the poor, thus contributing more to the state budget," Dr. Tin explained.

Sharing the same view, Dr. Nguyen Tri Hieu argued that in developed countries, the government provides support for the first home, which is for residential purposes, while the second home, usually for business or investment, is taxed. For example, in the US, the government supports homebuyers by not taxing the income used to pay interest to banks on the first home. However, for the second home, all income used to pay interest to banks is taxed like all other income.

Nguyen Van Dinh, Secretary General of the Hanoi Real Estate Brokers Association, also stated that in other countries, taxing second homes is normal practice, aiming to curb speculation and ensure social humanity. Mr. Dinh explained that this tax also aims to balance the gap between the rich and the poor, between those with excess housing and those with insufficient housing. Specifically, tax revenue from those with multiple homes can be used to support those lacking housing. This reflects the humane aspect of society.

Curb speculation, increase budget revenue.

According to a thematic report on real estate tax policy recently published by the Ministry of Finance, in terms of its role in regulating the market, the non-agricultural land use tax rate applied in Vietnam since 2012 has not been large enough to curb the artificial scarcity of supply in the real estate market.

Representatives from the Ministry of Finance stated that the real estate market is expected to develop more stably and sustainably in the coming period as a series of new related policies come into effect; Vietnam's per capita income has continuously increased in recent years, and people's ownership and investment in real estate are trending upwards. Therefore, in order to have a synchronized tax policy system that is consistent with international practices, contributes to market stability, limits speculation, and prevents wasteful use of real estate, it is necessary to research and develop a Law on Property Tax.

Illustrative image.

Former Deputy Minister of Natural Resources and Environment, Dang Hung Vo, stated that he agrees with the Ministry of Finance's view that a separate law on property tax should be studied and enacted. He believes that taxing second real estate properties would stabilize the market, reduce land speculation, and give the poor more opportunities to own property. Mr. Vo explained that those with money can still own real estate, but they must pay taxes. The law does not prevent property ownership, but it must be fair. Those who buy two houses should be able to pay the taxes.

"This will both increase revenue and regulate the market. Anyone intending to speculate will have to reconsider, reducing the risk of a real estate bubble," Mr. Vo emphasized.

According to Urban Economics