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Tax proposal for second properties presents questions over viability
A new second property tax pilot proposal has raised concerns that the market will become affected by low liquidity, discouraging buyers.
In a report to the government in December, the People’s Committee of Ho Chi Minh City proposed a pilot for a tax policy to be added on purchases of two or more properties.
The pilot aims to provide the practical basis for developing general policies, increasing stable and sustainable revenue for the local budget, and limiting speculation on abandoned houses and residential land, which wastes resources.
However, the proposal to levy tax on two or more properties in Ho Chi Minh City may not prevent speculation but instead hurt the real estate market, according to experts.
Supply in Ho Chi Minh City has reached its lowest level in many years. The legal barrier is also hindering many projects from being implemented while the land fund is increasingly scarce, many projects are delayed, investment costs are increasing, and investors are moving to second cities.
Some insiders say the tax proposal could also limit demand. Many parents may have to rent instead of buy homes for younger children who cannot afford to buy homes for themselves.
There is also the possibility of circumventing the law by letting family members own the house, a situation that is difficult for local authorities to manage.
Moreover, according to the Institute for Policy Research and Media Development of Ho Chi Minh City, the real estate market can only levy this tax if it is digitalised and transparent in other factors, such as the land fund, tax categories, and what the tax will be used for.
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