No matter where you buy real estate, you need to have a good understanding of what property taxes to be paid when buying, holding, and selling. To many investors’ surprise, Vietnam has comparatively low real estate taxes, at least compared to many Western countries.
In this article, we review the taxes you have to pay when buying new properties on the primary market in Vietnam. Such properties are typically new condominium units bought directly from a developer, or with the help of an agent.
This is undoubtedly the most popular option among foreign buyers in Vietnam, due to existing foreign property ownership regulations.
What real estate taxes do I have to pay in Vietnam?
Below, you can find the taxes you have to pay when buying, holding, and selling property in Vietnam.
VAT (Value Added Tax)
If you buy a condominium unit on the primary market you have to pay a VAT of 10%. The VAT is multiplied by the purchase price and paid by both local and foreign buyers.
You pay the tax at the time of the purchase.
Maintenance Fee/Sinking Fund
A maintenance fee of 2% will also be paid by the buyer. The fee is used for larger buildings and common areas to maintain the development’s quality standards.
You can see it as a hedge against future issues, such as large scale repairs or major works needed to the building.
This tax is also paid at the time of the purchase.
The registration fee is 0.5% and multiplied by the property value. It’s paid by the buyer and similar to the stamp duties used in other countries. It’s paid at the time of the purchase.
Rental Income Tax
If you rent your apartment to a tenant, you have to pay a VAT of 5% and a personal income tax of 5%. Thus, a total rate of 10% applies to your rental income. In reality, few property owners pay this tax.
The tax is paid when you hold the property.
Capital Gains Tax
Even if capital gains tax doesn’t exist in theory, you need to pay a personal income tax of 2% when selling property. The tax is paid when selling property.
Foreigners generally don’t have to pay land tax. The tax is used for non-agricultural land and ranges from 0.03% to 0.15%. To calculate the tax, you use the land area and the prescribed price per square meter.
How does Vietnam’s property taxes compare to other Asian countries?
Real estate taxes are low in Southeast Asia and Vietnam is doing comparatively well to its neighbors. Thailand, Vietnam, the UAE, and China, for example, don’t levy any annual property tax at all.
Thailand, which has some of the lowest real estate taxes in Asia, levies the following taxes to foreign and local buyers:
- Transfer fee: 2%
- Stamp duty: 0.5%
- Rental income tax: 0% to 37% (increases progressively)
- Business tax (capital gains tax): 3.3%
Examples of countries and cities that charge significantly higher real estate taxes, at least when buying, include Hong Kong and Singapore. This is primarily to avoid speculation.
Besides, Japan and Korea charge higher taxes compared to countries like Vietnam and Thailand on average.
Are there other fees I have to pay when buying property in Vietnam?
In addition to real estate taxes, you also have to consider other fees when buying, holding, and selling real estate. Below you can find a couple of examples.
For larger transactions, especially in the commercial real estate industry, you should preferably let a solicitor help you through the screening and buying process.
Fees change according to the scope of the project. You should expect to pay anywhere between USD 3,000 to USD 6,000 in Vietnam.
If you own a condominium unit, you have to pay monthly management fees. The management fee is sometimes passed on to the tenants and sometimes covered by the landlord.
The total fee is calculated by multiplying the size of the apartment by a fixed rate. I’d say that you should be prepared to pay USD 80 ~ 150 each month.