‘Destroyed’ Real- Estate Investments?

The HCM City People’s Committee has proposed the Ministry of Construction to issue a number of tax measures to ensure fair access to housing.

Accordingly, the People’s Committee of Ho Chi Minh City proposes to apply high tax rates on property second or more and property transactions take place within a short time after purchase (within 1 year).

Specifically, the higher tax rates apply to second or more real estate and property transactions occur shortly after purchase (within one year). In addition, the property tax revenue on land and the added value of land and property on land from the investment in infrastructure.

Taxation on second housing is levied on the rental housing segment. This is contrary to the policy of the state

Earlier, at a talk on taxing home ownership, Vu Van Phan, Deputy Director of the Housing Management and Real Estate Market Department (Ministry of Construction), said that property deals land and buildings on the land, the implementation of taxes and anti-speculation is the right and necessary.

“Regarding real estate is the home of individual households, the State recently levied non-agricultural land use tax but not taxed on the home. The tax rate is 0.03%, exceeding the limit of 3 times the norm is 0.07%; over 3 times limit is 0.15%. This tax has not helped land users effectively and not be against speculation, “said Phan.

Meanwhile, Prof. Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, said that the taxation on second housing is not reasonable because, in the real estate market, the proportion of business is very high. If the business is not available, the segment of rental housing will be reduced immediately.

According to Vo, taxing on second homes is a hit on the rental housing segment. This is contrary to the policy of the state: sale of apartments in the form of rent, purchase. If the tax is levied on the rental housing, the number of tenants will decrease. As the demand for secondary investors fell, the supply from the projects would decrease, reducing both supply and demand. Previously, there was a decrease in the demand for people with rental housing, followed by the lower demand for secondary investors.

If the business is not available then the rental segment will be reduced immediately.

“In addition, if the tax on housing should hit the land value, if the value of the home will not be beautiful anymore because no one fools to invest in beautiful houses to tax higher,” Mr.Vo emphasized.

Regarding social housing policy, the city also suggested the Ministry should consider the balance and allocate the budget from the State budget so that the State Bank has grounds to subsidize interest rates to implement social housing policy soon. Housing Law of 2014. At the same time, direct the Social Policy Bank to implement preferential loans and social housing savings policies in accordance with Clause 5, Article 13 of Decree No. 100/2015 to create more capital to implement the social housing program and ensure equity for social housing beneficiaries. According to the HCM City People’s Committee, there are 29 large-scale residential development projects in the city, of which two are projects with a land use area of 50ha or more and 27 projects with a total of from VND 3,000 billion or more or the size of apartments from 1,500 units or more.

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