Abolish the proposal to calculate 20% tax on profit from each real estate transfer

(Dan Tri) - The Ministry of Finance has abandoned the proposal to apply a 20% tax on the difference between the purchase and sale price of real estate for each transfer.

The Ministry of Finance recently sent the Ministry of Justice a dossier for appraisal of the draft Law on Personal Income Tax (replacement).

In this draft, the Ministry of Finance has abandoned the proposal to impose a 20% tax rate on income from real estate transfers, calculated on income from each transaction (selling price minus purchase price and related costs).

In the submission attached to the draft law to the Ministry of Justice, there is no mention of the content of amending and perfecting regulations on income subject to personal income tax and how to calculate tax on real estate transfer activities of individuals.

Real estate in Hanoi (Photo: Vu Tuan Anh).

Income from real estate transfer is an important source of income in the personal income tax system. Since 2015, according to the Law amending and supplementing a number of articles of the Law on Personal Income Tax, the unified tax rate is 2% of the real estate transfer price.

Previously, in the draft Law on Personal Income Tax (replacement), the Ministry proposed applying personal income tax to real estate transfers by individuals by multiplying taxable income by the tax rate of 20% for each transfer.

This taxable income is determined by the selling price minus the purchase price and reasonable expenses related to generating income from the transfer of real estate.

In case the purchase price and related costs are not determined, personal income tax is calculated by multiplying the selling price by the tax rate. The tax rate in this case will depend on the ownership period, up to a maximum of 10%.

The real estate holding period is calculated from the time the individual has the right to own and use the real estate (from the effective date of the Law on Personal Income Tax (replacement)) to the time of transfer.

For real estate derived from inheritance, the transfer tax rate remains the same as current, at 2%, and is not calculated based on the holding period. The reason is that the Civil Code stipulates that inheritance is the transfer of assets from a deceased person to a living person, different from giving or donating real estate.

The time for determining taxable income from real estate transfer is the time when the transfer contract takes effect or the time of registration of the right to use and own the real estate.

Previously, according to the Ministry of Finance, some countries have used tax policies to limit real estate speculation.

Germany has two main taxes: real estate transfer tax and income tax.

Income tax on real estate is applied at rates from 14% to 42%. Individuals who buy and sell real estate will be exempt from income tax when the real estate is owned for more than 10 years or the real estate is not considered an asset for business purposes (if the individual owns this real estate and has 3 transactions in 5 years, the property owned by this individual is business real estate).

In the US, anti-speculation policies in real estate depend on the laws of each state. Regulations in San Francisco (California) state that if an individual sells real estate within 5 years of purchase, a progressive transfer tax will be applied based on the holding period.

Specifically, the tax rate is 24% if sold in the first year; 22% if sold in 1-2 years; 20% in 2-3 years; 18% in 3-4 years and 14% if transferred after 4-5 years.

In Singapore, if a property is bought and sold again within the first year, the difference in price is taxed at 100%. After 2 years, the tax rate drops to 50% and after 3 years it is 25%.

In Taiwan, the tax rate is 15% if sold in the first year and 10% if sold in the second year.

In Malaysia, gains from the disposal of real estate are taxed according to the holding period: 30% if sold within the first 3 years, 20% if held for 3-4 years and 15% if held for 4-5 years.

Source: https://dantri.com.vn/kinh-doanh/bo-de-xuat-tinh-thue-20-tren-lai-tung-lan-chuyen-nhuong-bat-dong-san-20250904174536877.htm