23/07/2024
Throughout the journey of owning and managing personal real estate, taxes and fees are crucial factors that cannot be overlooked. They not only affect initial costs but also play a significant role in the use and transfer of assets. In this article, we will delve into the most important taxes and fees related to personal real estate, while exploring their impact on owners and those planning to invest in real estate in the future.
When buying Real Estate
In practical real estate transactions in Vietnam, buyers typically do not bear brokerage costs. An important consideration is the Value Added Tax (VAT), which applies at a rate of 10% on the construction value of the property. However, VAT is not calculated on the allocated land value.
In addition to VAT, buyers must also pay a registration fee upon receiving the Certificate of Land Use Rights and Ownership of Houses. This fee is calculated based on the land price zone set annually by the Province/City, multiplied by the area of the property, at a rate of 0.5%, not exceeding 500 million Vietnamese Dong per transaction.
For apartments, buyers also contribute to the Apartment Maintenance Fund, with a fee of 2% on the property's value before VAT. Furthermore, there's a management fee based on the operational and management costs of residential areas, as regulated by the Investor, Building Management Board, and operating unit, typically ranging from 8,000 to 120,000 Vietnamese Dong per square meter per month, based on actual usage area.
Lastly, buyers also incur parking fees for motorcycles or cars at the apartment, depending on the building's management policies and specific project conditions.
When selling Real Estate
In Vietnam, brokerage fees are typically included in the sale price and generally range around 2% of the total transaction value. It's noteworthy that if the seller is the first-time owner of the house they are selling, they are exempt from Personal Income Tax (PIT).
Regarding Personal Income Tax (PIT) from real estate transfers, a 2% tax rate is applied to the total transfer value. This means this amount will be deducted directly from the seller's taxable income.
Regarding Value Added Tax (VAT), if both the buyer and seller are organizations, VAT is usually included in the agreed sale price and does not need to be separately calculated.
In terms of marriage in Vietnam, under current regulations, property acquired by a couple after marriage is considered joint property of both spouses. This includes assets owned individually by each person before marriage. However, assets owned before marriage are generally considered personal property of each individual, unless otherwise agreed upon.
When renting out Real Estate
Brokerage fees for rentals are typically calculated based on the number of months rented, for example, from 1 to 1.8 months for leases exceeding 12 months.
Regarding property tax (land use tax), landlords must pay 1 million Vietnamese Dong annually if rental income reaches or exceeds 1.5 million Vietnamese Dong per month.
For Value Added Tax (VAT), a 5% rate applies to the total rental amount annually. However, if the total annual rent does not reach or is below 100 million Vietnamese Dong, VAT is not applicable.
Personal Income Tax (PIT) is also applicable on rental income, at a rate of 5% on the total rental income. If rental income does not reach or is below 100 million Vietnamese Dong annually, PIT is not applicable.
When renting Real Estate
Consultancy/search fees for real estate can vary depending on the type of property and its intended use. For office or retail space rentals, these fees typically start from $5,000 per month upwards.
In Vietnam, tenants renting apartments usually do not pay brokerage fees. Monthly rental costs are calculated based on each specific apartment or by usable area if it's office space.
Regarding Value Added Tax (VAT), specific regulations are as follows:
For office buildings, VAT is applicable at a rate of 10%.
If the property owner is an individual, VAT may be included in the rental amount at a rate of 5%.
Additionally, there are service fees depending on the type of property:
For office buildings, service fees typically range from approximately $5 to $7.5 per square meter per month.
Achieve Realty VN is currently distributing real estate projects of the new Thu Thiem urban area. If you need more information, please get in touch with the address:
Hotline: +8486 888 2539
Email: sales@achievereal.com
