TIPS FOR FOREIGN PROPERTY BUYERS IN VIETNAM

TIPS FOR FOREIGN PROPERTY BUYERS IN VIETNAM

  1. Understand the Vietnam housing law

Even though the revised Law on Housing took effect on 01 July 2015, much of the information regarding the purchase of property in Vietnam still remains unclear to many investors. To understand this new law and its inconsistencies, it is important to solicit a good property consultant and lawyer.

  1. Research the area

Understanding the different areas of Vietnam is critical to selecting the property that matches your requirement, whether for investment or living. As a developing country with significant regional distinctness, different areas benefit from different positive contributions, such as infrastructure development, comprehensive master planning, tourism, etc…

  • Metro Line 1 will be fully operational in 2021 – any development currently within 1 km of it will benefit from a capital appreciation of approximately 10% per annum. This effect is common and has been documented in many countries. Find a good property consultant to assist you through the entire purchase process.
  • The Thu Thiem NUA is a comprehensively planned extension of the current HCMC central business district and will comprise a variety of developments, ranging commercial, residential and administrative.
  1. Open a local bank account

Foreign investors are recommended to setup a local bank account to transfer funds for local property purchases. International banks with branches in Vietnam are as follows: ANZ, Citi Bank, HSBC and Standard Chartered.

  1. Contact a property consultant to get you through the purchase process

Your property consultant will guide you through the process of buying a property, providing advice on property values, investment potential and legal requirements. If possible, please provide your agent all necessary information to assist you with your investment such as budget, property type, etc…

  1. Understanding the taxes on a purchase

Foreign buyers are subject to a number of taxes in Vietnam, requiring any prospective investor to evaluate the inherent costs before moving ahead. The following taxes apply to property transactions:

  • VALUE ADDED TAX (VAT) – 10% VAT is taxed on any property sale by local or foreign buyer.
  • SINKING FUND – 2%
  • REGISTRATION TAX FOR OWNERSHIP – 0.5% registration tax for obtaining the house ownership certificate.
  1. Understanding the taxes on post-purchase

PERSONAL INCOME TAX (PIT)

If personal income is earned through the assignment or resale of a property, a 2% personal income tax must be paid on the transacted value. Please note that tax regulations are subject to change by the relevant authorities.

WHAT ARE THE TAXES INVOLVED IN LEASING?

  • If personal income is earned through rental, 5% VAT and 5% PIT must be paid on the revenue.
  • For rental income exceeding VND 100 million per year, a business license tax of VND 1,000,000 per year applies.