The People’s Committee of HCM City has proposed to impose a tax on apartments and houses which are sold within one year after purchasing, aiming to reduce speculation and ensure stability in the estate market.

Apartment buildings in HCM City. — Photo thoibaotaichinh.com.vn

The People’s Committee has submitted the proposal in its property market development project for the 2016-20 period with an orientation to 2025 and a vision to 2030 to the National Assembly and the Government.

The project was approved by the city by the end of last year. It provided evaluations on advantages and shortcomings of the market as well as development orientation.

The city’s property market still lacks transparency, causing speculation, it cited. Individual investors buy houses and land not for the purpose of accommodation or rental but with the intention of quickly reselling them for profit. However, the home buyers did not pay for asset taxes and additional income. Sometimes, the investors held a majority of transactions in the market, making land and house prices increase and reducing supply for people seeking to buy homes to live in.

HCM City therefore proposed that the Government should review regulations relating to taxes on estate transactions to encourage people to truthfully declare the value and additional income from the transactions. This could help the market develop transparently and healthily.

In addition, the project also suggested building an annual tax collection mechanism for land and estates increasing in value, which would create new funds for the Government to improve infrastructure.

It also proposed other solutions such as imposing a high tax rate on a buyer’s second home.

The city asked the Government to issue the urban and construction bonds, mobilising capital from banks and credit institutions as well as a mechanism to attract investment into infrastructure.

In the short-term, the Government could allow a pilot implementation of some new financial tools such as housing saving funds or a real estate investment trust (REITS) to diversify capital resources in the estate market.

The city proposed that the Government replace the calculation of land use payments with a fixed tax rate of 10-15 per cent. — VNS