The amended 2014 Housing Law, which took effect from July 1, 2015, allows foreign individuals and organizations to own property in Vietnam. The more “open” regulations of the Law have created new demand and momentum for the local real estate market. Here are the latest updates on Vietnam property foreign ownership that you need to know.
How can foreigners buy property in Vietnam?
Foreign individuals are eligible to buy residential properties in Vietnam, as long as they can enter the country legally. All legal entities like foreign investment funds, banks, Vietnamese branches and representative offices of overseas companies that are established in Vietnam; are also eligible to buy Vietnam properties. The Housing Law allows eligible foreign entity and individuals to buy and own all residential sectors including apartments and landed properties such as villas and townhouses (previously only applicable to apartments). However, foreigners can not buy more than 30% of the total units within one condominium complex; not exceeding 10% for the total number of the separate houses for each project or 250 separate houses in a ward-level administrative unit.
Several major past restrictions on property ownership have been removed for foreign buyers
Tenure of ownership:
– Foreign individuals: up to 50 years leasehold from the date of issuance of ownership certificate with possible renewal (subjected to approval by authorities.)
– Foreign individuals with Vietnamese spouse: Freehold
– Foreign organizations: up to the duration (inclusive of extended duration) indicated in the investment certificate.
Purpose of purchase:
Properties owned by foreigners can be sold, sub-leased, inherited and collateralize (previously only for the owner’s residence purpose).
In addition, experts from real estate consulting firm Savills advise foreigners should open bank account in Vietnam when they need to make payment to housing developers. They recommend international banks with branches in Vietnam such as ANZ, Citibank, HSBC and Standard Chartered.
Taxes involved in Vietnam property foreign ownership
Value added tax (VAT): 10% VAT is taxed on any sale of property by local or foreigners.
Administration fee: A minimal administration fee is to be granted an ownership certificate at the current regulation.
Registration tax for ownership: 0.5% registration tax for obtaining the house ownership certificate on the apartment value.
Maintenance fee: This is a shared fund contributed by buyers for maintenance of shared parts of the housing project. Currently, the maintenance fee is 2% on the pre-tax sale price.
Personal income tax (for resale): If personal income is earned through the assignment or resale of apartments or houses, a 2% personal income tax has to be paid on the transacted value.
Personal income tax (for rental income): If personal income is earned through rental of house/apartment, 5% VAT and 5% PIT has to be paid on revenue.
For rental income exceeding VND 100,000,000 per year, a business license tax of VND 1,000,000 per year applies.
(Source: Enternews)