Two events occurred recently within three days in HCM City: thousand of people jostled to purchase The Vista and Sky Garden 3 apartments, making the real estate market chaotic

Injecting money in houses and apartments is considered the wisest investment nowadays. H., the director of a real estate trading firm, who is also a ‘hunter’ for new apartments for speculation, said that he had paid security money to purchase 10 apartments at The Vista. When asked about the prices at which he would sell the right to buy the apartments, he said the prices would not be lower than $10,000 for every apartment (the original rate is $2,000). As such, Mr H. can pocket $80,000 within just a few days.

Meanwhile, Mrs Ng. said she would not sell the right to buy the apartments, she would sell the three apartments she had registered to buy, but at higher prices. Mrs Ng. said that she would offer them at $2,600/sq m, or $400/sq m higher than the price initially set by the investor. As such, Mrs Ng. can earn $68,000 for every 170 sq m apartment.

While the real estate market is heating up due to such speculation, the National Assembly’s legislative session is also heating up with discussions about how to stop it.

Legislators and experts are considering creating a tax that would prevent real estate speculation. It is expected that the tax rate of 25% would be imposed on the margin between the selling and purchasing prices of land and houses. If taxation bodies and the properties owners cannot define the real income from the asset assignment, the 2% tax rate would be imposed on the selling price.

The regulations are expected to replace the current regulations on imposing a 2% tax on selling prices (applied for agricultural land) and 4% (for other kinds of land).

Only the houses which have the usage time of more than 10 years will be exempted from assignment tax.

Meanwhile, in an interview with the press, Minister of Finance Vu Van Ninh said that the ministry was building the Asset Law, which will be submitted to the National Assembly in 2010.

Progressive tax rates on land will help prevent speculation. In principle, the more land you use and the more valuable the land is, the higher tax you have to pay.

Meanwhile, some analysts have doubts about the feasibility of the taxation of speculators.

“25% is an overly high tax rate, and I’m afraid that the overly high tax will prompt sellers and buyers to collude with each other to evade tax. Therefore, the taxation will encourage underground transactions,” an analyst said.

Moreover, state management authorities still do not have 100% control over real estate transactions, which will make it difficult for them to collect taxes.

Some analysts have expressed their concern that the high real estate assignment tax will make real estate prices even higher.

Source: VietnamNet.