1. Quoted price of the property
Whether the quoted price is inclusive of Value Added Tax or Maintenance Fee, they should be clearly indicated in the Sales & Purchase Agreement:
Quoted Price = Property Price + Value Added Tax (+ Maintenance fee) Value Added Tax (VAT): Is usually 10% of the property value at the moment. VAT rate is subject to change in accordance with VAT laws.
Maintenance Fee (or Sinking Fund): (The villas owners do not pay this fee.) Before the handover of the unit, all apartment owners have to contribute 2% of the apartment price for the maintenance and major repairs of common areas in the apartment building. This Maintenance Fee is different from the operation and management of the condominium, which will be covered by Management & Operation Fee.
2. Transaction Costs
Besides VAT and Maintenance Fees which have been included in the quoted price, real estate transactions often result in the following transaction costs:
Registration Tax (Upon registration for Ownership Certificate): 0.5% of the property value (capped at VND 500 mil.) and in the case of land residential property, 0.5% * land or house area * land price announced by the local people’s committee at the time of registration.
Personal Income Tax (PIT): Income gained from real estate transaction is taxable with tax rate fixed at 2% (of the selling price). Currently, tax laws in Vietnam allow PIT exemption in case the transfer is between immediate family members or the seller owns only one real property and meets other criteria.
Fee for granting of certificates: Maximum level of a paper is VND 500,000
Notary’s Fees: Calculated based on the value of the property under transaction (from VND 50,000 and capped at VND 10 mil.)
Management & Operation Fee: Service fee for the management and operation of property. This fee will be identified and paid periodically by the property’s owner (amount depending on the agreement). It can fluctuate based on the consumption of services, the service fee to lease the management & operating unit. (All these costs are subject to change in accordance with relevant laws and regulations)
It is a common practice in Vietnam for: The seller to bear the PIT + The buyer to pay the quoted price (the apartment owners have to pay the Maintenance Fee) and to bear the Registration Tax and the Management and Operation Fee. + Both parties to negotiate who will bear the remaining taxes and fees
