In its latest quarterly report on the housing and real estate market, the Ministry of Construction (MoC) has put forward several key proposals aimed at curbing speculative activities and property hoarding that disrupt the market.

Specifically, the MoC has expressed its support for a policy proposed by the Ministry of Finance (MoF) to tax the net profit from real estate transactions.

This proposal is part of the draft amendment to the Law on Personal Income Tax. The MoC stated that this new tax calculation will help deter speculation and prevent excessive price inflation in the real estate market.

The MoF recently finalized the draft amendment to the law and is currently collecting feedback from other ministries, local authorities, and relevant agencies.

A key feature of the draft is the MoF's proposal to apply a 20% tax rate on the income earned from each real estate transfer. This tax would be calculated based on the net profit (sale price minus the original purchase price and related costs), a significant change from the current system.

Under current regulations, individuals are required to pay a 2% personal income tax calculated on the total sale price of each transaction.

The draft also includes a provision for cases where the purchase price and related costs cannot be determined. In such situations, the tax would be calculated based on the final sale price and the duration for which the property was held.

The MoC also proposes  to tax vacant real estate in order to prevent speculation.