Can I Sell My Apartment to a Vietnamese Person as a Foreigner?

1. Foreign Property Ownership in Vietnam

Who can own property in Vietnam? According to Article 7, Clause 3 of the 2014 Housing Law, the entities eligible to own property in Vietnam include: "Article 7. Entities eligible to own property in Vietnam

1. Domestic organizations, households, and individuals.
2. Overseas Vietnamese.
3. Foreign organizations and individuals as stipulated in Clause 1, Article 159 of this Law."

Furthermore, Article 159 of the 2014 Housing Law specifies the entities eligible to own property and the forms of property ownership in Vietnam for foreign organizations and individuals as follows: "Article 159. Entities eligible to own property and forms of property ownership in Vietnam for foreign organizations and individuals

1. Foreign organizations and individuals eligible to own property in Vietnam include 
   1. Foreign organizations and individuals investing in housing projects in Vietnam as prescribed by this Law and related laws; 
   2. Foreign-invested enterprises, branches, representative offices of foreign enterprises, foreign investment funds, and foreign bank branches operating in Vietnam (hereinafter collectively referred to as foreign organizations); 
   3. Foreign individuals are permitted to enter Vietnam.  
2. Foreign organizations and individuals may own property in Vietnam through the following forms: 
   1. Investing in housing projects in Vietnam as prescribed by this Law and related laws; 
   2. Purchasing, leasing, being gifted, or inheriting commercial housing, including apartments and individual houses in housing investment projects, except in areas ensuring national defense and security as prescribed by the Government."

In addition, Article 74 of Decree 99/2015/ND-CP stipulates the documents proving the eligibility and conditions for owning property in Vietnam as follows: "Article 74. Documents proving the eligibility and conditions for owning property in Vietnam

1. For foreign individuals, a valid passport bearing the entry stamp of Vietnam's immigration management agency and not belonging to the group entitled to diplomatic privileges and immunities as prescribed by the Ordinance on privileges and immunities for diplomatic missions, consular offices, and representative offices of international organizations in Vietnam is required.  
2. Foreign organizations must belong to the entities stipulated in Article 159 of the Housing Law and have an Investment Registration Certificate or a document issued by a competent Vietnamese authority permitting operation in Vietnam that is still valid at the time of signing housing transactions (hereinafter collectively referred to as Investment Registration Certificate)."

Therefore, foreign individuals permitted to enter Vietnam and falling into one of the cases stipulated in Clause 1, Article 159 of the 2014 Housing Law may own property in Vietnam.

Summary and Key Points

The Vietnamese legal framework allows foreign individuals and organizations to own property under specific conditions. Key points to remember include:

• Eligibility: Foreigners must be permitted to enter Vietnam and meet specific criteria outlined in the law.
• Property Types: Foreigners can own commercial housing, including apartments and individual houses, but may have restrictions on owning property in certain areas, such as those related to national defense and security.
• Ownership Forms: Ownership can be acquired through purchasing, leasing, gifts, inheritance, or investment in housing projects.
• Documentation: Foreigners must provide necessary documentation, such as a valid passport and investment registration certificate, to prove their eligibility.
• Legal Framework: The 2014 Housing Law and related decrees provide the detailed legal framework for foreign property ownership in Vietnam.

In essence, while Vietnam has opened up its property market to foreigners, there are specific regulations and conditions that must be met.

Expanding on Key Points

• Leasehold vs. Freehold: While foreigners can own property in Vietnam, it's important to note that most ownership is leasehold, meaning the property is leased for a specific duration.
• Restrictions: There may be restrictions on the total area of land that a foreigner can own and the location of the property.
• Tax Implications: Foreign property owners are subject to various taxes, including income tax, property tax, and capital gains tax.
• Repatriation of Proceeds: While foreigners can generally repatriate the proceeds from the sale of their property, there may be restrictions or requirements related to foreign exchange controls.
• Legal Assistance: Given the complexity of Vietnamese property law, it is highly recommended to consult with a local lawyer to ensure compliance with all legal requirements.

2. Selling to a Vietnamese Citizen

The Vietnamese government prohibits foreign organizations and individuals from purchasing properties with the intention of reselling them for profit. However, if a foreigner owns a property and no longer needs it but still has remaining ownership time, they are allowed to sell it to other individuals or organizations, subject to the provisions of Clause 4, Article 7 of Decree 99/2015/ND-CP. Specifically:

• If a foreigner wants to sell, transfer, or gift their property to a domestic organization, household, individual, or overseas Vietnamese, the buyer or recipient must have the right to long-term ownership.
• If a foreigner wants to sell, transfer, or gift their property to another foreign organization or individual eligible to own property in Vietnam, that organization or individual will only be able to own the property for the remaining time and may request an extension, subject to the provisions of Article 77 of Decree 99/2015/ND-CP.

Additionally, when transferring property, foreigners must pay taxes and other financial obligations to the Vietnamese state according to the provisions of relevant legal documents.

Therefore, a foreigner legally owning an apartment in Vietnam has the right to transfer it to a Vietnamese individual, and the Vietnamese individual will have long-term ownership, while the transferring party must complete the payment of fees, taxes, and other financial obligations to the Vietnamese state.

Furthermore, Article 32 of Circular 19/2016/TT-BXD stipulates the conditions for transferring commercial housing purchase contracts:

• Individuals or organizations who have or have not yet received handover of a property purchased from a commercial housing project developer are allowed to transfer the purchase contract to another organization or individual if the application for a certificate of ownership has not yet been submitted to the competent state agency.
• Individuals or organizations receiving a transferred commercial housing purchase contract have the right to further transfer the contract they have previously received to another organization or individual if the application for a certificate of ownership has not yet been submitted to the competent state agency.

Therefore, individuals or organizations are allowed to transfer commercial housing purchase contracts to other organizations or individuals before submitting an application for a certificate of ownership to the competent authority.

Additionally, when transferring a commercial housing purchase contract to another individual or organization, the transfer must be made for each individual house or apartment. If the purchase contract with the developer includes multiple houses (apartments, individual houses), the entire number of houses in that contract must be transferred; if the transferring party wishes to transfer one or more houses from the total number of houses purchased from the developer, the transferring party must enter into a new housing purchase contract or a supplement to the housing purchase contract with the developer for the transferred houses before carrying out the contract transfer procedures.

Summary and Key Points

The Vietnamese government allows foreigners to sell their properties to Vietnamese citizens under specific conditions. Key points include:

• Purpose of sale: The sale must not be for the purpose of making a profit.
• Ownership rights: The new Vietnamese owner typically gets long-term ownership rights.
• Transfer restrictions: There are restrictions on who foreigners can sell to and the conditions under which the sale can occur.
• Taxes and fees: Foreigners must pay applicable taxes and fees upon selling their property.
• Contract transfer: There are specific rules regarding the transfer of purchase contracts for commercial housing.
• Government approval: All property transactions require approval from the relevant government authorities.

In summary, while foreigners can sell their properties in Vietnam, the process is regulated and requires compliance with various legal provisions

3. Tax Implications

Capital Gains Tax:

• Taxable Gains: The profit made from the sale of a foreign-owned property in Vietnam is generally subject to capital gains tax.
• Tax Rate: The tax rate may vary depending on the holding period of the property and other factors.
• Tax Calculation: The tax is calculated based on the difference between the selling price and the purchase price, adjusted for any expenses incurred.

Withholding Tax:

• Foreign Sellers: In some cases, a withholding tax may be imposed on payments made to foreign sellers.
• Tax Rate: The withholding tax rate can vary, but it is typically a percentage of the total sale price.

Other Taxes:

• Transfer Taxes: There may be additional taxes or fees associated with the transfer of property ownership.
• Stamp Duty: Stamp duty may be applicable to the sale and purchase agreement.

Tax Deductions and Exemptions:

• Eligible Deductions: Explore potential tax deductions or exemptions that may reduce your overall tax liability.
• Professional Advice: Consult with a tax advisor to understand the specific tax implications and available deductions.

Tax Compliance:

• Accurate Records: Maintain accurate records of your property purchase, expenses, and sale proceeds to support your tax filings.
• Tax Returns: File your tax returns within the prescribed deadlines.
• Tax Audits: Be prepared for potential tax audits by the tax authorities.

It is essential to seek professional tax advice to ensure accurate tax reporting and compliance with Vietnamese tax laws.

4. Currency Exchange and Repatriation

Currency Exchange:

• Vietnamese Dong: The official currency of Vietnam is the Vietnamese dong (VND).
• Exchange Rates: Be aware of the current exchange rates between your home currency and the Vietnamese dong.
• Authorized Exchange Points: Use authorized exchange points, such as banks or currency exchange bureaus, for currency conversion.

Repatriation of Proceeds:

• Foreign Currency Repatriation: Foreigners are generally allowed to repatriate the proceeds from the sale of their property back to their home country.
• Regulations and Limitations: Familiarize yourself with the specific regulations and limitations regarding foreign currency repatriation in Vietnam.
• Documentation: Provide necessary documentation to support your repatriation request, such as proof of sale, tax returns, and identity documents.

Currency Exchange Fees:

• Bank Charges: Banks may charge fees for currency exchange transactions.
• Comparison: Compare exchange rates and fees offered by different banks or currency exchange services.

Foreign Exchange Controls:

• Restrictions: There may be restrictions or limitations on foreign currency transactions, especially for large amounts.
• Compliance: Ensure compliance with foreign exchange regulations to avoid penalties or delays.

It is recommended to consult with a financial advisor or currency exchange specialist to understand the specific regulations and procedures for currency exchange and repatriation in Vietnam.

5. Transfer of Title

Legal Documentation:

• Sale and Purchase Agreement: Prepare a legally binding sale and purchase agreement outlining the terms of the transaction.
• Title Deed: Ensure that the seller has a clear title to the property and obtain a copy of the title deed.

Government Registration:

• Land Registration Office: Register the transfer of ownership with the relevant land registration office.
• Required Documents: Submit the necessary documents, including the sale and purchase agreement, title deed, and identification documents.

Stamp Duty:

• Tax Payment: Pay the required stamp duty on the transfer of property.
• Calculation: The stamp duty amount is calculated based on the property's value.

Timeframe:

• Processing Time: The transfer of title process may take some time, depending on administrative procedures and the workload of government agencies.
• Follow-Up: Regularly follow up with the relevant authorities to ensure the process is progressing smoothly.

Legal Advice:

• Professional Assistance: Consult with a legal expert specializing in property law to ensure compliance with all legal requirements and to address any potential challenges.

By understanding the transfer of title process and seeking professional advice, you can ensure a smooth and successful transfer of your property ownership.

6. Challenges and Considerations

Bureaucratic Procedures:

• Administrative Hurdles: Navigating the bureaucratic procedures involved in property transfers can be time-consuming and complex.
• Language Barriers: If you are not proficient in Vietnamese, communicating with government agencies and legal professionals may pose challenges.

Market Conditions:

• Property Value Fluctuations: Property values can fluctuate due to economic factors, market trends, and other influences.
• Demand and Supply: The demand for foreign-owned properties may vary depending on market conditions and economic factors.

Legal Advice:

• Professional Assistance: Consulting with a legal expert specializing in property law can help you navigate the complexities of the sale process and address potential challenges.
• Contract Negotiation: A lawyer can assist you in negotiating favorable terms in the sale and purchase agreement.

Tax Implications:

• Capital Gains Tax: Be aware of the potential capital gains tax implications and consult with a tax advisor for guidance.
• Withholding Taxes: Understand the withholding tax requirements and ensure compliance.

Currency Exchange:

• Exchange Rates: Monitor exchange rates and consider the potential impact on the value of your property and the proceeds from the sale.
• Repatriation: Ensure that you are allowed to repatriate the proceeds from the sale back to your home country.

By understanding these challenges and seeking professional advice, you can mitigate risks and navigate the process of selling your foreign-owned property in Vietnam more effectively.

7. Conclusion