Before investing in Cambodian real estate, consider the following. It’s crucial to understand how taxes will impact your choice. We’re here because of that. This blog post will explain Cambodia’s real estate tax system. This way, you’ll have all the information you need if you want to invest abroad. Let’s get started and learn about the different types of taxes and how they’re calculated.
Taxes on Property Ownership
On February 20, 1998, the Cambodian Taxation Law required buyers of property to pay taxes. The value of the land or structures determines the amount of tax owed. Taxes depend on whether the buyer is a foreign individual or company.
Types of Real Estate Taxes in Cambodia
Real Estate Tax (RET)
The taxes on real estate in Cambodia are different from those in other countries. This makes it harder for people who are new to the country to buy or sell property. The Real Estate Tax (RET) is one tax that needs to be thought about. Cambodian law says that RET must be paid on all property deals. It is based on how much the property is worth as a whole. The rate is currently 0.1%, but this can change based on whether or not the property has been owned before. Buyers must expect to pay RET within 30 days of purchase.
Real Estate Transfer Tax
Real property transfers are subject to a 4% transfer tax, sometimes known as registration or stamp duties.This transfer tax is due no later than three months after the property transfer. Buyers typically pay this bill, but sellers and buyers can often make a compromise.
Tax for Unused Land
The Unused Land Appraisal Committee will determine what constitutes “unused land,” which may include both undeveloped and abandoned properties (ULAC). Vacant land is not “Immovable Property,” although its owner must pay 2% of the tax base.
Real Estate Rental Tax
Cambodian and foreign landlords must pay an annual rental tax on their rented properties. Citizens of Cambodia pay an income tax rate of 10%, while foreigners are subject to a rate of 14%. In leasing agreements, a 10% or 14% tax rate is added to the gross rental amount.
Capital Gains Tax
It is expected that the 20% tax on capital gains will go into effect in April of 2020. The implementation date has been delayed from July 2020 to January 2022 due to COVID-19. Tax on capital gains must be paid by anyone who earns a profit from the sale of real estate.
Calculating Real Estate Taxes
Your real estate taxes will depend on whether you live in Cambodia and pay taxes there. The amount of capital gains tax due depends on how long you owned the asset before selling it. Residents pay 0.1%–0.3% of the assessed value of their property in property taxes (the longer you have owned it, the lower your rate). Non-residents must pay higher rates for both types of taxation (0.2%-0.5% for property and up to 20% for capital gains).
When are real estate taxes in Cambodia due?
Taxes are payable on September 30, conveniently close to the fiscal year’s end. This allows taxpayers a defined date to plan for and remembers, giving them plenty of time to prepare and pay before the deadline. Cambodian taxes allow people to appropriately manage their finances while maintaining comfort.
How is the real estate tax in Cambodia paid?
The procedure for making tax payments is simple and straightforward. You have the option of either paying your property taxes at the office of the assessor’s office or at a bank in the immediate area. You are going to need either your current property tax registration ID or the receipt that you received when you paid your taxes the year before.
Tax Benefits for Foreign Investors
Foreign investors that acquire property in Cambodia receive tax incentives, which is fantastic. Investors may be able to deduct closing costs and legal fees from their taxable income when buying or renovating real estate. Businesses in agriculture and hospitality receive considerable corporate income tax breaks in Cambodia. After 10 years, these exemptions may be renewed under certain circumstances.
You should understand Cambodia’s property taxes after reading this blog post. You now understand the tax ramifications of investing in overseas markets. You’re ready to enter the market with confidence. Remember that comprehending Cambodian tax guidelines is simply a start. Foreign investments have their own laws; therefore, it’s best to research and consult experts. If you’re looking for international property purchase advice, Keller Williams Cambodia is here for you. We’ll make sure your property purchase goes smoothly and hassle-free. Don’t miss out on the chance to invest abroad—get in touch with us today.