Learn More About The Fees And Types of Taxes To Be Paid for Buying and Selling Second-Hand Houses in Cambodia

Buying a home is one of the biggest decisions in our lives, especially when buying an old house (a second-hand house). Every step always requires a thorough examination of information related to the preparation of the tax contract that the buyer or seller must pay, the correct copy of the documents according to the procedure that leads to a smooth transaction, and no irregularities to avoid disputes.

If you intend to buy a property, whether for personal use or as an investment, do you know that in addition to the cost of the house, you have to pay taxes and other fees related to the property? When and how much will be paid? Let's find out more with Compass Real Estate!

【 For Buyer 】

① Registration Tax

Registration Tax is a type of tax that must be paid to identify the ownership of real estate. This tax is paid only once, for transferring ownership after the contract of sale and payment are completed. The taxpayer must pay within three months after the transfer of ownership. The tax rate is 4% (tax calculation: total price of real estate * 4%) and the burden is on the buyer.

Stamp duty may be exempt under the following conditions:

+ Inheritance between birth parents and children, between husband and wife, between grandparents and grandchildren

+ The first donation between the above relatives

+ Economic or social land concessions to the poor for building houses and/or doing agro-industry or family farming

+ Transfer of ownership or possession of all types of housing in the form of a Borey community with a value of less than or equal to 70,000 USD (except until the end of 2024). 

② Tax on Property

Tax on Property is an annual tax payable at the rate of 0.1% of real estate worth more than 100 million riels or equal to $25,000 (interest rate of $1 = 4,000 riels). The owner of the property is responsible for paying taxes. The property tax exemption applies to immovable property, agricultural land, state land, real estate in a special economic zone, and any house, building, or structure that is less than 80 percent complete.

Calculation of tax on property amount:

- Tax base = (total property value x 80%) - 100,000,000 Riel

- Tax amount = tax base * 0.1%

③ Loan Interest Rates

In case the buyer does not have enough money to buy a house, they can apply for a loan to buy a house with the bank loan or pay in installments with the landlord (on condition that the previous buyer sells the house to the new owner because he/she does not have the ability to continue mortgages with the project developer). However, home loans also have advantages and disadvantages. When applying for a home loan with your bank, you will be required to have proof of income, collateral, and other relevant documents before the loan is approved, and the interest rate will be between 5 and 10 percent per annum.

If you choose to install the loan with the project developers, the interest rate is usually between 8 and 12 percent per year, but the project developer does not require any proof of income or collateral from you. This option is good for small business owners and investors who do not have a fixed monthly income but are at high risk because their income can fluctuate.

④ Title Verification Fee

After negotiating between the seller and the buyer, the buyer must verify the title deed to confirm that it really belongs to the landlord at the Ministry of Land Management, Urban Planning, and Construction, which costs about 50,000 riels, while the registration for new ownership on legal documents will cost about 600,000 riels.

⑤ Home Insurance Fee

In common, every home loan application with a bank will require the purchase of home insurance to reduce the risk and ensure that if there is an unforeseen event such as a fire, both the homeowner and the bank will not lose much because most of the damage will be covered by the insurance company. Home insurance fees depend on the size and value of the home. 

⑥ Loan Application Fee and Legal Fees

When you apply for a home loan, the lender or bank requires you to pay a loan appraisal and transaction fee, which means you have to pay 1% of the total loan amount to the bank. You also have to pay $250 to an attorney for legal services related to legal advice, real estate inspections, and legal proceedings.

In addition, if you buy a house from a previous owner, you may incur additional repair costs, and there will be additional fees for accommodation, including home repairs, internet, electricity and water, property management, parking, cleaning, etc. If you are buying a condominium or a house in a Borey community, the maintenance fee is between $20 and $50 per month (for a Borey community), and the monthly management fee is between $0.50 and $2 per square meter (for condominiums).

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【 For Seller 】

① Capital Gains Tax

Capital Gains Tax is a type of tax that is paid to the state after receiving profits after the sale or trading of any capital assets. Capital gains tax is based on the total profit from the sale of capital only. The tax rate is 20%, for which the seller is responsible for paying the tax.

We can choose two ways to calculate capital gains tax:

+ Total property costs without expense deductions

→ Capital Gain = Sale or Transfer of Property Cost * (Sale or Transfer of Property Cost * 80%)

+ Total property costs with expense deductions

→ Capital gain = Sale or Transfer of Property Cost - (Sale or Transfer of Property Cost + relevant expenses)

Thus, Capital gains tax = capital gain * 20%

！！！The good news is that the capital gains tax is exempted until January 1, 2024.

② Real Estate Agent Fees

When you sell your home through a real estate agent, you definitely have to pay a commission for that agency. Generally, in Cambodia, real estate agents charge a 3% commission from the seller. But in some conditions, you can also negotiate with the agent to discount the fee.

All of the above content is knowledge related to fees and expenses for all readers, whether Cambodians or foreigners who intend to buy a house or invest in Cambodia successfully.