Full analysis of Cambodia's housing purchase process and taxes and fees at various stages. Must-read article for investors.

With the rise of the real estate market in Southeast Asia, the investment threshold has been lowered, and more and more people have joined the group of overseas property buyers. Cambodia has become an emerging real estate investment due to the advantages of low housing prices, low taxes and fees, unlimited purchases, freehold property rights, and US dollar assets Destination.

First, the investment environment in Cambodia is very accommodative, and foreigners are encouraged to buy housing. In 2010, Cambodia passed the Foreigners Holding Property Rights Act, which allows foreigners who are over 18 years of age to freely buy and sell real estate, they are allowed to buy and sell high-rise buildings on the second floor and get the same  property rights certificate and enjoys freehold property rights as Cambodia citizens.

The only purchase restriction: Cambodian policy stipulates that foreigners cannot purchase land and villas in Cambodia in their personal names, so foreigners cannot buy housing on the first floor, and they can only hold property rights on the second floor or higher, that is, they will only register property rights, without land property rights. Property rights with land certificates are restricted to Cambodians.

1. Process of purchase housing in Cambodia

There are six major steps to purchase housing, including first house selection, second deposit payment, third signing an agreement, fourth paying a down payment, fifth signing a contract, sixth and delivery housing.

First, choose the housing then pay the deposit. Usually 3000 US dollars.

Second, Use passport to sign a subscription agreement and choose a payment plan. Developers generally offer multiple payment options, including full or installment payments. (Common one-year installment plan: 30% down payment; 15% every 3 months，means 4 times a year, a total of 60%; 10% needed to be paid when housing is delivery)

Third,Pay the down payment

Usually down payment needed to be paid within a week, down payment ratio between 30%-50%.

Fourth, buyer need to sign the sales contract and other document.

Fifth, with the completion of project, the rest need to be paid. (usually 10% by installment).

Sixth, after the project delivery, developer will apply the property rights certificate, usually it costs 6-8 months, even a year.

2. Details of taxes and fees payable in Cambodia at various stages

1. Purchase stage

Rename fee: You can change your name once before the hard title certificate is processed. The cost is 500-1000 USD.

Attorney's fees / notarization fees: paid by the buyer, about 300-500 USD.

2. Holding stage

House transaction tax: Also known as registration tax, stamp tax, deed tax, transfer tax, all transfers of housing transactions need to be paid, the amount is 4% of the total price of the house, paid in one lump sum. The tax is for hard title certificate only. Only housing with hard title certificate will be charged. Housing with soft title will not be charged.

Cambodia's latest measures point out that from February 2020 to January 2021, houses with a total value of less than $ 70,000 are exempt from this tax. This measure is only for real estate developers registered with the Ministry of Finance or the provincial financial bureaus.

Property tax: property tax, real estate tax. After delivery the house, pay 0.1% of the total value of the house to the Ministry of Economy and Finance. The value is not the market price. The Ministry of Economy and Finance will value the property according to conditions such as type of housing, location, floor, and construction age.

Property tax = Total of property price * 80%-$ 100 millions reil) * 0.1%

The policy was released in May 2011. Landlords or homeowners have a tax liability for any property valued at more than 100 million riel (approximately US $ 25,000), with a tax rate of 0.1% and pay taxes annually.

Lease tax: It is also called rent income tax. If the housing is bought for rent, it is subject to this tax. Cambodian citizens or resident foreigners (over 182 days of residence) pay 10% of rental income tax; non-resident foreigners (within 182 days) pay 14% of rental income tax and pay monthly.