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The Impact of Cambodia’s Real Estate Tax on Investors in 2023



Cambodia's Real Estate Tax

Whenever people think of investing in foreign real estate or local real estate, tax is the significant element that needs to be analysed to get the perfect estimate of the expenses of profits on the particular investment.

Suppose you’re planning for foreign investment in Cambodia. In that case, the assistance of rewarded local real estate agents like IPS Cambodia can make the tax understanding of the foreign country easier for investors.

Overview of Real Estate Tax in Cambodia

Cambodia, famous for its architecture and garment industry, is one of the fastest-growing economies in the world. Tourism, the garment industry, and construction have been the main reasons for driving this growth. Cambodia’s real estate market is one of the most lucrative markets to book profit.

With the nation’s rising economy and development, the real estate market is bound to boom. Although additional Property tax in Cambodia can be a downer for a home buyer or investor, it is ultimately a profitable bet as Cambodia’s properties will appreciate with time.

Price Brackets Standard Rates Second Home Rates
£250,001 – £925,000 5% 8%
£925,001 – £1.5m 10% 13%
over £1.5m 12% 15%

IPS has been tracking the real estate market over the years and helping its clients take advantage and gain by guiding them to invest in the right property. Be it renting/buying/property valuation, IPS Cambodia keeps track of the market trends and reviews them regularly for the client’s benefit.

Positive Impact Of Cambodia’s Real Estate Tax On Investors

Cambodia's Real Estate Tax

Fairness And Transparency:

The real estate tax helps to ensure that the real estate market is fair and transparent by creating a level playing field for all investors. The tax is applied equally to all properties, regardless of who owns them or how they are used. This helps prevent corruption and ensures that investors are not disadvantaged.

Revenue For The Government:

The real estate tax provides a source of revenue for the government, which can be used to invest in infrastructure and other public services. This helps to improve the quality of life for all Cambodians, including investors.

Deter Speculation And Encourage Long-Term Investment:

The real estate tax helps to deter speculation and encourage long-term investment in the real estate market. This is because the tax makes it more expensive to buy and sell properties, discouraging investors from buying properties to sell them quickly for a profit. This helps to stabilise the real estate market and make it more attractive to long-term investors.

Overall, Cambodia’s real estate tax positively impacts investors by ensuring a fair and transparent market, providing a source of revenue for the government, and deterring speculation and encouraging long-term investment.

cambodia property tax

Negative Impact of Cambodia’s real estate tax on Investors

Increased Financial Burden –

Paying tax is an extra burden on the buyer or investor. When buying or investing in a property, one has to keep an additional amount as a buffer on top of the property’s price.

Reduced Profit Margins –

Adding a tax increases the financial burden and, in turn, reduces an investor’s profitability. It can also affect the affordability of many buyers as it may be out of their budget after adding the taxes.

Investment Decision-Making –

With an increase in property tax, many people postpone the decision to buy or invest in a property.

Market Slowdown –

As property transactions come down due to taxes or any hike, the real estate market slows down as fewer transactions occur. People invest based on their risk profile, and tariffs add additional costs to their decision to invest or buy a property.

Compliance and Administrative Costs –

The government incurs the administrative costs in administering the tax system, and the private sector or taxpayers incur the compliance cost. One must also keep that amount in consideration when investing in a property.

Tips to Keep in Mind When Investing in Cambodian Real Estate

If you plan to invest in Cambodia’s real estate market, here are some pointers you need to evaluate while considering the probability of putting your hard-earned money into a real estate market in Cambodia.

  • Investing in the right property at the right time is the key. Knowing and understanding the market trend in the real estate market and the extra costs like property tax and administrative fees should be well accounted for in the decision-making.
  • Cambodia’s real estate market is expected to grow significantly in 2023.
  • Any property/real estate transaction involves some tax to be paid to the government. Property Tax in Cambodia, known as the Tax on Immovable Properties TOIP, imposes a 0.1% on all immovable properties with an assessed value exceeding Khmer Riel 100 Million (or approximately USD 25,000). Immovable properties include land, houses, infrastructures, buildings, etc.
  • Properties like agricultural land, industrial land, state-owned land and anything below the above value are tax-exempt.

ConclusionCambodia's Real Estate Tax

Buying or investing in a property is a decision after a complete thought process considering the various extra elements like the attached property tax. There are many positives to paying taxes as the Government uses that pool of money to meet citizens’ needs. The tax money is invested in buildings, new infrastructure, museums, parks, etc.

The team at IPS Cambodia understands your needs and financial capacities and helps you decide on a property that suits your needs and falls within your budget. They allow you to understand the tax structure in Cambodia’s real estate market, guide you on reducing the burden and help you calculate and know the tax liability when buying or investing in a property.


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