Cambodia’s real estate market is entering a new phase of growth in 2025, thanks to several key property tax exemptions and incentives. Designed to make property ownership more accessible, these reforms are expected to attract greater investment, particularly from investors, expats, and high-income Cambodians looking to purchase residential and commercial properties in high-demand areas like Phnom Penh and Siem Reap.
What is Stamp Duty and Why is it Important?
Stamp duty is a tax imposed on property transactions in Cambodia. It is paid by the buyer during the property transfer process and is calculated based on the total value of the property. Stamp duty can significantly increase the overall cost of purchasing property, often by thousands of dollars, depending on the price of the property. In 2025, Cambodia is introducing new property tax exemptions to ease this financial burden, particularly for first-time homebuyers and certain property developments.
Key Property Tax Changes in 2025
1. Stamp Duty Exemption for First-Time Homebuyers
Starting in 2025, the Cambodian government will exempt stamp duty for first-time homebuyers on properties valued up to $210,000. For properties exceeding this threshold, buyers will benefit from a $210,000 deduction in the taxable value, thereby significantly lowering the stamp duty.
Example Calculation:
Consider a first-time buyer purchasing a property in Phnom Penh or Siem Reap with a market value of $250,000. Under the previous system, the stamp duty would have been calculated on the full value of $250,000. However, with the new reform:
- Property Value: $250,000
- Stamp Duty Deduction: $210,000
- Taxable Value: $250,000 - $210,000 = $40,000
If the stamp duty rate is, for example, 4% (the rate may vary), the buyer would pay:
- Stamp Duty Due: 4% of $40,000 = $1,600
This represents a savings of $9,600 compared to the previous system, where the stamp duty would have been:
- Old Tax Calculation: 4% of $250,000 = $10,000
Thus, the new reform results in a savings of $9,600, making property transactions more affordable for first-time buyers.
2. Tax Incentives for Affordable Housing Projects
In addition to the stamp duty exemption, Cambodia is also offering tax exemptions and incentives to developers involved in affordable housing projects. This is designed to increase the availability of affordable properties and promote greater homeownership across different income groups.
Additional Tax Changes to Consider
Tax on Unused Land (TUL):
The suspension of the Tax on Unused Land (TUL) will continue until December 31, 2024. From January 1, 2025, a new tax policy will apply, offering a 5-hectare tax-free allowance per plot. Any unused land exceeding this size may qualify for exemptions, providing further incentives for property developers and investors with large land holdings.Capital Gains Tax on Real Estate Transactions:
The imposition of a capital gains tax on immovable property has been delayed until December 31, 2025. This allows investors to continue benefiting from tax-free capital gains on property sales for the time being.
Real-World Impact on the Real Estate Market
These tax reforms are a critical development for Cambodia’s real estate market, which has seen increasing interest from both local and international investors. By reducing the upfront costs of purchasing property, the reforms are expected to stimulate demand, particularly in residential sectors like affordable housing and luxury properties.
For Example:
An investor purchasing a $500,000 commercial property in Phnom Penh will benefit from the following:
- Old Tax Calculation (no deduction): 4% stamp duty on $500,000 = $20,000
- New Tax Calculation (with deduction): The $210,000 deduction applies, reducing the taxable value:
- Taxable Value: $500,000 - $210,000 = $290,000
- New Stamp Duty Due: 4% of $290,000 = $11,600
This means the investor saves $8,400 in stamp duty costs.
What Buyers Need to Know
- Eligibility: The stamp duty exemption applies to first-time homebuyers purchasing residential properties. Commercial properties and second-home buyers may not be eligible for these exemptions.
- Impact: Significant savings on stamp duty and other taxes can make property ownership much more affordable, especially for first-time buyers.
- Timing: These benefits apply to properties purchased in 2025 and beyond.
- How to Apply: Buyers will automatically benefit from the reduced stamp duty when transferring property ownership, ensuring a seamless process.
Conclusion
Cambodia’s property tax reforms are set to make significant waves in the real estate market, offering valuable savings and incentives to investors, expats, and high-income Cambodians. By reducing the tax burden for first-time homebuyers and investors, these reforms are designed to stimulate demand, foster market growth, and position Cambodia as an increasingly attractive destination for property investment.
For those looking to take advantage of these reforms, now is an ideal time to explore the many real estate opportunities available in Cambodia’s growing market. Whether purchasing your first property or expanding your portfolio, the benefits of these new tax exemptions and incentives are clear.