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Government Cuts Transfer Fees to Stimulate Thailand’s Housing Market

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Thailand's Housing Market

Thailand’s government approved new property policies on Tuesday to stimulate home and condominium sales, including lower transfer costs. The government is also increasing the maximum home and condo price eligible for transfer and mortgage registration fee advantages to 7 million baht, up from the present level of less than 3 million.

According to Deputy Finance Minister Krisada Chinavicharana, the cabinet approved a slew of measures to encourage home ownership and boost the real estate and related industries.

The initiatives include lowering the transfer fee charge from 2% to 0.01% of the transaction value and decreasing the mortgage registration fee from 1% to 0.01% of the transaction value.

The rules apply to the sale of residential properties such as single houses, duplexes, townhouses, commercial buildings, land with buildings, and condominium units, with a purchase price and tax assessment of no more than 7 million baht.

The mortgage amount cannot exceed 7 million baht per contract. The initiatives are intended to alleviate the burden on home buyers while also stimulating the real estate sector, which accounts for up to 10% of GDP, he said.

To qualify for equivalent current reductions in transfer fees and registration costs, units could not be worth more over 3 million baht. According to Mr Krisada, the new rules are only applicable to Thai nationals.

The measures take effect when they are published in the Royal Gazette and expire on December 31, 2024.

Thailand's Housing Market

Tax Break for Building Your Own Home

Individual taxpayers who want to build a house can also take advantage of a tax break, which allows them to deduct building expenses paid to registered value-added tax operators for payments made between April 9 and December 31, 2025.

The tax deduction is 10,000 baht for every 1 million baht spent in building costs, with a maximum of 100,000 baht for construction expenditures for one house in the tax year in which construction was finished.

The contract must be initiated and construction begin between April 9, 2024 and December 31, 2025, with stamp duty paid online via the internet.

Other methods include promoting low-income housing projects through a Board of Investment (BoI) housing project.

On March 15, 2024, the BoI announced that it planned to provide tax breaks to real estate developers, including a three-year exemption from corporate income tax for up to 100% of the investment amount (excluding land and working capital) for the construction of low-income housing. These apartments have a maximum value of 1.5 million baht, which includes the land price.

Thailand's Housing Market

Stimulate housing demand in Thailand

Pornchai Thiraveja, director-general of Thailand’s Fiscal Policy Office, stated that the new property measures are expected to boost GDP by 1.7-1.8 percentage points, with a total property transaction value of approximately 800 billion baht and an estimated additional investment of 400-500 billion baht.

He projected that the tax incentives will stimulate expenditure by 120 billion baht. According to Kessara Thanyalakpark, managing director of Sena Development, a SET-listed company, the property measures adopted by the cabinet will benefit the sector and the economy over time.

“The measures can stimulate home demand and purchasing power as home buyers deal with a slowing economy, high household debt, inflation, elevated interest rates and stricter lending rules,” she said.

She added that the initiatives may also motivate some potential homeowners to make a choice who have been putting off a purchase because they are concerned about the economy and are keen to take advantage of the measures.

According to Ms Kessara, consumers looking to acquire units valued between 3 and 7 million baht will profit most because the new measures now encompass this price range, up from the previous ceiling of 3 million baht.

The CTNNews editorial team comprises seasoned journalists and writers dedicated to delivering accurate, timely news coverage. They possess a deep understanding of current events, ensuring insightful analysis. With their expertise, the team crafts compelling stories that resonate with readers, keeping them informed on global happenings.

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