On 9th April 2024, Thai deputy minister of finance addressed to the public about the economic boost measures on the real estate market. Theses measures are aimed to boost Thai economic and GDP 10 1.8%. The measures by the cabinet resolution are (1) Reduction of Transfer Fee and (2) Tax Reduction. H&P real estate lawyers in Bangkok have prepared a brief summary of these measures as follows:
Reduction of Transfer Fee
The main objective of the transfer fee reduction is to support the people on purchasing the real estate, and encouraging the real estate business. The measure of reducing the transfer fee will assist people who want to purchase a house or condominium on their own. The time period for the reduction is until 31st of December 2024. The detail of fee reduction is as follow.
- Reduction of transfer fee from 2% to 0.01%
- Reduction of mortgage fee from 1% to 0.01% (only when doing the transfer and mortgage at the same time)
The measure of transfer fee reduction can be applied in all types of houses including detached house, semi-detached house, town house, commercial building and condominium. The measure can also comply with both first-handed house and second-handed house.
However, the reduction cannot apply to every circumstance of purchasing the real estate. The measures stated the exception circumstance, which cannot apply the reduction fee. The criteria for a person who wish to utilize the reduction fee measure is as follow:
- Is a natural person
- Have Thai nationality
- The value of the house with the land does not exceed 7 million baht and the mortgage value does not exceed 7 million baht.
As the objective of the measures is to encourage the house ownership by Thai people, it states Thai nationality as one of its criteria. For this reason, a foreigner will not obtain the benefit from this measure. A foreigner still has to pay the transfer fee and mortgage fee in the same percentage, which is 2% for transfer fee and 1% of mortgage fee.
To conclude, the new measure to reduce the transfer fee has been addressed to encourage Thai people who want to have their own house. For this reason, the measure reduces both the transfer fee and the mortgage fee to 0.01%. This will reduce the cost, which house purchaser may have to pay on the transfer date of real estate.
Tax Reduction Measure
Tax reduction measure is aimed to reduce taxation on a person who wish to build his or her own house within this year. The government believes that it will encourage the house building business and any related business. This measure is different from the reduction of transfer fee measure as it can only be applied on the newly built house and cannot be applied on the house in housing development. The detail on this measure can be found as follow.
- The value, which can be deducted, is up to the value of the construction expenses paid to contractors who are registered value-added tax operator.
- The tax can be deducted on the tax year which the house is completely built.
- The house building contract and the house must be started building between 9th April 2024 – 31st December 2025.
- The tax can be deducted 10,000 Baht per the construction cost of 1,000,000 Baht. The deduction is limited at 100,000 Baht.
Moreover, a person, who can have benefit from this measure, does not have to be Thai citizen as the criteria for this measure only specify for a person who has personal income tax liability in Thailand. Hence, a foreigner, who has a personal income tax liability in Thailand, can also have the benefit from this measure as well if he or she wish to build a house in Thailand.
To conclude, this measure is aimed to encourage a person who wish to build house. Although this measure does not provide the deduction on the governmental fee, it provides the deduction on income taxation. The tax will be 10,000 Baht deducted per 1,000,000 Baht construction value. The measure does not limit the nationality of a person.
If you plan to buy a condominium in Thailand, please contact our property lawyers in Bangkok at [email protected]
