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Effects of a Land and Buildings Tax on Bangkok Condo Owners

By on Apr 16, 2015 in Property News, Residential

Bangkok IndustryThe Finance Ministry has proposed a new property tax on land and building owners, however the decision has been made by Prime Minister Prayut Chan-o-cha to delay the new tax. The delay is because there are concerns about weak economic growth and the impact on the poorest sectors of the population.  Even though the decision to delay has been made, property owners and prospective owners should ensure they are aware of the new property taxes so they can be prepared.

The new law is a radical change from the current property tax structure. At the moment the property tax is the Maintenance Tax Act 1965. Under this Act the government collects a local maintenance tax from real estate owners. If the property is used as a personal residence, then the local maintenance tax is reduced. The reduced amount depends upon the location and size of the property. For example if you own land in central Bangkok there is only local maintenance tax if the area is more than 100 square wah. This tax is not enforced if you own a condominium unit and use it as your personal residence. It’s all change in the new property tax as the government is seeking increased taxes. There will be additional factors to take into account such as the value or size of the condominium unit. For example if the area of a condominium unit exceeds 50 square metres or is more than 1 million baht, the owner will be required to pay the new tax, but the applicable tax rate would not exceed 0.1% of the unit’s value if it was their place of residence. This would mean many Bangkok condos will be liable.

If the law goes ahead taxpayers will be required to pay the new tax by the end of April each year. The impact is likely to be a reduction in the number of condo sales especially if the Lands Department, upon notification by the relevant government entities, might attach “encumbrances” to a condominium if the owner has tax owing. The local Lands Department is where all official transfers are registered and can hold up any transfer of ownership until the tax is paid.

It’s not certain whether the tax bill will be passed, but any owner or prospective owner should plan for the likely tax liabilities.

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Nora has been in the Corporate Communications arena for a number of years. Nora's role is to communicate all newsworthy items that are of a PR nature.

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