Thailand
Thailand: Tax perk’s impact seen as minimal
The government’s latest tax perk for property will likely have a minimal impact on the housing market because only a handful of homebuyers will qualify for benefits, say property analysts.
Phattarachai Taweewong, associate director of research for property consultant Colliers International Thailand, said the new stimulus measures for the property sector may not help boost housing demand.
“The current tax deduction may not change much,” he said. “But reductions of the property transfer fee and mortgage fee from 2% and 1%, respectively, to 0.01% could really help. This could boost purchases by 20%.”
According to the Real Estate Information Center, total housing transfers in Greater Bangkok in the fourth quarter of 2015 jumped to 63,869 units from 39,892, 43,496 and 49,385 in the first, second and third quarters.
This was largely driven by incentives, including reductions of the housing transfer and mortgage fees from 2% and 1% to 0.01% starting in October 2015 and expiring in April 2016.
Wanting to help an ailing economy and consumption to offset weaker exports, the cabinet on Tuesday approved new stimulus measures worth 21.83 billion baht.
The measures cover spending of 13.2 billion baht in public welfare benefits for low-income earners, plus tax measures worth 8.62 billion baht, including tax deductions of up to 200,000 baht offered to buyers of property worth up to 5 million baht. The property measure will run to Dec 31.
“The tax deductions could make some homebuyers decide quicker, before the incentive ends,” Mr Phattarachai said. “But very few will qualify to get the benefits.”
He said the tax deductions may help boost the purchasing power of buyers of low-rise houses. For condo demand, many buyers may face an impact from the new lending curbs.
“The major problem in the residential sector is condos, particularly units in Bangkok and Pattaya,” Mr Phattarachai said. “This sector is being affected by the new lending curbs.”
He said many developers have a large amount of completed, unsold supply on hand, which will become a serious problem in the future when units remaining unsold are completed.
Atip Bijanonda, president of the Housing Business Association, said the tax incentives for the property sector will do little to boost the market.
“Those who are eligible to get the tax deductions will be only first-time buyers and have a tax base to get maximum benefit,” he said. “But most of these people already bought a unit.”
Source: https://property.bangkokpost.com/news/1670572/tax-perks-impact-seen-as-minimal