There has been much talk of the incoming changes to existing land and property tax regulations. The new regulations came into effect on the 1st of January 2020. The new taxes will apply to land, buildings, houses, condominiums, apartments or any structure which can be used for residence or storage. How will these new regulations impact you?..
The new regulations replaces the existing House and Land Tax Act and Local Development Tax Act. The governments main aim is to encourage land owners to utilize vacant land plots and increase overall tax revenue. Under previous rules the House and Land Tax Act imposed taxes on properties based on their annual rental value at a rate of 12.5%. Based on the new regulations taxes will now be based on the total appraised value of the property. The appraised value is the value registered with the local land office when registering the property under the land code. Should the property have no appraised value taxes will be calculated based on ministerial regulations.
Taxes will now be charged based on any properties held on the 1st of January each year. However after much debate on the actual implementation of the new taxes assessments; the new assessments will now be issued in June 2020 with payment due in August 2020 (rather than previously planned dates of February assessment and April payment).
The new regulations now divide properties into four categories:
Properties used for agricultural purposes at a rate of 0.15%
Properties used for residential purposes at a rate of 0.3%
Properties used for purposes other than (1) or (2) at a rate of 1.2%
Any unutilized / vacant property at a rate of 1.2%
NOTE: Any unutilized / vacant property which is left vacant or unused for three years will see the rate increase by 0.3% every 3 years with a maximum rate of 3%.
Don’t panic yet as there a range of tax exemptions in place. The new regulations will mostly impact land owners and buy-to-let investors. There are a range of exemptions which reduce the rates listed above for residents. For condominiums used as full time residences there are reduced rates based on the value of the property. The new regulations provide a tax exemption for ‘buildings’ under 10,000,000 THB owned by individuals where they also don’t own the land (therefore applicable to condominiums). This exemption applies as long as the owner is using the property for full time residence (with their name registered in the house book). For condominiums over 10,000,000 and under 40,000,000 THB (which are used as a full time residence) the effective rate will only be 0.02%. Relief is also available for house owners; land and buildings up to a value of 50,000,000 THB shall be exempt as long as they are used as their place of residence. Any land or buildings used for agricultural purposes will also be exempt from taxes until 2022. There is also transitional relief available should the new taxes be higher than the taxes due under the previous House and Land Tax Act.
