A royal decree regarding Thailand’s land and building tax reduction for 2023 was issued in March. This became official when the Government Gazette published an announcement stating the land and building tax due will be decreased by 15 percent in 2023.
Land plots eligible for a previously confirmed 50 percent tax break were eligible for this as well, essentially meaning these plot owners will receive a tax break of 65 percent.
Thailand’s land and building tax reduction covers four areas:
- Land or buildings used for agricultural purposes
- Land or buildings used for residential purposes
- Land or buildings used for other purposes
- Vacant or unused land or buildings
Also Interesting: Highest land price rises in Bangkok seen in Huai Khwang
What will the impact of Thailand’s land and building tax reduction be?
Thailand’s land and building tax reduction may not have much of an impact on the real estate market in the short term. While buyers may be more eager to acquire plots due to the tax reduction, sellers could opt to keep their holdings unless the asking price is met.
Many landowners are also coming to terms with new land appraisal prices for 2023-2026 which were published by the Treasury Department. This was initially slated to happen in 2021 but was delayed until this year because of the COVID-19 pandemic.
All eyes will be on what the government does in 2024. If the tax reduction is extended for a further year, many owners may feel comfortable waiting even with the new appraisal prices. However, the full tax coming into effect could see a rush of sales over the coming months.
In the meantime, the Bangkok Metropolitan Administration will continue its drive to close land tax loopholes that have seen some owners turn their holdings in prime areas into makeshift farms. This allowed them to enjoy the agricultural land tax rate of 0.01-0.1 percent as opposed to the 0.3-0.7 percent applied to undeveloped commercial plots. The hope is that even under the reduced tax rates, this would help the city generate more revenue.
