An expert from the Agency for Real Estate Affairs (AREA) has recommended that the Thai government impose higher taxes on foreign condominium buyers. This move aims to regulate the increasing trend of foreign ownership and generate additional revenue for national development.
Key Takeaways
- Foreign ownership of Thai condominiums is expected to reach a new peak in 2024.
- AREA suggests higher taxes for foreign buyers in four areas: transfer, property tax, inheritance, and capital gains.
- The proposed tax rates range from 1-20% or 10,000 to 200,000 baht per million baht.
- The revenue generated could be used to help low to middle-income Thais gain access to home ownership.
Rising Foreign Ownership
Dr. Sopon Pornchokchai, president of the Real Estate Research and Valuation Center at AREA, revealed that foreign buyers purchased 2,885 condominiums in Bangkok and its metropolitan area in the first half of 2024. This number is projected to rise to 5,770 units by the end of the year, marking a 15% increase compared to 2023.
From 2020 to 2023, the number of units sold to foreigners ranged from 1,017 to 5,036 annually. The forecast for 2024 indicates a significant growth in foreign ownership, driven by the decline in Thai purchasing power due to the ongoing economic downturn.
Popular Areas and Price Segments
The Ratchada-Ladprao zone and the city center are particularly popular among foreign buyers. In the Ratchada-Ladprao zone, foreigners bought 1,024 out of 2,012 available units, accounting for 51.7% of the total sales value in the area. In the city center, 895 out of 3,730 available units were sold to foreigners, representing 27.7% of the total sales value.
Foreign buyers tend to purchase units at an average price of 6.31 million baht, higher than the 4.5 million baht average price paid by Thai buyers. The most popular price segment among foreigners is for units costing over 5 million baht.
Proposed Tax Measures
Dr. Sopon has proposed four types of property taxes on foreign buyers, based on market transaction prices rather than government-assessed values:
- Purchase or Transfer Tax: Levied at the Land Department on transactions, with a tax rate of 10-20% or 100,000 to 200,000 baht per million baht.
- Property Tax: With a tax rate of 1% or 10,000 baht per million baht.
- Capital Gains Tax on Resale: With a tax rate of 10-20% or 100,000 to 200,000 baht per million baht.
- Inheritance Tax: Proposed at a rate of 10% of the market value of the estate or 100,000 baht per million baht.
Economic Impact
Prasert Taedullayasatit, president of the Thai Condominium Association, supports the proposed tax measures, noting that many countries already tax foreign property buyers at higher rates than locals. Initial estimates suggest that the tax revenue could amount to 10-20 billion baht annually. This revenue could be used to set up a fund to help low to middle-income people gain access to home ownership, easing the burden on the national budget.
The real estate sector has a 2.9-fold multiplier effect on the economy. For every million baht in property value, the economic impact extends to related businesses, generating an economic turnover of 2.9 million baht in the Thai economy.
Sources
- Expert Urges Government To Raise Tax for Foreign Condo Buyers, Khaosod English.
