In April 2024, the Thai cabinet enacted a reduction in transfer and mortgage fees, a further decrease over those that were extended from December 2023. This article by PropertySights Real Estate will explain the details and how you can take advantage of the policy for increased property investment returns.
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The policy affects Thai property and tax law in the following ways:
- Transfer fees are reduced from 2% to 1% of the appraised or sales value of the property (whichever is higher). The government reduced this further from the previous 1%.
- Registration fees for mortgages are reduced from 1% to 0.01%.
The following conditions apply to these fee reductions:
- Only the following categories of immovable property are authorized: detached houses, duplexes, town houses, land with buildings, or commercial buildings and condominiums (new and second-hand).
- Only sales to Thai citizens are eligible.
- The mortgage must be registered at the same time as the property transfer to qualify for the mortgage registration fee reduction.
- The value of the transferred property must not exceed 7 million Baht ($189,700 USD as of April 2024). This is up from the previous 3 million Baht valuation.
- Each mortgage contract must not exceed 7 million Baht ($189,700 USD as of April 2024). This is up from the previous 3 million Baht valuation.
The original reduction of mortgage and property transfer fees began on January 18th, 2022, in an effort to make real estate more affordable and boost the market at large. Thailand’s government expects the latest extension of this policy to December 31st, 2024, to have added benefits to the economy at large.
In addition to the reduced transfer and mortgage registration fees, a tax deduction of 10,000 baht per 1 million baht of construction costs is possible for payments made on contracts beginning and concluding within a window of April 9 2024 to Dec 31, 2025. The maximum potential deduction is 100,000 baht.
Though the Kingdom’s tax revenue will shrink, it estimates that this policy will raise overall GDP by 0.5%. This estimation is based on an increase in the number of construction projects and other economic activity throughout the supply chain such as sales of lumber, steel, concrete, and interior finishing.
These updated rules may target Thai citizens, but foreigners can still benefit. The first way that foreigners in the Land of Smiles can benefit from the reduced transfer and mortgage registration fees is from an increase in demand in the market. A reduction in fees makes property more attractive for Thai citizens, opening a wider network of buyers. This may, in turn, increase the value of offers.
The second way that foreigners can benefit is on the transfer fee itself. When transferring property in Thailand, the buyer is often responsible for the transfer fee, but occasionally the seller agrees to pay a portion. Reduced fees make this a more attractive tool to leverage in sales negotiations.
For more information on securing value from your property investments, get in touch with one of PropertySights Real Estate’s licensed experts today.
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