Tax boost for property sector

June 17, 2000

THE Finance Ministry is to launch a tax-incentive package designed to stimulate the real-estate sector by increasing tax allowances to Bt50,000 for home-buyers and cutting the transfer fee for land transactions to 0.01 per cent.

Finance Minister Tarrin Nimmanahaeminda said he would forward the package to the Cabinet soon for consideration.

The package represents the last economic stimulus measure of the Chuan Leekpai government, which will see its official tenure end this November. Apart from stimulating the sagging real-estate sector, this measure will also help put money back into the pockets of Thai consumers.

Under the package, the Revenue Department will raise tax allowances to Bt50,000 for interest payments |on mortgages. The allowance |will be counted as tax deductible before calculating tax payments each year.

The tax allowance will be retroactive, extending to those who have already brought houses.

Currently, the Revenue Department awards tax allowances up to Bt10,000 for a home-buyer.

The measure was expected to encourage people to buy new townhouses and condominiums, officials said.

The property market is still saddled by oversupply but is recovering slightly in some sectors, particularly detached houses. The real-estate collapse contributed to the economic crisis in 1997.

Detached houses are currently not available on the market, although new projects are beginning. But sales of townhouses and condominium units are still sluggish and it will take several years before this sector fully recovers.

The Finance Ministry will also propose a reduction in the land-transfer fee from 2 per cent to |0.01 per cent, officials said.

The Cabinet on August 10, 1999, approved the reduction of the real-estate transfer fee from 2 per cent to 0.01 per cent for detached houses, semi-detached houses, townhouses, commercial building used for residential purposes and condominiums.

By Thanong Khanthong