The new land and buildings tax is expected to take effect in January 2019 and when it does, landowners may be faced with a tough choice. The will need to either divest from vacant plots, seek partners to develop their land, or hire property consultants to manage their land if they do not wish to pay the increased taxes.
“A lot of the reviewing is for vacant plots. They have been thinking about doing something with them after learning the new tax will be effective from January 2019. Some landlords are seeking partners to participate in joint ventures to develop projects on land that has been idle for years,” says Ratchaphum Jongpakdee, General Manager at Colliers International Thailand, to the Bangkok Post.
Some have already decided to sell or rent out their land holdings in Bangkok. The majority of these plots are located in prime locations and would be taxed at a higher rate under the draft tax. This is due to the high appraisal prices of the land. The new law proposes that the tax on vacant land will start at 2% and rise by 0.5 percentage points every 3 years, until it reaches 5%.
A number high-net-worth families, such as the Osathanugrah family and the Prasarttong-Osoth family, have hired an outside firm to manage their land plots. This is because they are concerned about the impact the land and building tax will have. The Osathanugrah family’s plots, which are located along Sukhumvit Road from Bang Chak BTS station to Pak Nam in Samut Prakan, may be developed into condo projects. Other families are looking at similar options with their land.
“Ask yourself whether you want to hold that land or not. Everyone has a different answer. To manage it, you should know its cost, market price and tax rate. Then you can plan what to do with it,” says Kiatnakin Bank Plc Asset Management Department Executive Vice President Suwannee Wattanavekin.