The Thai Home Builders Association pointed out to local media that the land and buildings tax may create an unintended scenario in which people who bought a land plot intending to build a house in the future may be prevented from doing so. That’s due to the new legislation significantly increasing the tax on vacant land plots
HBA honorary director Wisit Monaiyapong told media those who wanted to build a house valued at THB50 million or more will have no issues paying the tax rather it be for the land or the home. However, those owning vacant land and planning on building a house under the THB50 million threshold will be forced to pay additional taxes until the home is completed.
“Many people who plan to have a self-built home will usually buy a vacant plot long before building a house as they want to take time to collect money for the unit,” Wisit said. “These people are mostly civil servants but some are parents who plan to build a house for their children when they grow up.”
The new tax, which is scheduled to take effect in 2017, will require these people to pay tax for a vacant plot even if they plan to build a house on it. On possible solution floated is that people who own a vacant plot and plan to have a self-built home can have the tax refunded after construction is completed.
“The rate [for vacant land] is too high, nearly equal to the inflation rate,” Wisit noted. “This will discourage those who buy a plot and plan to have a self-built home unit in the future. They may shift to buy a unit in a housing estate project instead as they don’t want to pay tax.”
The new tax could also have a positive impact on the self-built home market. It will likely force those owning a vacant plot and planning to build a house to speed up their decision in order to avoid the vacant land plot tax increase. There is also the possibility that people looking to construct a self-built home but have yet to purchase a plot may be able to find one more easily. That’s because landowners looking to avoid the tax may seek a quick sale.
