Developers need to guard against risk of housing oversupply

PROPERTY

The government should put in place tax measures including the land and building tax and inheritance tax before liberalising foreign land ownership in Thailand, suggests Sopon Pornchokchai, chairman of the consultancy firm Agency for Real Estate Affairs (AREA).

"If these two types of tax are not implemented, it means that the state will get nothing when land is sold to foreigners," he said.

Dr Sopon said that when a Thai citizen buys a house in the United States, the transaction would face land and property tax at around 1-2% of the value. When this person wants to transfer the property to an heir, the inheritance tax will be 20-45% of the value.

Thought some US states may not apply this system, they use a capital gains tax based on the difference between the purchasing and selling prices.

He said that if foreigners buying land in Thailand did not face similar taxes, it would disadvantage te country.

"AREA views that the government should implement the tax measures first because the lack of such taxes would bring huge losses to Thailand. The system here is completely different from what exists when Thais buy houses in Europe or the US," said Dr Sopon.

The agency also suggests the government improve other facilities such as databases on foreigners, and inspections to detect legal breaches related to land holdings in Thailand, and continuous examination of residency and ownership.