Property tax break ill-timed – Phummisak

PHUKET: Phummisak Hongsyok, President of the Phuket Real Estate Club (PREC), yesterday criticized the government’s move to reduce the tax on transfer of property ownership as ill-timed and inappropriate.

His criticism came despite the fact that many would assume that real estate companies and property developers would welcome the proposed tax break as a stimulant, however small, to house sales.

The proposal was aired on Wednesday by Deputy Finance Minister Chaiyot Sasomsub.

Currently, homebuyers must pay transfer taxes based on the purchase price of each and every property they buy.

The proposed tax break, K. Chaiyot explained, would mean that transfer taxes would be based on the difference between the price of the new home and the price of the old one.

For example, under the current system, a homebuyer upgrading from a 1-million-baht home to a 1.5-million-baht home pays tax on both amounts in full.

Under the new proposal, the buyer would pay tax on the original 1 million baht, and then on the difference between the house prices – 500,000 baht.

K. Phummisak, however, told the Gazette that he believes the timing of the tax break proposal is wrong.

“I don’t think this idea is appropriate right now. I don’t know what the central government is trying to do, but it is the wrong time.

“When the economy is like this, with the cost of fuel rising every day, we should encourage people to save more. If they have a house already, why encourage them to spend more buying a bigger house?” he asked.

In addition, he queried, “Who would buy a new house just because transfer fees have been reduced like this?”

K. Phummisak explained that in Phuket the market for low- to medium-cost houses, which he described as being priced between 1 million and 4 million baht, was suffering because most of the buyers are hotel staff, tour guides or other people who work in the tourism industry.

“But the high-end of the [Phuket property] market has no problems because most of the money is transfered from overseas and the buyers are still certain they want to buy. They are thinking long-term about having a holiday home in Phuket,” he added.

Phuket News
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