The Land and Buildings Tax Act 2019, published in the Royal Gazette on March 12, 2019, and effective since January 1, 2020. By replacing the House and Land Tax Act 1932 and the Local Maintenance Tax Act 2508. So that the law is consistent with the current land and building characteristics. The income from land and building taxation will be collected by Local government organizations to be used in local development.

However, on June 2, 2020, the Cabinet meeting (Cabinet) passed a resolution approving the draft. The Royal Decree cuts tax on some types of land and buildings to help alleviate the economic crisis during the epidemic of COVID-19. By reducing land and buildings tax at the rate of 90% of the tax amount that will be subject to tax in 2020 and will begin paying normal taxes in April 2021 as follows:

1. Land or buildings that are used for agricultural purposes

• If the owner is a natural person Will be exempt from tax according to the transitional provisions of The Land and Buildings Tax Act 2020, the first 3 years (2020-2022) are exempt from tax.
  
  
• If the owner is a legal entity Usually taxable at a rate of 0.01% of the appraised value. For example, the appraisal price of land 5 million baht, usually 500-baht tax, but when the tax has been reduced under the Royal Decree on land and building taxes already Will pay tax only 50 baht

2. Land or buildings used as a residence

• In the case of the main house, the owner of the house is a natural person. Is in the house registration Will be exempted from the tax base on the value of land including buildings not exceeding 50 million baht
  
  
• In the case of building ownership but does not own the land, such as a condominium will be exempted, the tax base value of that building does not exceed 10 million baht.
  
  
• For other residential houses Usually, tax is 0.02% of the appraised value. If it is a house with the land the appraisal price of the property will be the appraised value of the house and land. If another residence is a condominium the appraised price will be the appraisal price of that condominium. Whereas, if the appraised value of 5 million baht is taxed 1,000 baht when the tax is reduced under this Royal Decree, it will remain at the rate of 0.002% or will pay tax only 100 baht

3. Land or buildings for use other than agriculture and housing

For example, industrial commerce from 0.3% is converted to a rate of 0.03%. The value of the appraisal value of 5 million baht is taxed at 15,000 baht, but when reducing the amount of tax under this Royal Decree, tax will be paid only 1,500 baht.

4. Land or building that is wasteful or not doing what it deserves

The tax payment rate is the same as item 3.

Although we will be relieving the land and building tax burden in 2020, those who have land, buildings, or have houses to live. Including those who are deciding to buy real estate must also pay attention. And must consider the costs arising from the applicable land and building tax laws

Land and building tax administration techniques and considerations

1. For people who have many houses

The owner has his name in the house registration. That house will be considered a home for living. If the house and land are worth not more than 50 million baht, they will be exempt from tax. So, if there are many houses or several condos to move the title of the owner to the house registration with the highest value available for living. Considered to use that real estate as the main residence This will help benefit from the land tax exemption for the first 50 million baht. In the case of holding both land and buildings (such as houses, townhouses) or the first 10 million baht in the case of holding only buildings (such as condos) by exempting that tax will be considered from the name in the house registration as of the date. On January 1 of each year.

In addition, if we want to raise a house or a condo to be an inheritance for children May consider the transfer of the house or condo first Is equal to that the house or condo after that will have an owner, And whose name is in the house registration. Which will be eligible for the first house except Which is exempted from the tax base worth not more than 50 million baht for houses and 10 million baht for condos. However, be sure to consider the transfer costs and the tax to be considered.

2. For those who have many plots of land

Because this law promotes the use of land. Which if we leave it to be a wasteland Will make the tax at a high rate So if we have many plots of land, we should consider adding value to the land as follows.

• Use that land for other uses, such as plots of wasteland into agricultural land the trees must be planted according to the appendix of the law to receive tax privileges. Which has determined many kinds of plants, such as 200 bananas per rai, 20 durian trees per rai, 20 mangoes per rai, 20 coconut trees per rai, papaya if lifting 100 grooves per rai, not lifting 175 grooves per rai, 50 lemons per rai. etc. In addition, there is also an attached account for raising animals such as 1 cattle per 5 rai, 1 goat and sheep per rai, 4 square meters of poultry per animal, etc.

However, it should be considered that Is the cost of farming or animal husbandry worth the lower land tax?

• Divide the land into sub-plots, Will see that in the collection of land taxes Will use the tax rate as a step the higher the property value, the higher the tax rate. So, if someone holds a large piece of land May chooses to divide a large piece of land into smaller land to pay the land tax at a lower rate. However, if multiple plots of land with consecutive territories and having the same ownership Land tax calculation to include every piece of land to calculate land tax. Therefore, apart from dividing the land into sub-plots, the name of the right holder must also be distributed the overall land tax burden will therefore be reduced. The ownership distribution may be done by giving it to another person, such as an heir, a close relative, or setting up a company to hold real estate.

However, when lifting or transferring land to others, there will be expenses such as transfer expenses. And the giving tax, in addition, we must have confidence in the transferee that he will have sufficient financial discipline. That will not cause problems later. Such as a liability to the point of confiscation Because creditors will have the right to seize the land that we transfer to. As for setting up a company, there will be costs for setting up a company. Employ Doing and auditing as well Making it no matter what type of action you choose Must compare the cost of the land with the land tax that will save every time.

• Build a house on that land, if we have a large plot of land Idle Will make the tax at a high rate May consider planting a house in that plot the wasteland will be converted to land for a living. And make us pay land tax at a lower rate

From the tax rate above the public may be less affected by the land and building tax. Because if it is a land for agriculture and land and buildings for living With a value not exceeding 50 million baht will be exempt from tax But the person who has to pay land tax, of course, is the owner of many houses, commercial land legal entities. Including the rulers of the desolate land

However, the land and building tax It is important that we know and study well. It will help us to better plan and manage the taxes that will arise in the future.

Nipapun Poonsateansup

CFP®, ACC and independent Financial Planner Writer and speaker