Second-hand home-buyers to benefit from waiver

Anyone planning to buy a resale home should wait for a tax waiver that is expected to come into effect soon.

The tax privilege for second-hand houses is an extended version of the major tax stimulus package announced on March 4 for the property sector, which focused on purchases of new houses. The waiver for resale houses is mostly similar to that for new homes.

The tax cuts aimed at promoting the real-estate sector, in particular for new houses, became effective yesterday. The specific business tax rate has been cut from 3.3 per cent to 0.11 per cent. This tax rate applies to both individual and private firms engaging in the property business. Transaction and mortgage fees have also been cut - to 0.01 per cent from 2 per cent and 1 per cent, respectively.

A buyer pays either a transaction or mortgage fee, depending on the terms of contract between the parties. In practice, some buyers and sellers share half of the fee.

Deputy Finance Minister Pradit Pataraprasit said yesterday the government had agreed to extend these tax incentives to cover the resale home market.

The Revenue Department is expected to issue details of the regulations for resale houses in a few weeks. Meanwhile, the Interior Ministry in charge of transaction and mortgage fees is drafting its own regulations, he said.

The Finance Ministry will also submit to the Cabinet today a proposal for cheap housing loans for lower income groups. Those who have monthly earnings of no more than Bt15,000 are eligible to apply for loans from the Government Housing Bank.

Each can receive up to Bt600,000 from the bank, which plans to lend a total of Bt10 billion under the scheme.

The GHB will offer two types of fixed-rate mortgage: seven and 10 years. If home-buyers choose the seven-year fixed rate, the bank will charge interest at 4 per cent for the first seven years. After that, it will charge the minimum retail rate (MRR) minus 0.5 per cent.

If they choose the 10-year fixed rate, the bank will charge 4.5 per cent in the first 10 years and MRR minus 0.5 per cent for the remaining period.

The mortgage term could be up to 30 years. The ministry will guarantee GHB bonds worth Bt10 billion to support the project.

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Wichit Chaitrong Wichit Chaitrong
Wichit Chaitrong is a journalist with The Nation, Bangkok's independent English language newspaper and specialises in the property and real estate sectors.
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