Bangkok:The real estate sector is urging the government to increase the tax deduction for home purchases to 200,000 baht. This proposal aims to address a high loan rejection rate of 44%, which is affecting purchasing power in the housing market.
According to Thai News Agency, three real estate associations have suggested raising the tax deduction limit for home loan interest from the current 100,000 to 200,000 baht per year. This move is intended to stimulate purchasing power amid a high loan rejection rate and rising construction costs, which have increased by 7.8-8%. The associations have cautioned that house prices may escalate next year.
Mr. Sunthorn Sathaporn, President of the Housing Developers Association, emphasized the essential nature of housing and the continuous demand for it. However, he pointed out challenges such as fragile consumer purchasing power and credit access difficulties. A survey from the first half of the year indicated a 44% loan rejection rate by commercial banks. This prompted an urgent dialogue with the government to find solutions for retail debt and propose new market stimulus measures. The proposed measures include increasing the tax deduction limit, which would allow citizens to save up to 50,000 baht in taxes for homes priced under 7 million baht. Additionally, the government would benefit from a 3.3% tax refund on home purchases. Another measure involves taxing residential and commercial properties at 0.03% and 0.3%, respectively. Despite increased construction costs due to factors like rising oil prices, businesses are still offering existing stocks at unchanged prices, though future price adjustments may be n ecessary.
Mr. Pornnarit Chuanachaisit, President of the Thai Real Estate Association, noted that the demand in the real estate market remains despite challenges such as natural disasters. He highlighted that economic stability, consumer income, and strict lending policies are current obstacles. While state-owned banks have implemented the "One Home Plus" project, he urged more support from commercial banks. He also stressed the importance of Green Finance for low-interest loans, which will support environmentally friendly housing. Despite challenges like energy prices and household debt, there has been a 17% increase in purchases and transfers. The IMF-World Bank Group 2026 meeting has shown global interest in Thailand, potentially enhancing its role as a regional economic hub. If the proposed tax relief measures are approved, it could significantly boost the real estate market next year.
Mr. Pitipat Preedanont, President of the Thai Condominium Association, praised existing government measures but encouraged further enhancements, such as increasing tax deduction limits. This would facilitate home purchases, especially as housing prices are expected to rise due to external factors impacting construction costs. With current low interest rates, he described this as an ideal time for consumers to buy homes.