Jump in land transfers: owners 'spooked by inheritance tax'

In December 2014 alone, there were 1,290 land transactions in Bangkok worth Bt14.74 billion in total. These were increases of 88 per cent and 180 per cent respectively, over the same period in 2013.

Last month saw 55 inheritance land transfers in inner Bangkok, up from 12 a year earlier, with a total fee income of Bt28.16 million (up from Bt1.94 million), said Manus Chuasawat, chief of the Bangkok Metropolis Land Office. 

“Many Bangkokians came to the office to make transfers of land ownership,” he said.

The value of land transferred as inheritance increased from Bt388 million in December 2013 to Bt5.6 billion last December. 

A fee worth 0.5 per cent of the land-appraisal value is collected for land transferred to the heir.

The land offices in Bangkok recorded 1,290 transactions in December 2014, compared to 686 transactions in December 2013 – an 88 per cent rise. 

The land value was Bt14.74 billion – a 180-per-cent increase.

A total of Bt73.77 million in transfer fees was collected.

The Bangkok Metropolis Land Office saw the highest value in inheritance land transfers – Bt2.8 billion, followed by the Land Department’s Phra Khanong branch (Bt758.9 million), Huai Khwang branch (Bt706.3 million), Bangkok Noi branch (578.1 million), and Prawet branch (Bt532.31 million). 

The office covers inner districts, namely Phra Nakhon, Dusit, Pom Prab (Sattru Phai), Pathumwan, Samphanthawong, Bang Sue, Yannawa Bang Kho Laem and Sathon.

The Inheritance Tax Bill, which is now under scrutiny in its second reading by the National Legislative Assembly, seeks to collect a tax that is 10 per cent of an inheritance exceeding Bt50 million. 

“This [the transfer spike] is a clear result derived from the Inheritance Tax Bill,” Manus said. 

“As the bill is in the process of being discussed, concerning details about the threshold, people were worried about the amount of tax they would have to pay.” 

The possibility of transfer fees rising was another factor prompting people to make more transactions, he said. 

“Should the law pass and the [increased] transfer fees come into effect, people will be charged twice,” Manus explained.

The law is expected to come into effect in 2016.

The top three districts in terms of the number of transactions were Bang Khunthien, Chom Thong and Bang Bon. 

Phra Nakhon, Dusit, Pom Prab (Sattru Phai), Pathumwan, Samphanthawong, Bang Sue, Yan Nawa and Sathon are ranked among the most expensive areas.

The total number of land-transfer transactions in Bangkok in December 2014, which combined sale, gift and inheritance transactions, totalled 17,573 – up 1.4 per cent from the 17,324 transaction in December 2013. 

Of the 17,573 transactions, 12,667 were sales, 3,616 gifts, and 1,290 inheritance. 

Across the country, inheritance-land transfers totalled Bt5.36 billion in December 2013.

Finance Minister Sommai Phasee previously said that the impact of the inheritance tax would not be too severe on most people because the 10 per cent tax will apply only to the Bt50 million ceiling. 

“I think that there is not an urgent need for people to transfer their inheritance to their heir at this time,” he said.

Along with the increase in land transfers, there has also been a rise in the sale of land to property firms. 

“From December last year till now, most landlords in Bangkok and the provinces are offering to sell their land to us because they do not want to have the land as an inheritance when the inheritance tax comes into effect,” Supalai Plc deputy managing director Tritecha Tangmatitham said. “They want to keep the cash to invest in other asset that will avoid the inheritance tax.”