SCB WEALTH hosted a seminar titled "Strategies for Managing Land Tax in 2022" for its wealth clients, aiming to provide insights into land and property taxes. This year marks the first full-rate collection by the government, following a two-year period where tax rates were reduced by 90% due to the COVID-19 pandemic. The seminar also introduced financial tools for asset management through Property Backed Loans, offering a flexible option for managing land tax to enhance wealth under the guidance of financial advisors and investment consultants. Additionally, Asset Allocation will be tailored to match the risk tolerance of clients, aiming for an average return of 6-8% per year.

Dr. Sathit Phongthanya, Senior Director of Estate Planning and Family Office at Siam Commercial Bank, revealed that SCB Wealth organized the seminar for its wealth clients on the topic of “Strategies for Managing Land Tax in 2022” to educate them about land and property taxes that the government will collect at full rates this year for the first time after two years of reduced rates due to the pandemic. The assessed land values used for tax collection in 2022 are based on 2016 valuations, and in 2023, new assessments will be made, which will likely increase land tax rates.

For the land and property tax rates in 2022, for example, vacant land valued at 0-50 million baht is taxed at 0.3%, 50-200 million baht at 0.4%, 200-1,000 million baht at 0.5%, 1,000-5,000 million baht at 0.6%, and properties valued over 5,000 million baht at 0.7%. Managing land for various uses incurs costs, so careful consideration is needed to determine if it is worthwhile. Nevertheless, SCB WEALTH offers a financial tool for asset management called Property Backed Loans, which provides a more flexible way to manage land tax by mortgaging existing land with the bank and using the loan proceeds to create another type of investment portfolio under the supervision of financial advisors.

Mr. Pakorn Phetarakast, Senior Director of Wealth Lending Products at Siam Commercial Bank, stated that the Property Backed Loan product meets the needs of Private Banking clients looking to generate income from their land rather than leaving it idle. The interest rates are attractive, and surveys show that most wealth clients hold about 40-50% of their total assets in land, with plans to pass it on to future generations. Thus, it is suitable for long-term investment through Property Backed Loans, allowing clients to invest the loan proceeds in various asset types.

The Asset Allocation is managed by a team of financial advisors who select assets that align with clients' acceptable risk levels, aiming to generate good returns even after accounting for loan interest and land tax payments, thereby enhancing clients' investment portfolios. Furthermore, if clients wish to sell their land, they can do so without incurring prepayment penalties.

Dr. Kampon Adireksombat, Senior Director of SCB Chief Investment Office (SCB CIO) at Siam Commercial Bank, stated that Property Backed Loans focus on generating good returns to cover land tax and loan interest. The financial advisory team will recommend an Asset Allocation strategy to diversify investments across various assets, considering factors such as country groups, markets, industries, and appropriate valuations. The portfolio for clients is divided into three main categories (Mild Moderate, Moderate, and Aggressive allocation) based on expected returns and acceptable risk levels.

“The portfolio management for clients using Property Backed Loans emphasizes generating cash flow each year. We will not take on high-risk opportunities but will focus on consistent returns sufficient for clients to cover land tax, loan interest, and still yield returns. In addition to the relationship managers who provide advice, there is a team of experts dedicated to finding suitable products, working alongside the investment consultants to analyze strategies and select products to achieve the asset class that meets clients' goals,” Dr. Kampon stated.