Property Tax in Thailand

Thailand remains an attractive destination for foreign investors and relocators thanks to its scenic beaches, warm climate, and modern infrastructure. However, purchasing property in another country involves understanding the local tax system. We have compiled a detailed guide to give investors an insight into taxation in Thailand in 2024.

Main Types of Property Taxes

  1. Property Transfer Tax is a significant levy in Thailand, constituting approximately 2% of the property’s assessed value. This tax plays a pivotal role in property transactions, impacting both sellers and buyers alike. Traditionally, the burden of this tax is shared between the seller and the buyer upon the transfer of ownership. However, it’s crucial to note that Property Transfer Tax is exclusive to freehold ownership forms. In the context of leasehold properties, this tax is not applicable. 
  2. Leasehold Registration Tax in Thailand is calculated at a rate of 1% of the total contract value for leasing real estate, with a lease term of up to 90 years. This tax obligation arises when entering into a lease agreement and registering the leasehold rights with the relevant authorities. One notable aspect of this tax is its flexibility in terms of payment obligations. 
  3. Stamp Duty is relevant in cases where the business tax is not paid. The amount depends on the type of transaction and can range from 0.1% to 0.5%.
  4. Business Tax of 3.3% is imposed on the company if the property has been owned for less than 5 years. This type of tax does not apply to property used as a residence.
  5. Withholding Tax varies for legal and natural persons. For legal entities, it is 1%, and for natural persons, it is from 5% to 35%, depending on the duration of ownership and the transaction value.
  6. Inheritance Tax was introduced in 2016. It only applies to properties valued above 100 million baht and is 5% for relatives, 10% for other heirs.
  7. In Thailand, Gift Tax is imposed at a rate of 5% on property valued above 20 million baht in cases of kinship. For other individuals, the threshold for Gift Tax is lower, set at 10 million baht. This tax applies when property is transferred as a gift, whether it be real estate, cash, or other assets.

Differences in Taxation of Freehold and Leasehold Property

  • Leasehold

Leasehold is a form of long-term lease, the simplest way to officially register ownership in Thailand.

  • Lease Term: The legislatively established maximum lease term is 30 years, with the possibility of renewal for the same period.
  • Taxation: The tax on registration of rights amounts to 1% of the total contract amount for the entire lease term (up to 90 years). This tax is usually shared between the tenant and the owner.
  • Freehold

Full ownership of the property and the land on which it is located. Unlike leasehold, freehold is registered once with an unlimited duration.

  • Ownership Conditions: Foreigners can own apartments on a freehold basis if the foreign ownership in the condominium does not exceed 49%, the remaining 51% belongs to locals.
  • Taxation: It is necessary to pay a property transfer tax of 2% of the cadastral value of the object, which is often shared between the buyer and the owner. In addition, the seller pays 3.3% for property that was not used as a residence and was owned for less than 5 years.

Taxation of Rental Income

Foreign nationals who spend more than 180 days per year in the country are considered tax residents and are required to pay tax on incomes earned in Thailand. And the tax on income from rentals for foreign residents applies also to profits made in other countries if the money is brought into Thailand. It is levied at a fixed rate of 15%. Here are the key features that are important for an investor to know.

  • Withholding Tax

When a foreigner is not a resident in the country and earns rental income, the management company is required to withhold tax from the rental payments. The tax amount depends on the amount of earnings and the nature of the operation, and the final percentage varies from 5% to 15%. The management company must submit form PND 3 and Withholding Tax. The basic income tax rate can vary from 1% to 3%.

  • Declaration Obligations

Residents must file a tax declaration using form PND 91, provided their annual income exceeds 60,000 baht. The declaration lists the income amount and subtracts previously paid income tax.

  • Transfer of Income Abroad

If rental income is sent abroad, the payer must complete form PND 54.

  • VAT Registration

Tax residents with income exceeding 1.8 million baht must register as VAT payers. This tax does not apply to wages.

Property taxes in the kingdom are relatively low. Overall, the attractiveness of the country as a place for investment is undeniable, but success in this endeavor depends on a deep understanding of local rules and tax regulations. Investors are advised to consult with qualified lawyers to ensure the maximum possible return on investment and compliance with all necessary formalities.

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Марина Абрамович
Марина Абрамович
2024-02-27
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