Taxes when buying property in Phuket

According to Intermark Global, Thailand ranked second in the list of the most popular countries for real estate purchase in 2023. Embarking on the journey of acquiring real estate in Thailand presents a myriad of advantages, with one notable aspect being the favorable taxes for buyers. The quantum of these financial commitments varies contingent upon the chosen form of property ownership: freehold or leasehold. It is imperative to highlight that all documentation processes are conducted in the Thai language, emphasizing the unique intricacies associated with property acquisition in the country. Let’s explore the tax implications pertinent to each form.

Tax Considerations for Freehold Ownership

Freehold, synonymous with absolute ownership, delineates a form of property possession where the proprietor secures perpetual rights to the land and any structures erected upon it. This affords the owner absolute control over the property, entitling them to inheritance or sale rights. A notable advantage of freehold ownership is the exemption from rental obligations or the need to renew ownership tenure. Freehold owners possess unrestricted rights to utilize and manage their property without temporal constraints. In this ownership paradigm, the tax burden is comparatively lower than alternative ownership structures. Tax rates may undergo fluctuations as the government introduces legislative changes. Here is a comprehensive list of the primary taxes associated with freehold ownership:

  • Transfer Fee Tax: 2%
  • Stamp Duty: 0.5%
  • Business Tax: 3.3%
  • Withholding Tax: 1% (for legal entities), 5-35% (for individuals)

Upon the acquisition of property in the country, the buyer is solely liable for the property transfer tax.

Tax Considerations for Leasehold Ownership

Leasehold is a form of ownership where non-residents can lease land for an extended period, typically 30 years with provisions for extension, which can extend up to 90 years in tourist-centric areas. Leasehold provides the right to construct and own the developed property, with the land retaining state ownership. Owners have the flexibility to transfer lease rights to heirs or opt for property sales. Leasehold transactions typically incur lease fees, which can be fixed or variable over the lease term. The requisite taxes include:

  • Lease Registration Fee: 1%
  • Stamp Duty: 0.1%

Features of taxes

Property Transfer Tax: These expenditures are apportioned between buyers and sellers based on mutual agreements, calculated with reference to the cadastral value.

Lease Registration Tax: Levied upon registering a leasehold for 90 years, often shared equally between the landlord and tenant.

Business Tax: Applicable to owners who have owned for less than 5 years, calculated based on the cadastral.

Stamp Duty: It is calculated based on the cadastral value or the remaining lease value.

Withholding Tax: It is deducted by the government from the payer rather than the recipient. For legal entities (foreign or local), withholding tax is 1% of the cadastral value or contractual selling price, whichever is higher. For individuals (foreign or local), it follows a progressive scale, with the tax base derived from the cadastral value and deductions based on years of ownership. The tax calculation is intricate and necessitates examination through an illustrative example.

Rental Income Tax: Non-residents are obligated to pay tax solely on income generated in Thailand. Thai tax residents, individuals residing in the country for at least 180 calendar days, must pay tax on income from Thai sources and a portion of foreign income entering its territory, utilizing Form PND 91.

In the context of property leasing, the managing company remits a tax deducted from the owner’s profit to a foreign account at rates of 5% or 15%, contingent on the property owner’s tax residency in Thailand. Upon making this payment, the managing company submits Form PND 3 along with the Withholding Tax Form. The income tax rate for substantial transactions can fluctuate between 1 to 3%. A tax resident of Thailand submits an individual income tax return using Form PND 91 if their annual income surpasses 60,000 baht. Form PND 54 is the designated form for remitting rental income abroad.

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Марина Абрамович
Марина Абрамович
2024-02-27
Моя первая покупка квартиры на острове наконец-то состоялась! Благодаря Silk Properties все прошло гладко и без лишнего стресса. Они не только нашли квартиру под мои требования, но и провели онлайн сделку под ключ, советую! Все прошло быстро, сейчас я на пути к получению ВНЖ, по этому вопросу тоже консультируюсь с ребятами! Если хотите сэкономить время и выбирать из действительно качественных застроек - обращайтесь в Silk, не пожалейте !)