Property Tax in Thailand

Transfer Taxes and Fees in Thailand

Buying Property in Thailand

Thailand is often regarded as one of the most beautiful countries in the world, home to a rich and elegant culture. The country gives travelers a real sense of wonder with its enriched beauty. The vast majority of the foreigners have admitted to the fact that they have one or the other way of thinking of buying property in Thailand.

Be it the building, housing, or land tax, it is collected on a yearly basis by the local government under the building and Land Tax Act. It is to be stated that there is no general annual property tax in Thailand, but if individual owners rent out or put their property to commercial use, housing and rent tax is imposed at the rate of 12.5% yearly. However, no general property taxes imposed by the government in Thailand is a piece of good news for many.

It is stated to be the responsibility of the owner, to inform the local authorities if the property is rented out, or is put to commercial use, and are supposedly instructed to pay this rental tax by February, each year. As mentioned earlier, this specific “rental tax” is passed on to the tenant, making it his responsibility to be paid.

The property tax and lease agreements in Thailand go by the following clause:

‘The lessee agrees to pay to the Lessor any and all taxes, if any, beginning with taking possession of the property and during the term hereof which may be levied upon or assessed against the property and all interests therein and all improvements and other property thereon, whether belonging to Lessor or Lessee’

This states that tenants who sign a separate lease agreement are liable to pay building and the land taxes to their landlord. The Thai government has been accessing current buildings, lands, and local taxes and have decided to replace them with the new property tax.

This new tax will be implemented on immovable property, and every owner of that land, including any permanent structure built upon that land, will have to pay property tax. The new property tax implies that it will have a maximum of 3 tax rates based upon the property’s use, which will be calculated later over the property’s appraised value.

The three tax rates are mentioned below:

  • If the property is put to commercial use, the tax rate should not be exceeding 0.5% of the land and the building’s appraised value.
  • If the property is being used as a private residence, the tax rate should not exceed 0.1% of the property’s appraised value.
  • If the land is utilized for agriculture purposes, a tax rate of 0.05% of the appraised value should be charged.

The above-mentioned rates are the highest rates that are possible to be charged by the local authorities. Hence, there can be variation per district in the building and land tax rates, under the new system.

Property Tax in Thailand for Foreigners

As per the law, Thailand does not allow foreigners to own land in their country, and if a foreigner persists, it’s not a piece of cake. The Land Code Act rules land ownership in Thailand. It is essential to state that the foreign land ownership restrictions in Thailand land laws are restricted to land only and do not involve any building on the land or any condominium.

Having a foreigner interested in purchasing land, there are two significant routes that are advised to take, the first being by not owning the property at all, rather leasing it on for an extended 30-year lease. The majority of such cases involve a foreigner marrying a Thai citizen, where the Thai will be purchasing the land while demanding a lease with the foreigner. Thai Limited Company, where you will be a 49% shareholder. As per Thai government property law, a foreigner cannot hold half or more than half of the company’s shares. Getting through this, now the Thai ownership can sign the company over to the foreigner, with the immigration office keeping a close eye on the foreigner’s business.

Selling a Property in Thailand

Selling Property in Thailand

Many people who have invested in property in Thailand are unaware of the taxes that may come to light when selling it. Foreigners often invest in property, sometimes by buying a condominium under their ownership, or sometimes by taking out a lease on landed property. The Thai Government imposes a transfer fee of 2% of whatever the sale figure is while purchasing or selling a property. The fee is to be shared amongst the seller and the buyer, dividing it by 1% each. Both parties have the right to negotiate, depending on the terms agreed upon. Moreover, if the property is in the owner’s possession for five years or more, a stamp duty of 0.5% is added on and imposed on the sale.

That’s not it; there are several taxes involved. Talking about the business tax imposed over the sale of the property, a charge of 3.3% of the appraised value or the registered sale price (the higher one) is given over via the sale. The 3.3% tax is mounted up by Specific Business Tax(3%) and the local tax of 0.3%, which is relevant to the immovable property’s sale or real estate commercially or profitably. It is significant to know that this tax is only applicable over the course of the first five years after getting ownership of the property. If the property was obtained through inheritance, this figure is waived regardless of the time period that it was owned for.

Selling property incurs property tax that is payable by sellers depending on the retained tax structure, which is calculated over time, according to the appraisal value or the sale price of the property, along with the time period for which the property has remained under that ownership. In comparison to the other nations, Thailand being the sole country that puts forward a favorable structure that guarantees that your returns on investments are shielded with the least possible erosion to capital gains.

Thailand Property Lawyer

Siam Legal is a law firm that offers various services that are designed to protect the rights and interests of foreigners wishing to acquire or buy property in Thailand. Our firm offers a wide array of property-related services to best suit our foreign and Thai clients’ property needs. Should you have any property questions or issues that need to be addressed, our team of Thailand property lawyers invites you to contact us through the link below:

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