Tax

Property Tax Thailand for Foreigners 101

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Property Tax Thailand – (explained) 

property tax in thailand

Thailand does not need any introduction, it is a top destination for international property buyers and if you’re a foreigner planning to invest in residential property in Thailand, or if you own a property in Thailand, you must understand the country’s tax scheme on property tax. This article aims at summarizing the applicable property taxes in Thailand for foreigners, focusing on residential purpose and incomes you might receive from your properties.

Here are the main questions we will address : 

Do I need to pay taxes when I own a property in Thailand ? 

What are the taxes on properties and incomes in Thailand ? 

1.  Property Tax in Thailand – Land and new building Tax –

Property tax in Thailand is quite a low tax scheme in comparison to what may exist in other western countries. Depending on the type of property you own in Thailand, for residential purpose, the “Land and new Building Tax“, modernized in 2020, starts as low as 0.02% and is capped at max 0.3% of the appraised property value, yearly. This act ensures that property taxes are levied fairly based on the appraised value and purpose of the property. All taxes and fees related to owning a property in Thailand are to be paid at the Land department at the time of registration or transfer of the property / lease and to your local tax office for yearly property taxes.

  link icon See the official double tax avoidance agreement by country

Definitions

  • Owners : when you own, possess or control the usage rights  – no distinction about nationalities
  • Leaseholders : whose name appears as the Lessee in a leasehold ownership agreement are not deemed as owners – the Land and new building tax is to be paid by the Lessor, owning the Land/building 
  • Appraised value : The official government assessed property value for a specific real property in Thailand based on a calculation method set by the Land Department and the Treasury Department and is adjusted every 4 years based on market conditions. Is among others used to determine the (minimum) amount of property or transfer tax that must be paid – it can be a bit different from the market value –
  • WithHolding Tax (WHT) : All persons paying assessable income are required to withhold income tax at source on each occasion of payment. A taxpayer who has had income tax withheld may pay, or request a refund of, the amount of any tax that has been under-/over-withheld. A claim for a refund must be submitted to the Revenue Department within three years from the last day of the time limit prescribed by law for filing the tax return
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 The Land and Building Tax

This annual tax applies to ALL property owners regardless of Thai nationality or foreigners. However, since foreigners cannot own land, the section no 3 from the table below only is applicable to foreigners in most cases : 

The tax rate for residential properties is tiered based on the appraised value of the property:

  • Up to 10 million THB: 0.02% 
  • 10–50 million THB: 0.03%
  • 50–100 million THB: 0.05%
  • Over 100 million THB: 0.1%
land and building tax

 The Land and Building Tax Calculation

Consider a property appraised at 15 million THB:

  • Tax Rate: 0.02% for values up to 10 million THB and 0.03%  between 10 and 50 million THB
  • Appraised value – taxable Value: 15,000,000 THB

Calculation:

  • Annual Land and Building Tax = (10,000,000 THB × 0.02%) + (5,000,000 THB × 0.03%) = 2,000 THB + 1,500 THB = 3,500 THB

Exemptions on Property Tax Thailand, for residential purpose

Properties with an appraised value of up to 50 million THB and used as the primary residence by the owner are exempt from the Land and Building Tax.

Get help to leverage exemptions and allowances through contacting an accounting / tax firms and get up to 30% flat tax deduction for residential purpose and 60,000 thb personal allowance, other specific allowances(life insurance, etc) may apply

Penalties for Non-Compliance with property tax in Thailand

Failure to pay property taxes can result in fines, interest on unpaid amounts, and potential legal action.

The rate of penalty is 100% for an inaccurate return and 200% for failure to file a return.

property tax foreigner thailand

2. Property Tax when buying / selling a property in Thailand

 If you buy or sell a property in Thailand, other taxes, else than the land Building Tax apply –  upon freehold or leasehold registration, taxes to pay at the Land department at the time of registration are different, hereafter a breakdown of the main taxes to be paid at the Land department.

FREEHOLD PROPERTIES

  • Transfer fee: 2% of appraisal value for freehold (foreign or thai freehold)
  • Withholding tax: 1% for companies / up to 3% for individuals of actual selling price
  • Stamp duty: 0.5% of appraisal value
  • Special Business Tax: 3.3% (if any) if property is bought / sold within 5 years – applicable for new properties

 LEASEHOLD PROPERTIES

  • Transfer fee: 1% of appraisal value for leasehold
  • Stamp duty: 0.1% of appraisal value
  • Special Business Tax: 3.3% (if any) if property is sold within 5 years – applicable for new properties

Depending on sales and purchasing terms, usually, only the Transfer fees are to be borne by the buyer, and it is a usual practice, for those transfer fees to be shared equally between buyer and seller. All other charges are borne by the Seller. In practice, when you buy a property in Thailand, you might therefore end up paying only 1% transfer fees or 0.50% at the Land department depending on conditions stated about the transfer fees in the Sales and Purchase Agreement. Read more on Freehold vs. Leasehold ownership in Thailand.

3. Personal Income Tax in Thailand

Although, you are to be taxed on the incomes generated from your property, if any. The rental revenue would be part of your Personal Income Tax declaration scheme with applicable tax rates calculated as follows if you have a Tax ID in Thailand. Personal Income Tax is to declare yearly and you can possibly claim a refund at the Revenue Department afterwards from what has been withdrawn – WHT tax

A Flat Withholding Tax of 15% would be withdrawn at the source for non-residents (foreigners without a Thai Tax ID)

personal income tax thailand 2

Show calculation breakdown by threshold – example 1.5M thb  

300K x 5% + 200K x 10% + 250K x 15% + 250k x 20%

4. Example of property tax and income tax Thailand

Example of Personal Income Tax and Annual property tax below with a Freehold property

Personal income tax calculation for freehold

5. Property Tax Thailand Optimization

To minimize your tax burden as a foreign property owner in Thailand, consider these strategies:

  1. Primary Residence Exemption: If possible, designate your property as your primary residence to utilize the Land and Building Tax exemption for properties valued up to 50 million THB.
  2. Lease Structure: For long-term property investments, explore a leasehold structure, which may offer reduced transfer fees and stamp duties compared to freehold ownership.
  3. Timing of Sales: Be mindful of the Specific Business Tax on properties sold within 5 years of purchase. If feasible, retain the property for a longer period to avoid this additional 3.3% tax.
  4. Professional Advice: Seek guidance from local tax professionals or property lawyers to ensure you are maximizing all available exemptions and structuring your investment in the most tax-efficient way.

Conclusion on property taxes in Thailand

Understanding property tax in Thailand is essential for foreign investors and expatriates seeking residential properties. By familiarizing yourself with tax rates, exemptions, and compliance requirements in Thailand, you can effectively manage your investment costs. Consult a legal or tax expert to ensure all obligations are met and to identify potential savings. With proper planning, your property investment in Thailand can be both financially sound and legally compliant.

Frequently Asked Questions (FAQs)

How is property tax in Thailand calculated for residential properties?

Property tax is based on the government’s appraised value of the property. For residential use, the rate ranges from 0.02% to 0.1%, depending on the value, exemptions can be leveraged 

What happens if I sell my property within five years?

Selling property within five years of purchase incurs a Specific Business Tax (SBT) of 3% on the property’s registered value.

Can I reduce my property tax liability?

Using the property as your primary residence and ensuring accurate documentation of appraised values and exemptions can help reduce tax liability.

What taxes are involved when purchasing property in Thailand?

The primary taxes include a 2% transfer fee, a 0.5% stamp duty, a 1% withholding tax for companies (progressive for individuals), and a 3.3% business tax (if applicable), all based on the registered value.

How is rental income taxed for foreigners in Thailand?

Personal income tax is imposed on rental income, and the tax rates are progressive, ranging from 5% to 35%. A standard deduction of 30% can be applied to the rental income.

How does the Thai tax system treat foreign-sourced property income?

Income from foreign sources is subject to taxation in Thailand only if it is remitted into the country within the same year it was earned.

Are there any specific taxes for selling a property within 5 years of purchase?

A Specific Business Tax of 3.3% is applicable if a property is sold within 5 years of the purchase date.

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Keller Henson Team

Thailand Real Estate Market Analysts

Expert real estate specialists in Thailand, the Keller Henson team offers comprehensive guidance for foreigners buying property. They combine local market knowledge with legal expertise to ensure a secure and efficient investment experience.

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