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Most Property buyers who purchase will have either established their own Limited Thai Company or have bought a Condominium or Apartment or have taken out a lease on a landed property.

Property Rent:

For long term rentals there is a property usage tax payable to the local council or Tambon at the rate of 12.5% of the access annualized rental. For all intents and purposes, assuming that you are renting your property between 3 months or longer (an unregistered contract of lease is under 3 years) and you are not a resident of Thailand (i.e. in the country of less then 180 days) then there is nothing else to pay. The property tax is not deducted from source but is payable by you or your tax accountant.

For short term rental contracts the Revenue Department considers this as income that is subject to a Value Added Tax of 7 % and hence is subject to a withholding tax of 15 % (at source) for those property owners who are not resident of Thailand (i.e. not having been in the country for longer then 180 days.) If you have been residing in the country longer then this time or are resident in Thailand earning rental income from a short term let, then it is possible to recuperate some of this by lodging a personal income tax return.

Sale and Re-sales:

The table below show the tax rates (excluding company or individual personal tax which may also apply) for property transactions - typically for re-sale landed property. If you are buying new property (from a developer) the onus for the tax schedule show below,e with the exception of the registration fee and stamp duty is for the developer.

N.B. All payments outlined above for the sale of property (including land / apartment leases) are payable at the Land Department.

Transfer Fee: Traditional practice spilt equally between the seller and buyer. The value is obtained on the basis of the "official appraised value" irrespective of the selling price.

Lease Registration Fee: This is paid on the total rental payable over the lease term. This cost is often borne equally by the Lessor and Lessee but this needs to be agreed by both parties.

Specific Business Tax (SBT): SBT is payable by companies and those individuals that hold the property for less than 5 years. It is based on the official appraised value or the contracted price whichever is the higher.

Withholding Tax: The tax is remitted by the buyer (on behalf of the seller) from the proceeds of sale with the following exceptions:

1. Where the vendor is a company, the Withholding Tax on the sale of property is calculated at 1% of the official Land Department appraisal price or the contracted sales price whichever is greater.

2. Where the vendor is an individual, the Withholding Tax is based on the individual's marginal tax rate (except that the first 100,000 baht is taxed at 5% instead of allowing the tax-free threshold) after deducting from the "official appraisal value" a standard deduction based on the number of years of ownership. i.e. capital gains calculation as shown in the example below

The Withholding tax that is payable in respect of a non-resident seller is treated as a " final" tax in practice.

The 1% withholding tax liability of a resident Thai company can be used as a credit against the final income tax payable against the submission of an annual tax return. A resident individual seller can, however, elect to treat the WHT as a final tax or lodge an annual return by declaring the actual gain on sale in order to obtain a refund of any overpaid tax. In practice, however, this method is rarely used.

Download the 2007 Thai Tax Booklet Prepared by Price Waterhouse Coopers

Example :

In the situation for landed or condominium property (FREEHOLD) where The Seller is an individual, (either Thai or Foreigner) will be subject to withholding tax at the rate calculated, based on the "official appraisal" price of the property (irrespective of the contractual price) as follows :-

( i ) The official appraisal price of the unit is obtained.
( ii ) A standard deduction for expenses is allowed against this appraisal price based on the number of years owned (Table 1).
( iii ) This resulting calculation is then divided by the number of years in possession (maximum of 10 years).
( iv ) Initial tax is then calculated on this gain in accordance with the Personal Income Tax Schedule (Table 2).
( v ) The result is multiplied by the number of years of ownership to arrive at the withholding tax payable.

Assuming a Sale is made within 4 years of buying, and the official appraisal price is Baht 10,000,000, the withholding tax will be Bt. 360,000 and your total expense would be Bt. 890,000:-. There is a maximum threshold ceiling of 20 % payable in taxes for associated transactions.