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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.

Type

Landed Property

Lease Transfer

Sale of Buildings

Taxable

Transfer

2 %

1 %

2%

Shared

Specific Business Tax

3.3 %

n/a

3.3% or n/a

Seller

Stamp Duty

0.5%

0.1

0.5% or n/a

Seller

Lease Registration

n/a

n/a

n/a

n/a

Withholding Tax

1 % or 5 % -37 %

n/a

1 % or 5 % -37 %

Seller

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 2009 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.

TABLE 1

 

TABLE 2

Years Owned

Expenses % of Selling Price

Income

Taxable Rate

1st

92 %

1- 100,000

5 %

2nd

84 %

100-101 - 500,000

10 %

3rd

77 %

500,001 - 1,000,000

20 %

4th

71 %

1,000,001 - 4,000,000

30 %

5th

65 %

4,000,000 - Over

37 %

6th

60 %

   

7th

55 %

 

8th

50 %

 


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.

 

 

Years Owned

Tax

Yr 1

Yr 2

Yr 3

Yr 4

Yr 5

Yr 6

Yr 7

Yr 8

Yr 9

Yr 10

2 % Fee

200,000

200,000

200,000

200,000

200,000

200,000

200,000

200,000

200,000

200,000

Stamp Duty

0

0

0

0

0

50,000

50,000

50,000

50,000

50,000

SBT

330,000

330,000

330,000

330,000

330,000

0

0

0

0

0

Withholding

105,000

210,000

295,000

360,000

425,000

470,000

515,000

560,000

505,000

450,000

Total

635,000

740,000

825,000

890,000

955,000

720,000

765,000

810,000

755,000

700,000


EXAMPLE : (How to find the tax payable from the deduction of expenses)

1. Number of Years Owned

71 % of Price

10,000,000 x 71 %

7,100,000

 

Sub total

2,900,000

---------------------------------------------------------------------------------------

2. Divided by Years Owned

4 Years

2,900,000 ÷ 4

725,000

3. Calculation of Tax on Bt. 725,000

100,000 x 5. %

5,000

 

400,000 x 10%

40,000

 

225,000 x 20%

45,000

90,000

4. Tax Multiplied by Years Owned

4 Years

90,000 x 4

360,000

---------------------------------------------------------------------------------------

 

 

Tax payable

Baht 360,000

 

 

 

 
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