Property Taxes in Thailand: What Investors Need to Know
When purchasing real estate abroad, it's essential to understand all associated taxes in advance. Each country has its own property tax regulations. Investors who plan to rent out or resell properties should also gather information on income taxes.
CONTENT:
- Property Tax in Thailand
- Taxes and Fees on Residential Property Transfers
- Property Income Tax in Thailand
- Non-Payment Penalties
PROPERTY TAX IN THAILAND In Thailand, property taxes are governed by the Land and Building Tax Act B.E. 2562 (2019). Previously, annual property tax was only required for commercial building use, but that has since changed.
Due to the financial challenges faced by local citizens during the COVID-19 pandemic, a 90% reduction in land and building tax was introduced in 2020. However, this relief is not being extended into 2022.
The Royal Order sets the current land and building tax rates (2021), with a recalculation expected in 2024.
Thailand uses four categories of property tax rates depending on the intended use of the property:
- Agricultural
- Residential
- Undeveloped land and unused buildings
- Other purposes (commercial, industrial, etc.)
Tax rates depend on the appraised property value. The detailed tax breakdown is shown in the table below:
Tax Rates Based on Assessed Real Estate Value
| Type of Real Estate | Appraised Property Value (M THB) | Tax Rate (%) |
|---|---|---|
| 1. Agricultural Real Estate | 0–75 | 0.01 |
| >75–100 | 0.03 | |
| >100–500 | 0.05 | |
| >500–1000 | 0.07 | |
| >1000 | 0.1 | |
| 2.1. Residential (building + land) | 0–25 | 0.03 |
| >25–50 | 0.05 | |
| >50 | 0.1 | |
| 2.2. Residential (building only) | 0–40 | 0.02 |
| >40–60 | 0.03 | |
| >60–90 | 0.05 | |
| >90 | 0.1 | |
| 2.3. Other Residential Types | 0–50 | 0.02 |
| >50–75 | 0.03 | |
| >75–100 | 0.05 | |
| >100 | 0.1 | |
| 3. Commercial, Industrial, etc. | 0–50 | 0.3 |
| >50–200 | 0.4 | |
| >200–1000 | 0.5 | |
| >1000–5000 | 0.6 | |
| >5000 | 0.7 | |
| 4. Undeveloped Land and Unused Buildings | 0–50 | 0.3 |
| >50–200 | 0.4 | |
| >200–1000 | 0.5 | |
| >1000–5000 | 0.6 | |
| >5000 | 0.7 |
TAXES AND FEES ON THE TRANSFER OF RESIDENTIAL PROPERTIES
When conducting a real estate transaction, there are various taxes and fees that must be paid, which are usually divided between the buyer and seller. In Thailand, there are two main types of property transfers:
- Long-term lease (leasehold)
- Property purchase (freehold)
Government fees vary depending on the type of transaction. The buyer and seller may decide in advance who will cover specific taxes and fees. However, there are common practices that most buyers and sellers follow in Thailand. Below is a table outlining the applicable tax rates and indicating which party is typically responsible for each cost:
Taxes and Fees for the Transfer of Residential Real Estate
| Taxes and Fees | Freehold | Leasehold | Who Pays |
|---|---|---|---|
| Transfer Tax | 2% of the actual cost | - | Buyer |
| Rental Registration Tax | - | 1% of the estimated or actual cost | Buyer |
| Stamp Duty | 0 – 0.5% of the actual cost | 0.1% of the actual cost | Seller |
| Income Tax | 0-35% of the actual cost (details below) | - | Seller |
Inheritance Tax Thailand introduced a real estate inheritance tax in 2015. Inheritances worth less than 100 million baht are exempt from this tax. Spouses are also exempt. For direct descendants and ascendants, the tax rate is 5%. For other cases, the rate is 10%.
PROPERTY INCOME TAX IN THAILAND Anyone who earns rental income in Thailand must declare this income to the tax authorities and pay the applicable taxes.
If rental income is managed through a company or legal entity, taxes are paid in two parts: an advance tax (Withholding Tax) when the payment is received, and, if necessary, an additional amount after filing a tax declaration. The management company will withhold a 5% tax if the landlord has a Thai Taxpayer Identification Number (TIN). Without a TIN, the withholding rate is 15%.
For real estate investments, a 5% tax applies with a TIN and 15% without. Income from hotel investments is considered commercial, and a 3% withholding tax applies with a TIN.
If no TIN is provided, no annual tax declaration is required, and the withholding tax is considered final. However, having a TIN allows you to submit an annual declaration, deduct personal expenses up to 30,000 baht, and claim a 30% rental deduction on expenses. Note that subleasing a leasehold property does not allow for rental cost deductions.
Income Tax Rates on Real Estate in Thailand
| Total Income (baht) | Tax Rate (%) |
|---|---|
| 0–150,000 | Tax-free |
| 150,000–300,000 | 5 |
| 300,000–500,000 | 10 |
| 500,000–750,000 | 15 |
| 750,000–1,000,000 | 20 |
| 1,000,000–2,000,000 | 25 |
| 2,000,000–4,000,000 | 30 |
| > 4,000,000 | 35 |
Thailand has double taxation agreements with 48 countries, including Russia and Ukraine, to prevent being taxed twice on income based on location and citizenship.
Income from the sale of property is taxed based on the same progressive scale mentioned above.
NON-PAYMENT FINES A penalty applies if taxes are not paid on time. If payment is made after the due date but before receiving a notification letter, the penalty is 10% of the outstanding amount. If taxes are not paid within the period specified in the notification, the penalty increases to 20%. After this period, the penalty rises to 40%. Additionally, a 1% monthly interest charge is applied for each month of non-payment.