Real Estate Rental in Thailand: What You Need to Know About Renting
In this article, we will cover the main rules and rental laws in Thailand, providing important information for both tenants and those looking to rent out their property. Renting out real estate is a popular way for investors to generate passive income. If you’re considering purchasing property in Thailand with the intention of renting it out, this guide may be useful for you.
It’s important to note that you can rent or lease apartments in Thailand either through an agent or independently. A management company or developer can also serve as an agency. If you opt for agency assistance, representatives will prepare the necessary documents for you and ensure they comply with legal requirements.
However, if you choose to rent from an individual or rent out your property without intermediaries, it’s essential to familiarize yourself with Thailand’s legal regulations. It is advisable to consult a lawyer when drafting a rental agreement.
CONTENT:
- Real Estate Rental Agreement in Thailand
- Short-Term Rental
- Is Airbnb Legal in Thailand?
- Rental Income and Taxes
- Avoiding Double Taxation
- Registering Tenants
- Long-Term Lease for Over 3 Years
- Transferring Lease Rights and Subleasing
- Deposits
REAL ESTATE RENTAL AGREEMENT IN THAILAND
In 2018, Thailand made changes to its laws governing the rental of houses and apartments, introducing new regulations that remain in effect today.
Firstly, foreign property owners have the right to rent out real estate, such as apartments and houses. The landlord can be someone who owns the property under a freehold or leasehold agreement on equal terms.
Under the 2018 amendments, the rental agreement must be drafted in Thai. However, a second copy in English or another language can also be created. The contract must include an inventory listing all items and household appliances in the property, along with their condition. Photographs can also be included. The document must be signed by the tenant, confirming they have reviewed and agree with the information.
Two copies of the contract, each with equal legal standing, should be prepared. After signing, the tenant must receive one copy.
SHORT-TERM RENTAL
According to Thai law, private houses can be rented for any duration. However, apartments in condominiums can only be rented out for a minimum of one month or longer. In some cases, the management company or residents’ council may impose stricter rules, such as requiring rentals of at least a year, or, in tourist areas like Pattaya, they may allow daily rentals. It is important to clarify these details before purchasing investment property.
Is the Airbnb Service Legal in Thailand?
In many apartment buildings, you might see notices claiming that Airbnb is illegal in Thailand. This is not true. Airbnb and similar services are not prohibited under Thai law. However, it's essential to follow the building's house rules, as mentioned earlier. If short-term rentals are not allowed in a particular building, you can still rent out your apartment for longer periods using Airbnb.
RENTAL INCOME AND TAXES
Income earned from renting out real estate in Thailand is subject to taxation. If you use an agency’s services, they will handle the tax process for you. If you manage the rental yourself, you can handle the taxes on your own or hire a local accountant.
If you rent your property through a management company or another legal entity, you will need to pay taxes twice: a withholding tax upfront and a final tax payment or refund at the end of the year. The management company will withhold 5% of your rental income if you have a taxpayer identification number (TIN) in Thailand. If you do not have a Thai TIN, the withholding rate will be 15% of the rental income stated in the contract. Obtaining a Thai TIN makes the process more complex but more beneficial, as you can file an annual tax return. Taxpayers are eligible for a personal deduction of 30,000 baht per year and a 30% deduction on rental income. However, if you have leasehold property, you are not considered the owner, and renting out such property will be classified as subleasing, which does not qualify for deductions.
The amount of annual income after deductions is taxed on a progressive scale, with the following rates for 2023 (to be updated in 2024):
| Income (Baht) | Tax Rate |
|---|---|
| 0–150,000 | Not taxed |
| 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% |
AVOIDING DOUBLE TAXATION
Thailand has double taxation agreements with 48 countries, which help prevent individuals from being taxed both in Thailand and in their home country.
REGISTERING TENANTS
All foreign tenants must be registered with the immigration authorities using the TM.30 form, also known as the «Notification from House-Master, Owner or Possessor of the Residence where Alien has Stayed.» This document is required for the foreigner's legal stay in the country, along with a visa and a «90-day report» that must be submitted every 90 days. The property owner is responsible for issuing TM.30. Without this document, foreigners may not be able to extend their visas, and landlords could face fines. In most regions of Thailand, TM.30 can be filed online, but in some areas, landlords and foreign tenants may need to report to the immigration office in person.
A LONG-TERM LEASE FOR OVER 3 YEARS
According to Thai law, leases longer than three years must be registered in the Land Department, which holds the land title deed or condominium ownership documents. The maximum lease term that can be registered is 30 years.
TRANSFERRING LEASE RIGHTS OR SUBLEASING
The lease agreement must specify the tenant's right to sublease or transfer the lease. If this is not stated in the contract, Thai law prohibits the tenant from subletting or assigning the lease to someone else.
DEPOSIT
In Thailand, tenants are required to pay a deposit when renting a house. This deposit is returned after the lease ends. By law, the deposit should equal one month’s rent, but in practice, landlords often require a deposit of two months’ rent. The contract must specify the deposit amount and the conditions for its return. According to the law, the deposit should be returned within seven days after the lease expires and the tenant vacates the property.