Understanding Taxes on Buying and Owning Property in Thailand

 

Navigating the complexities of property taxes in Thailand is crucial for anyone looking to invest in real estate, whether it’s for personal use or as an income-generating asset. Here’s a detailed look at the various fees and taxes involved in purchasing and owning property in Thailand.

Transfer Fee

When you buy property in Thailand, you’ll need to pay a transfer fee of 2% of the property’s appraised value. This fee is generally borne by the buyer and is payable to the Thailand Land Department.

Business Tax

If you sell the property within the first five years of ownership, a specific business tax of 3.3% of the appraised value applies. However, if you hold the property for more than five years before selling, this tax is waived, and instead, you’ll pay stamp duty.

Stamp Duty

Stamp duty is set at 0.5% of the total registered value of the property. It is only payable if the specific business tax does not apply.

Withholding Tax

Withholding tax varies depending on whether the seller is an individual or a company. For companies, the tax is fixed at 1% of the appraised value or the sales price, whichever is higher. For individuals, it’s calculated at a progressive rate based on the appraised value of the property.

Leasehold vs. Freehold Ownership

• Leasehold Ownership: If you’re acquiring a lease for land or buildings, a stamp duty of 0.1% and a lease registration fee of 1% of the total lease value must be paid. These costs are typically shared equally between the buyer and seller.
• Freehold Ownership: For freehold properties, including land or a freehold condominium, you’ll encounter several fees:
  • Transfer Registration Fee: 2% of the land’s assessed value.
  • Withholding Tax: 1% of the appraised value if the seller is a business entity.
  • Specific Business Tax or Stamp Duty: 3.3% of the appraised value or 0.5%, respectively.

Capital Gains and Personal Income Tax

Capital gains from the sale of property are taxable. If the seller is an individual, capital gains are taxed at progressive rates from 10% to 37%. For Thai corporations, the tax rate ranges from 15% to 30%, while foreign corporations face a flat 15% withholding tax on gains.

Rental Income Tax

• Individual Ownership: Rental income is taxed at progressive rates from 5% to 35% after deductions. A standard deduction of 30% is applied, and a 5% withholding tax is levied if renting to a Thai corporation.
• Thai Company Ownership: Rental revenue is subject to corporate income tax at progressive rates between 15% and 20%.
• Foreign Company Ownership: A flat 15% withholding tax is applied to rental income if the foreign company does not conduct business in Thailand. If it does, Thai corporate income tax rates apply.

Summary

Investing in property in Thailand involves understanding and navigating through various taxes and fees. Whether you’re buying a condo, a villa, or a house, it’s essential to be aware of the financial obligations involved. Consulting with a property lawyer can provide personalized advice and ensure compliance with Thai real estate regulations.

For detailed advice tailored to your specific situation, contact Sukhothai Inter Law, where our experienced property lawyers can assist you with your investment and tax planning needs.