After just buying a condo in Bangkok. I thought that I would write an article on the taxes that Thailand imposes in 2023. I have been an expat for roughly 10 years and I have lived in Bangkok for many of those years. Traditionally, I have rented because at the very start, I didn’t and couldn’t buy property in Thailand, however, now with my circumstances I have looked at purchasing a property in Thailand and will take you with me.
Why Thailand? Well, I enjoy it here, I like the culture, weather, cost of living, infrastructure, food and transport. I often go to locations nearby for a weekend or to see clients and being in Bangkok enables me to be able to travel for reasonable prices.
Owning for income or to live?
Owning property in Thailand can serve as a potential source of income or as a great place to live. Even if it doesn’t generate income, it’s important to be aware of Thailand’s real estate regulations, which may require you to pay taxes on your property. You can earn income through property sales or rental income. Your obligation to pay property tax in Thailand is determined by your tax entity type.
These property and real estate tax laws are applicable to both Thai residents and foreigners in Thailand. To determine whether you are liable for property tax in Thailand during this fiscal year, consult this guide.
Property Acquisitions Through Company Takeover
In the case of property transactions involving the acquisition of a company, whether it’s a Thai company or an international one, the ownership of the property remains unchanged, and no real estate-related taxes or fees are incurred. Instead, a share transfer is required.
When a Thai company acquires a property, the government imposes a 0.1% stamp duty based on the value of the shares involved. Additionally, personal income tax is applicable to the capital gains of the share seller (see the Capital Gains section below). In contrast, acquiring a foreign company does not trigger a taxable event in Thailand. However, for transactions taking place outside Thailand, tax obligations may arise in the respective country, but there is no Thai tax liability.
Property Acquisitions Without a Company Takeover
When purchasing property in Thailand without acquiring a business, there is a genuine transfer of property ownership. Such real estate transactions are subject to government fees and taxes, which can amount to as much as 6% of the contract’s value.
The specific taxes and fees that apply depend on whether the property ownership is leasehold or freehold.
For Leasehold Ownership:
When obtaining a lease for land or a building, both stamp duty and a lease registration fee must be paid. The stamp duty is set at 0.1%, while the lease registration fee is 1%. It’s important to note that these fees are calculated based on the total value of the lease, which includes the total rental amount throughout the lease’s duration. In Thailand, the stamp duty and lease registration fee are typically shared equally, with the buyer and the seller each bearing 50% of the cost. Importantly, these fees remain consistent regardless of whether an individual or a business entity is involved in the transaction.
Freehold Ownership
When dealing with freehold property transactions in Thailand, which includes land or a freehold condominium, you need to take into account the following taxes and fees:
- Transfer Registration Fees
- Withholding Tax
- Either Specific Business Tax or Stamp Duty
Property registration must be either in a corporate name or held by an individual owner for less than five years, at which point it becomes classified as a commercial transaction, triggering the application of stamp duty.
The transfer registration cost is calculated at 2% of the land value as assessed by the land office. This assessed value is typically lower than the agreed purchase price or the actual market value.
If the seller is a business entity, the withholding tax applies at a rate of 1% of the value exceeding the purchase price or the land office’s assessed value. However, this applies when the sale takes into account the assessed value, the ownership duration, and the progressive tax rate.
The Specific Business Tax is assessed at 3.3% of either the office’s appraised value or the purchase price, whichever is higher.
Stamp duty amounts to 0.5% of the value exceeding the purchase price or the land office’s appraised value.
Regarding the division of these taxes and fees between the buyer and the seller, the seller is responsible for the withholding tax, specific business tax, or stamp duty. However, in most transactions, there is an agreement for the buyer and seller to evenly split all taxes and transfer costs. Furthermore, both parties share the transfer registration charge on a 50:50 basis.
Property Taxes on Capital Gains
The sale of leasehold or freehold property and shares of a Thai corporation triggers a tax obligation on any capital gains. If the seller is an individual, these capital gains are subject to income tax, with rates ranging from 10% to 37%. Conversely, if the seller is a Thai corporation, corporation tax applies, with rates ranging from 15% to 30%. In the case of a foreign corporation, a 15% withholding tax is levied.
It’s important to note that foreign buyers of Thai real estate need to ensure they have documented proof of foreign remittance to Thailand. This documentation typically includes the Foreign Exchange Transfer (FET) Form for transfers exceeding $20,000 USD. Notably, the remittance to Thailand should be made in foreign currency, not Thai baht.
The FET Form serves as an official record of the transfer of foreign funds into Thailand and their subsequent conversion into Thai baht upon arrival. This enables the seller to repatriate the same amount of money tax-free, provided they can substantiate that the foreign currency remittance to Thailand was intended for the purchase, with only the capital gain being subject to income tax.
Personal Income Tax
Foreign nationals who earn income from Thai real estate registered in their name are required to file a personal income tax return. This process involves calculating progressive tax rates, which range from 5% to 35%, after deducting allowable expenses.
Property Taxes on Rental Income
Income tax in Thailand is imposed on revenue generated from renting out real estate within the country. The applicable tax rates depend on the ownership structure of the property, whether it’s held in an individual’s name, a Thai corporation, or a foreign entity.
Tax on Property Registered in an Individual’s Name
Regardless of the owner’s nationality or whether the rental income is received within Thailand or from overseas, Thai personal income tax applies to foreigners who own Thai property in their own names. Consequently, they are required to file a personal income tax return in Thailand.
The rental revenue is subject to progressive tax rates, ranging from 5% to 35%, based on the net income after accounting for costs and allowances. Notably, a standard 30% deduction is applicable to rental income. Additionally, when the property is leased to a Thai corporation, a 5% withholding tax is withheld from the rental payment. This withholding tax serves as a tax credit on the taxpayer’s individual tax return.
Tax on Property Registered in a Thai Company’s Name
If the property is registered under the ownership of a Thai company, the rental revenue (after deducting business expenses) is subject to corporate income tax at progressive rates, ranging from 15% to 20%. The specific tax rates can be found in the corporate income tax rate table.
Tax on Property Registered in a Foreign Company’s Name
The tax rates applicable to rental revenue income from property registered in the name of a foreign company are determined by whether the foreign company conducts business activities within Thailand, such as maintaining a branch, office, or staff.
For foreign businesses that do not conduct business in Thailand, a flat 15% withholding tax is imposed on rental income from Thai property. However, international corporations engaging in business within Thailand are subject to Thai corporate income tax, similar to Thai enterprises.
Property Taxes on Rental Income
Income tax in Thailand is imposed on revenue generated from renting out real estate within the country. The applicable tax rates depend on the ownership structure of the property, whether it’s held in an individual’s name, a Thai corporation, or a foreign entity.
Tax on Property Registered in an Individual’s Name
Regardless of the owner’s nationality or whether the rental income is received within Thailand or from overseas, Thai personal income tax applies to foreigners who own Thai property in their own names. Consequently, they are required to file a personal income tax return in Thailand.
The rental revenue is subject to progressive tax rates, ranging from 5% to 35%, based on the net income after accounting for costs and allowances. Notably, a standard 30% deduction applies to rental income. Additionally, when the property is leased to a Thai corporation, a 5% withholding tax is withheld from the rental payment. This withholding tax serves as a tax credit on the taxpayer’s individual tax return.
Tax on Property Registered in a Thai Company’s Name
If the property is registered under the ownership of a Thai company, the rental revenue (after deducting business expenses) is subject to corporate income tax at progressive rates, ranging from 15% to 20%. The specific tax rates can be found in the corporate income tax rate table.
Tax on Property Registered in a Foreign Company’s Name
The tax rates applicable to rental revenue income from property registered in the name of a foreign company are determined by whether the foreign company conducts business activities within Thailand, such as maintaining a branch, office, or staff.
For foreign businesses that do not conduct business in Thailand, a flat 15% withholding tax is imposed on rental income from Thai property. However, international corporations engaging in business within Thailand are subject to Thai corporate income tax, similar to Thai enterprises.
Summary
Buying a property in Thailand comes with a lot of processes and hoops but also as an expat, you need to make sure you do your due dilligence and research on the property.
For example, I see a lot of vacant condos in Bangkok which means there is a lot of supply and demand isn’t reducing but shifting to different parts, standards and facilities. This has led to many developers reducing prices and exploring ways they can add in services. A thought that comes to mind is AirBnB for many of the developers – however, I’ve never done this and it’s not my area of expertise.
As a UK expat who has bought a condo in Bangkok, if you have any questions, please email me using the button at the bottom of the page or contact me by visiting the contact page.
Further Reading
- Top Places to Invest in Real Estate in South East Asia and Why: 2023
- Real Estate Investment Trusts (REITs) For Expats
- Capital Gains Tax For UK Expats on UK Property
- Non-Resident Landlord Schemes for British Expats
