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  • Advice From An Expert: Property Tax and Fees in Thailand

    Advice From An Expert: Property Tax and Fees in Thailand

    Property in Thailand has long been popular among investors looking to make passive income through holiday rentals, and sizable returns from flipping property for profit. However, as with any real estate market, Thailand has a lot of red tape that potential investors should be aware of. 

    If you are thinking of buying and selling property in Thailand, we advise that you brush up on all of the relevant tax and fee information before going ahead. 

    In this article, we’ll do our best to outline as much of this information as possible, for your convenience. Let’s get straight to it! 

    Foreign investor fee

    The foreign investor registration fee is calculated by adding 2% of the higher price from either evaluation cost, or the selling price. 

    • An evaluating cost is issued by the government, indicating the price for all properties in the country. This provides the criteria for fees and tax selling calculations. They are recalculated every 4-years.
    • The Department of Lands updates all land prices in Thailand, which can be viewed on the Property Treasury website. This information can help both buyers and sellers to set an appropriate price which can be either higher or lower than the evaluating price. 
    • The market price is an actual “buy and sell” price according to market supply and demand at the time. These are also adjusted based on the current cost of living – as such, the market price tends to be higher than the evaluating price. 

    Stamp duty fees

    Stamp duty fees refer to the stamp duties cost that the seller is required to pay during the foreign investor (aka alien) registration process. This is 0.5% calculated from the higher price of either the evaluating cost or selling price. 

    Particular business tax 

    In the case of sellers possessing a property for less than 5-years, you will be required to pay what is known as a particular business tax. An exception is made for those who have possessed a property for over 5-years, or have their name on the property registration certificate.

    • The particular business tax is 3.3% calculated from the higher price of either evaluating cost or selling price.  
    • Stamp duties fees are void when you are required to pay particular business tax. 

    Personal income tax

    Foreigners who are earning an income from Thai property that is registered in their own name will be required to file a personal income tax return. The tax required is calculated using the following progressive rate: 

    Income After Expenses (THB) Tax Rate (%)
    Up to 150,000 0
    150,001 – 300,000 5
    300,001 – 500,000 10
    500,001 – 750,000 15
    750,001 – 1,000,000 20
    1,000,001 – 2,000,000 25
    2,000,000 – 4,000,000 30
    Over 4,000,000 35

    Withholding tax 

    As selling a property in Thailand counts as receiving income, it must also be accountable for income tax and deductions as a withholding tax. 

    • This tax is calculated by evaluating the cost: (See 40(8) section 49 of the Revenue Code). 
    • It must then be paid as ordered by the Royal Decree: (Revision 165 2529 BC). 
    • If the property is either gifted or inherited, the deductible expenses are set to 50%.

    The possession period (number of years) is counted as a fiscal year (from the 1st of Jan through 31st of Dec). Any property that is bought or sold within the same period counts as a 1-year possession. 

    In the event that you are selling a property without aiming for profit, a maximum withholding tax of 20% of the selling price is required. 

    Building and land tax 

    Building and land tax is a commercial rental tax and only applies to commercial properties that are being rented out or leased. This is collected by the local government in the area in which the property is located. This is subject to a rate of 12.5% on the overall annual lease value (or the local authority’s assessed value) – whichever is highest out of the two. 

    Local land tax 

    Local land tax is a very small tax that is required for undeveloped land and collected by the local government. The rate at which this tax is collected depends on a variety of factors, for example:

    • Location
    • Size
    • Assessed value. 

     For freehold ownership 

    When the transaction involves freehold property (e.g., land or a freehold condominium), the following taxes must be considered: 

    • Transfer registration fees (2% of the land office appraised value).
    • Withholding tax (1% of the land office appraised value). 
    • Specific business tax / stamp duty (as necessary).

    If the transaction is deemed to be commercial (e.g., when a property is registered through a company name), then specific business tax applies.  

    • Specific business tax (3.3% of either the land office appraised value or the purchase price – whichever is highest). 
    • Stamp duty (0.5% of either the land office appraised value or the purchase price – whichever is highest). 

    For leasehold ownership 

    When you are acquiring a lease of land or a building, there is a stamp duty and lease registration fee that needs to be paid. These are both calculated using the overall value of the lease itself. 

    • Stamp duty (0.1%).
    • Lease registration fee (1%).
    • The seller is required to pay the stamp duty in Thailand. 
    • The lease registration fee is split between both parties 50:50. 

    Average real estate property agency commissions 

    Of course, when it comes to buying and selling property in Thailand, it’s not just government fees and tax that you will have to be aware of. You must also account for real estate agency commissions as well (assuming that you are going to be operating through the professionals for a safer, speedier transaction). Here’s a look at some of the average commissions charged by real estate agencies in Thailand: 

    • Sales commission: the average sales commission for residential properties in Thailand is 3% of the agreed selling price. Remember that if you are hiring legal advice as well to accommodate the sales and transfer process, all legal fees will be at the seller’s expense. 
    • Rental commission: the average rental commission is as follows: 
    • 0.5-month rent for 6-month lease.
    • 1-month rent for 1-year lease.
    • 1.5-month for 2-year lease.
    • (these fees are for finding the tenant – they do not include any maintenance, tenancy support, or property management). 
    • Property and tenancy management services: for overseas property investors who are buying property to rent out, there are property & tenancy management services available. These are typically charged as follows: 
    • 1-bed condo- 15,000 THB per annum.
    • 2-bed condo- 20,000 THB per annum.

    Feeling overwhelmed? 

    As you can see, there is an awful lot of red tape involved in Thailand’s real estate market. Whether you are buying or selling a property in Thailand, if you are feeling overwhelmed and would like to speak with a professional, we highly recommend reaching out to a reputable real estate agency to represent you. 

    While it might feel impossible to grasp, the relevant taxes and fees involved are rather straightforward and shouldn’t end up costing you all that much in the long run. 

    With the proper representation, the whole process can be simplified significantly, removing any unnecessary stress from the situation. 

    Want to learn more? Contact Lazudi today and their friendly team of representatives will happily talk you through the process in greater detail. 

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