Tax planning should be a core consideration during any form of property investment. The tax system in Thailand has many foibles – this section is designed to offer a general guideline in principle to the Thai property tax system.
Those living outside their home country may be currently free of the burdens of taxation, but future changes in personal circumstances may mean that tax could once again become payable, whether or not they plan to return “home”.
We strongly advise that all clients speak with our independent tax advice partners regarding their individual case.
Property Taxes and Costs
Stamp duty of 0.5% and transfer fees of 2% have, for now, been waived for the short term as the government entices buyers to the market.
Business tax of 3.3 % (levied against a vendor who has been in registered possession of the property less than 5 years) is also charged, along with income tax (similar to capital gains tax) at a variable rate.
Capital Gains Tax
Capital Gains Tax as such is not payable in Thailand, unlike many other countries.
This is usually between 1.0 and 3.0% on property and is the comparable replacement to capital gains tax. There are no established rules regarding who pays the income tax while this is simply another part of the bargaining process during purchase, as are all other costs relating to the transfer of ownership.
This is an annual tax levied on land ownership. The amount is often so small that in practice the body charged to collect it rarely bothers to do so. When they do collect it, it is usually after several years when the amount has accumulated.
Structures Usage Tax
This only applies to commercially used properties. The rate is 12.5% on the actual or assessed gross rental value of the property. However, this notional value is well below the commercial market rental value.
If the property is purchased through a company, you need to remember that corporate tax is higher than personal tax, and the cost of setting up the company must be considered as part of the initial investment.
Tax on Rental Income
This tax is charged at between 10 and 30% of the rental income, depending on the type of property leased.
No inheritance tax is charged in Thailand for all family members.