The beautiful country of Thailand is an attractive prospect if you’re thinking of buying somewhere to live: whether you’re on the lookout for a beachside retreat or an apartment in bustling Bangkok, Thailand could be the place for you. However, property ownership always comes with costs attached, and that includes taxes. Here’s a look at the taxes that you have to pay when you buy, sell or simply own property in Thailand.
Property tax is any tax that you pay because of property you buy, sell or own. In Thailand, like in most countries, there are a number of different property taxes that you’ll have to pay if you get involved with the property market.
Some Thai property taxes are paid by the buyer, and some by the seller - see below for more info. If property is rented out, the owner has the tax liability.
If you’re not a Thai citizen, the same rules apply, although you should be aware that it’s not legally possible for you to own land in Thailand. So you’ll have to rent the land the property’s on.
(Source 31 December 2017)
In general, there are two categories of property tax:
- Sales taxes, paid when you buy or sell a property
- Maintenance taxes, paid regularly when you own property
Thailand has examples of both - although not everyone has to pay maintenance taxes. Here’s a rundown of each tax that you might have to pay.
There are 4 main types of sales tax in Thailand, although you shouldn’t have to pay all of them. They are:
- Transfer fee
- Withholding tax
- Stamp duty
- Business tax
Read more about each below. Note that while they are all charged as percentage figures, some are based on the appraised property value and some on the sale value.
Individuals don’t have to pay a specific capital gains tax, although that doesn’t mean there's no tax on the profit. Any profit made on property may be taxed in the broader category of income tax.
- The transfer fee is charged at 2% of the registered sale value.
- This fee is generally paid by the buyer, although this should be agreed formally before the deal is made. It could also be shared between buyer and seller.
Withholding tax is technically a part of income tax, but rather than being paid when you do your tax return it’s payable straight away when you sell a property.
- For a company, withholding tax is set at 1% of either the appraised value or the sale value - whichever is higher.
- For individuals, the withholding tax rate is set progressively, based on the appraised value. So you pay a higher rate of tax if you’ve made more on the sale.
- When calculating withholding tax, the appraised value is reduced according to how long you’ve owned the property: the longer you’ve owned it, the less withholding tax you have to pay.
- This fee is always paid by the seller.
- As this is a withholding tax, you have to pay it when the property is sold, but the amount you pay can be claimed back later on when you pay income tax.
- Stamp duty is charged at 0.5% of the sale value.
- You only pay this tax if you don’t pay business tax - pay one or the other, but not both.
- Unlike in many countries, it’s usually paid by the seller, although again this can be negotiated.
(Source 1 31 December 2017)
- Business tax or ‘specific business tax’ isn't just payable by businesses - individuals may have to pay it too.
- The rate is 3% of the appraised or sale value, whichever is higher. An additional 10% of that amount goes to local government so that the total amount paid is 3.3%.
- This is also generally paid by the seller.
- Sellers are exempt from business tax if they’ve owned the property for more than five years, or if they pass the property on to an heir, child, government agency or religious institution.
- If you’re exempt from business tax, you’ll have to pay stamp duty instead.
(Source 1 31 December 2017)
|Any property||Property owned for more than 5 years, or being given to family member etc||Property owned for less than 5 years||Buyer||Seller||Cost|
|Transfer fee||✓||✓||2% of sale value|
|Withholding tax||✓||✓||Companies: 1% of sale or appraised value;Individuals: taxed progressively|
|Stamp duty||✓||✓||0.5% of sale value|
|Business tax||✓||✓||3.3% of sale or appraised value|
There’s currently just one principal maintenance tax to pay in Thailand, and even that is only payable if you rent your property out. Alongside that, you’ll need to pay income tax on your rental gains.
Currently, local authorities in Thailand charge a ‘house and land tax’ as follows:
- You have to pay this tax if you rent out your property.
- If you occupy your property yourself, or if the property is vacant, you don’t have to pay.
- It’s charged at 12.5% of the assessed annual rental value.
But keep your eyes peeled! Changes are afoot. Under a proposed new system, owner-occupiers and owners of unused or vacant property, might be charged too, vastly increasing the number of property owners who have to pay this tax. Rates would vary depending on how the property is used, ranging from 0.03% up to 5%.
As well as paying the house and land tax, people who rent out Thai property must pay income tax on the rental payments they receive.
- Income tax is only charged on a certain percentage of the rent received.
- This is part of your income tax payment, so most of it can be paid along with the rest of your income tax bill.
- However, 5% of this tax is payable upfront as a withholding tax - you pay it when you receive the rent, rather than at the end of the tax year.
- Personal income is taxed progressively in Thailand, with rates between 5% and 35%.
- If you earn rental income from your property, then property taxes can be deducted from income tax liability.
- When filing your income tax return, don’t forget to claim back withholding tax if you’ve sold a property that year or received money from rent.
- Below is a table that displays the deductions you can claim on certain property types when paying your personal income tax.
|Type of property||Deductions|
|Buildings and wharves||30%|
|All other land||15%|
|Other types of property||10%|
The Thai tax year is the calendar year and income tax payments are due by the end of March. You may also have to submit half-yearly returns and pay some of the bill in September. It’s up to you as the homeowner to declare your property to the authorities, so don’t sit around waiting for a bill - you could be caught out.
Sales taxes generally need to be paid at around the same time as other fees when the property changes hands. Specific business tax is paid via monthly tax returns.
The answer varies from tax to tax: for rental income and specific business tax, there are tax returns to fill out, while the process is different for the transfer fee and stamp duty. You should speak to your agent or attorney to get a full fee schedule and check payment methods.
Take a look at the Thai Revenue Department and see if you can make your payment via one of the government’s e-services. Paying online can take a lot of the hassle out of the process.
But if you’re living internationally or have bank accounts in other countries around the world, even an online payment to the Thai government can be complicated. Making an international transfer into or out of Thailand can be expensive and time-consuming if you use a bank: banks often mark up the exchange rate by as much as 4-5%, meaning that the transfer costs you far more than it should.
TransferWise can help: always providing the mid-market exchange rate, which is the only rate that’s fair to use, TransferWise usually works out far cheaper than using a traditional bank to make your transfer. Whether you’re looking to pay your tax bill directly from abroad (check that they accept third-party payments first) or simply moving money into your Thai account, take a look at TransferWise now and see if you could save money.
Property always comes with costs attached, so it pays to know what’s coming. Good luck looking into property taxes for your Thai property.
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