Thailand is often considered one of the most beautiful countries in the world and home to a rich and elegant culture. The country amazes travelers with its unparalleled beauty. The vast majority of foreigners have admitted to considering buying property in Thailand.

Property Tax Law in Thailand

Whether it's building tax, property tax, or land tax – these are levied annually by the local government according to the Building and Land Tax Act. There is no general annual property tax in Thailand. However, if private owners rent out their property or use it for commercial purposes, a property and rental tax of 12.5% ​​per year is levied. The fact that there is no general property tax in Thailand is good news for many.

It is the owner's responsibility to inform the local authorities if the property is rented out or used for commercial purposes, and they are supposed to pay the rental tax by February of each year. As mentioned previously, this specific "rental tax" is passed on to the tenant, who is then responsible for its payment.

Property tax in Thailand and Thai rental agreements are subject to the following clause:

'The tenant undertakes to pay to the landlord all taxes that are levied or assessed on the leased property and all rights, improvements and other assets thereon, whether belonging to the landlord or the tenant, from the time of taking possession of the leased property and throughout the entire term of the lease.'

This means that tenants who sign a separate lease are obligated to pay building and property taxes to their landlord. The Thai government reviewed the existing building, land, and municipal taxes and decided to replace them with the new property tax.

This new tax is levied on real estate, and every owner of a plot of land, including any permanent buildings erected on it, must pay property tax. The new property tax provides for a maximum of three tax rates, which depend on the use of the property and are subsequently calculated based on its market value.

The three tax rates are listed below:

  • If the property is used for commercial purposes, the tax rate may not exceed 0.5% of the estimated value of the property and building.
  • If the property is used as a private residence, the tax rate may not exceed 0.1% of the assessed value of the property.
  • If the land is used for agricultural purposes, a tax rate of 0.05% of the assessed value is to be levied.

    • The rates mentioned above represent the maximum rates that can be levied by local authorities. Therefore, building and property tax rates may vary from district to district under the new system.

    Property tax in Thailand for foreigners

    According to Thai law, foreigners are not permitted to own land in Thailand. However, should foreigners attempt to acquire land, it is not a simple matter. Thai land law regulates land ownership. It is important to note that the restrictions on foreign landowners in Thailand apply exclusively to the land itself and do not include buildings or condominiums.

    If a foreigner is interested in buying land, there are two recommended approaches: First, instead of purchasing the land, lease it for 30 years. In most cases, the foreigner marries a Thai citizen. The Thai woman then buys the land and enters into a lease agreement with the foreigner. Second, the foreigner can establish a Thai Limited Company (Thai Limited Company) in which they hold a 49% stake. According to Thai property law, a foreigner cannot own half or more of the shares in a company. Once this is clarified, the Thai owner can transfer the company to the foreigner. The immigration authorities will then monitor the foreigner's business activities.

    Sale of a property in Thailand

    Many real estate investors in Thailand are unaware of the taxes that may apply when selling property. Foreigners frequently invest in real estate, either by purchasing a condominium or leasing land. The Thai government levies a transfer fee of 2% of the sale price when buying or selling real estate. This fee is split equally between the seller and buyer (1% each). Both parties have the right to negotiate the fee amount. Additionally, a stamp duty of 0.5% is levied on the sale price if the property has been held for five years or more.

    That's not all; there are other taxes to consider. The business tax on real estate sales is 3.3% of the market value or the registered sale price (whichever is higher). This 3.3% comprises the business tax (3%) and the local tax (0.3%), which applies to the sale of properties used for commercial or profit-generating purposes. It's important to note that this tax is only due within the first five years after acquiring ownership. In the case of inheritance, this tax is waived regardless of the length of ownership.

    Property tax is levied on the sale of real estate, the amount of which is calculated by the seller depending on the chosen tax structure. This tax is calculated over time, based on the market value or sale price of the property and the duration of ownership. Compared to other countries, Thailand offers a particularly advantageous structure that optimally protects your capital gains and minimizes capital losses.

    Thai real estate lawyer

    Siam Legal is a law firm offering a range of services to protect the rights and interests of foreigners wishing to purchase real estate in Thailand. Our firm provides a comprehensive suite of real estate-related services to best meet the needs of both our foreign and Thai clients. Should you have any questions or concerns regarding real estate, our team of Thai real estate lawyers invites you to contact us via the link below: