Thailand Property & Land Taxes

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Whenever a property in Thailand is bought and sold, there are four taxes that need to be taken into account.

1. Land registration (transfer fee) of 2.0% of assessed value of the land.

2. Stamp Duty/Fee of 0.5% of the assessed value or the sale price - whichever is higher.

3. Specific Business Tax of 3.3% of the assessed value or the sale price - whichever is higher - this will be applied to all sales by companies and to any private sales that occur within 5 years of the date of purchase.

4. Income Tax - this is calculated on a very complex formula based on the assessed value of the property, the length of time owned and the applicable personal income tax rate. In practice, this will work out to under 2% of the price for low to medium value properties, and up to 3% for higher value properties.

The local system of taxing property is based on an arbitrary assessed value as determined by the local Land Department, rather than true market value price. There are no set rules as to who pays for which taxes, and it is just another part of the bargaining process for purchasing property in Thailand

 

Which of these taxes/fees will be applicable depends on the details of the transaction, the vendor and the duration of the vendor's ownership. It is also significant to note that most of the fees are calculated relative to the governments "tax assessment value" of the property and this value is well below the market value.

Property Taxes

Once you have acquired the property, there are 2 different types of tax levied on property in Thailand that you need to be aware of:

Land Tax

This is an annual tax levied on land ownership equivalent to just a few Baht per rai. The amount is often so miniscule that in practice the body charged to collect it, rarely bothers to do so. When they do collect it, its usually after several years when the amount has accumulated.

Structures Usage Tax

This only applies to properties used for commercial purposes. This is applicable at the rate of 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.

 

Notes

If the house is purchased through a company, you need to consider that corporate tax is higher than personal tax, and the cost of setting up the company has to be considered as part of the initial investment, even if this is relatively modest.

If you wish to purchase property in Thailand using Thai Baht, ensure that your funds are transferred to Thailand in foreign currency and converted to Thai Baht here. The receiving bank will issue a Foreign Exchange Transaction Form or Tor Tor 3 confirming the transaction for individual inward transfers exceeding 20,000 US$, which is one of the documents you may need in the future if you wish to repatriate funds without incurring tax penalties.

Repatriation of investment funds and repayment of overseas borrowing in foreign currency can be remitted freely upon submission of supporting evidence. One of these documents would be the Foreign Exchange Transaction Form mentioned above, or in respect of a foreign currency loan and the loan contract. Remittance of funds without proper documentation could be regarded as income and become liable for tax.

 

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