Taxes on Real Estate in Thailand: Comprehensive Guide

Thailand’s real estate market is flourishing, not only due to its stable economy, developed infrastructure, rich culture, and breathtaking nature but also because of its investor-friendly tax system.

This article outlines the main types of taxes applicable to real estate in Thailand and explains how they differ based on property ownership types: Leasehold (long-term lease) and Freehold (full ownership).

Real estate taxes in Thailand can be divided into four main categories:

1. Taxes on property purchase
2. Taxes on property ownership
3. Taxes on property sale
4. Taxes on rental income

1. Taxes on Property Purchase

Transfer Fee

This fee is charged for transferring ownership rights during the sale of a property.

• Freehold: 2% of the property’s assessed value.
• Leasehold: 1% of the property’s assessed value.
  The transfer fee is typically shared between the buyer and seller.

For primary market properties, developers may transfer up to 50% of this fee to the buyer.

Government Duty

Payable at the Land Office during property registration, the duty depends on the ownership type:

• Leasehold: 1.1% of the property’s value.
• Freehold: 6.3% of the property’s value.

2. Taxes on Property Ownership

Thailand introduced a property ownership tax in March 2019, effective from January 2020.

Tax Rates

For personal residences where the owner is listed in the house registration book (Tabien Baan), tax rates include a 90% discount:

• Properties under THB 10 million: Tax-exempt
• THB 10 million–40 million: 0.02%
• THB 41 million–65 million: 0.03%
• THB 66 million–90 million: 0.05%
• Above THB 90 million: 0.1%

Example:
For a residence valued at THB 15 million:

• Taxable amount = 15,000,000 – 10,000,000 (exempted) = THB 5,000,000
• Tax = 5,000,000 × 0.02% = THB 1,000

For properties where the owner is not registered in the Yellow Tabien Baan (for foreigners), the tax rate is 0.3%.

Notes:

• For under-construction properties, taxes apply after the completion of construction.

3. Taxes on Property Sale

Transfer Fee

As mentioned earlier, this fee applies during both the purchase and sale of property:

• Freehold: 2%
• Leasehold: 1%

Specific Business Tax (SBT)

Applies if the property has been owned for less than five years:

• SBT = 3% of the property’s value + 10% municipal surcharge on SBT.

Exemptions (for individual sellers):

• Owned property for more than five years.
• Property is transferred to a legal heir or direct descendant.
• Seller lived in the property (registered in Tabien Baan) for at least one year.

Duty Stamp

If the property is owned for more than five years, the duty stamp replaces the SBT:

• Freehold: 0.5% of the property’s value.
• Leasehold: 0.1% of the property’s value.

Capital Gains Tax

Capital gains tax is calculated based on the assessed value of the property by the Land Office, not the sale price.

Example:

• Property’s assessed value: THB 7.5 million.
• Ownership duration: 2 years and 2 months (rounded to 3 years).
• Taxable amount: 77% of the assessed value based on ownership duration = THB 5,775,000.
• Annual taxable income: 5,775,000 ÷ 3 = THB 1,925,000.

Using Thailand’s progressive tax rates:

• Up to THB 150,000: Tax-free.
• THB 150,001–300,000: 5%.
• THB 300,001–500,000: 10%, etc.

4. Taxes on Rental Income

Many properties in Phuket are purchased to generate passive income. Taxes on rental income depend on whether the owner is a tax resident:

• Non-resident: 15% tax on rental income.
• Resident: 5% tax on rental income.

Becoming a Tax Resident

To qualify as a tax resident, one must reside in Thailand for at least 180 days a year and register with the Revenue Department, providing:

• Passport with a valid visa.
• Migration card.
• Property ownership document (Chanote).
• House registration (Tabien Baan).

Tax residency provides benefits such as personal deductions, rental expense deductions (30% for Freehold, calculated for Leasehold as “property value ÷ 30 years”), and dependents or education deductions.