Property buyers and investors have long fuelled the ongoing development of condos, housing projects and resort properties in Thailand. And as with any sort of business enterprise, real estate transactions require a fair amount of planning in order to establish the most efficient tax structure.
Generally, foreigners cannot be the legal owners of land in Thailand; they can, however, own houses and buildings, including condominiums. For the land, the buyer usually enters into a leasehold agreement with the seller, and the house can be held in the name of the buyer or a company, including an offshore entity.
Despite such discrepancies, there is no difference in property tax implications among Thai nationals and foreigners; individuals are taxed at the same rate and their property tax base is the appraised value of the property by the Land Department. There are different implications for company-owners, however. The tax base is the actual sale price or the appraised value — whichever is greater.
The property-related taxes buyers will encounter include withholding tax, transfer fees, stamp duty, and/or business tax. There is no fixed formula for sharing these costs, and the details are entirely negotiated upon by the buyer and seller prior to the transfer of the deed.
The withholding tax is imposed on sellers according to whether they are an individual or a company. This progressive tax serves as a credit against the taxpayer’s year-end income tax liability. The transfer fee is a fixed rate based on the government’s assessed price of the asset. A Specific Business Tax (SBT), an indirect tax that covers specific businesses, including real estate, applies for the sale of immovable property that has been in possession for less than five years. Individuals and corporate sellers may also be subject to a stamp duty; sellers are exempt from this tax if they paid the SBT.
Additionally, personal or corporate income tax liabilities may apply. If an individual or entity has been deemed to be carrying on business in Thailand by deriving income from their immovable property, such as rental income or capital gain from sale or transfer of such property, then they shall be subject to Thai corporate income tax at regular rates.
As property tax rates and laws occasionally change to reflect current economic conditions and/or governments, check with a real estate lawyer for the latest information before you decide to buy property in Thailand, for both residential and business purposes.
