Property tax Thailand_featured

Property tax Thailand: who has to pay and how much?

One of the major costs of living in Thailand is rent. Some people who are considering to migrate to, retire or work remotely in Thailand long-term may consider buying a property instead of finding rental property. While the number one consideration is property price, prospective homeowners should also keep in mind any property tax Thailand implication. 

Who has to pay property tax in Thailand? Do you have to pay extra tax on purchase? Will there be any tax consideration every year? Will your rental income get taxed as well? We will explore these in this article. 

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Who has to pay property tax in Thailand?

In short, property/land owners need to pay property tax in Thailand. Unfortunately, owners are taxed during the purchase, throughout the ownership period and also on rental income. However, on the bright side, on-going annual tax rate for land and building is a lot lower than the one-off tax purchasers and sellers have to pay during the purchase. 

We will cover more in details in the following section.

Tax on the sell/purchase of properties in Thailand

During a property transaction, both buyer and seller will need to pay tax.

In sumary, there are a total of 4 types of taxes involved during the transaction: 

  • 2% transfer fee (based on registered value) to be paid by the buyer and seller. While this is typically split, some property developers are now offering to cover this fee completely as a way to attract buyers. This is the only fee/tax purchaser need to worry about
  • 3.3% business tax (based on registered or appraised value) to be paid by the seller
  • 0.5% stamp duty (based on registered value) to be paid by the seller if business tax has been exempted
  • 1%  withholding tax (based on registered or appraised value) to be paid by the seller, however progressive rate may be applied to individual seller

If you are looking to move to Thailand, purchase a property and stay there – the only fees you should worry about in the short term is the transfer fee.

Property tax for land and building owners in Thailand

There was a new land and building act that came into effect in 2020. Under this act,  land and building owners will need to pay tax on their property every tax year – however the tax will depend on usage. 

Minimum tax rate will apply to appraised land and building value, depending on usage. 

  • For agricultural use: 0.15%
  • For residential use: 0.3%
  • In case of vacant/unused: 1.2% – 3.0% (increase by 0.3% every 3 years of vacancy until it reaches 3.0%)

The cut off date is on the first of each year. So if you own a property on the 1st of January 2022, you will be required to pay property tax in April of 2022.

Property tax Thailand_vacant land

Land owners throughout Thailand are planting trees on their vacant land to be qualified for agricultural use tax instead of vacant land tax.

Tax on rental income

If you are looking to rent out your property in Thailand, one consideration is around income tax. Thailand’s revenue department considers rental income as part of assessable income. Citing the revenue department definition of assessable income below.

“Income from letting of property and from breaches of contracts, installment sales or hire-purchase contracts.” 

So in general, any income from rental will be included in your progressive income tax calculation. Read more on this topic in our other article. 

So, do you need to pay property tax in Thailand and if yes, how much?

Whether you are a digital nomad or looking to retire in Thailand, understanding land and house tax is super important. Property ownership is an alternative to long-term rental but tax will also affect your finances and financial planning into the future.

In conclusion, property owners are subject to property tax on the day of transfer and everyday from then onwards. Moreover, there are tax increments each year. However the tax amount isn’t very significant unless you leave your land vacant. Lastly, if you are looking to rent out your property, pay attention to the progressive income tax as well.

Read our other insights into Thailand in other articles: