BUILDING
OR HOUSING AND LAND TAX is collected yearly by the local government where the
property is located. For individual property owners if they rent/ lease out
their property (or otherwise put to commercial use) Housing and Land Tax shall
be collected at the rate of 12.5% of the yearly rental according to the lease
agreement or the annual assessed value by the local authorities, whichever is
higher. This means that if the owner's self-declared value is to low the local
authories have the authority to adjust the amount depending on several factors.
Owner-occupied residences are exempt from building and land tax, however the
second and more properties are not automatically exempt.
It
is the owners responsibility to inform the local authorities (Or.Bor.Tor) if
the property is leased out or otherwise is put to commercial use and pay this
'rental tax' before the end of February each year. Generally this tax burden in
Thailand
Note
there are plans to replace the current housing and land tax by a general asset
based property tax read more...
Owner-occupied
houses are exempt
To
prevent this rental property tax burden foreigners obtaining a long term lease
interest in a property should make sure that they own the house and only lease
the land and not lease land and house. Also if they own the property through a
limited company the house should be owned separate from the land and the land
should be held as an asset in the Thai company, not land and house. When the
house on the leased land is owned freehold and owner occupied the house is
exempt from housing and land tax. Building a house and ownership or transfer of
ownership of an existing house in Thailand
Standard
sample clause in a lease agreement: The lessee agrees to pay to the lessor any
and all taxes and general and special assessments beginning with the date of
possession and during the term hereof which may be levied upon or assessed
against the leased apartment and the lessees proportionate share of the common
area charges through the property management company to be set up on behalf of
all lessees and all interests therein and all improvements and other property
thereon, whether belonging to lessor or lessee.
Condo
apartments and Building and Land tax
The
owner of a condominium or leasehold apartment, similar to renting out other
real estate, is responsible for payment of this property tax when he rents out
his condo unit. Payment of this local rental tax, especially in long term leases,
is always passed on to the lessee or the buyer of a leasehold apartment - read
more...
Thai
companies and Building and Land tax
If
the land and buildings or any other improvements is owned by a Thai company and
the property is used as a rental property, director's residence or holiday home
the company is required to pay housing and land tax, even if the company does
not receive any income out of it or does not actually operate a business. A
foreigner living in a house owned under a company structure is not regarded as
'owner occupied' and therefore the company is required to pay this property
tax.
Do
they send a tax bill?
The
collection of building and land tax begins by self-declaration of the owner of
the property to the local government authority. It is the responsibility of the
individual or company to come forward and to declare the value and pay tax. The
local authorities do periodically and actively collect building and land tax
and will if applicable assess the amount including a fine over the years not
paid. Foreigners who own land and building through a Thai company have been
fined for not paying this tax. In case of foreigners owning property in a Thai
company structure the authorities will simply assess the rental value and send
tax bill with a substantial fine. It is recommended to pay this tax to prevent
investigations into the company and ownership structure.
There
is also a tax on non-rental property (local development tax) imposed upon the
person who either owns or is in possession of the land without a building. The
rate depends on location and land classification and assessed value, and varies
from 0.25% to 0.95% a year - read more...
Proposed
changes to property tax system in Thailand
There
are approved plans to replace the current Housing and Land Tax and Local
Maintenance Tax by a new asset based Building and Land Tax. It is not yet known
when the new tax law will be announced. Under the new property tax law every
owner of land and/ or any permanent structure built upon the land must pay
building and land tax (owner-occupied residences are under the new property tax
law not exempt). For every building the new property tax must be paid. The new
building and land tax will be based on the appraised value and use of the
property. Appraised value is set by the Treasury Department and adjusted every
4 years, with next valuation in 2011 which will take effect from 2012 through
2015. Under the new tax system there will be 3 maximum rates that can be set by
the local authorities:
If
the property is used for commercial purposes the tax rate shall not exceed 0,5
% of the appraised value of the land and building.
If
the property is used for a private residence by he owner the tax rate shall not
exceed 0,1 % of the appraised value of the property.
A
tax of 0.05% of the appraised value shall be charged if the land is used for
agricultural purposes.
The
above rates are the maximum tax rates that can be charged by the local
authorities, therefore the building and land tax rates under new system can
vary per district - related inheritance tax proposed and 'land tax bill back in
discussion'
Property
transfer tax
The
transfer of a house as immovable property is subject to withholding (income)
tax, transfer fees, stamp duty, business tax. There is no fixed formula for
sharing these costs. Who pays the transfer tax and fees is part of the overall
price negotiation. The last place you want to be working out such details is
when you arrive at the Land Office.
Rental
income tax
A
foreigner in Thailand Thailand
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