Rental Taxes: What You Need to Know.

Aside from generating capital appreciation, the other purpose of investing in property is to generate an income through renting it out. All landlords are subject to a tax or any person owning more than one property who will have a tax levied against the additional ones.

It is important to get your head around these taxes since it will dictate its profitability. The Kingdom is open to foreigners owning their own slice of Thailand, however, restrictions in place mean that overseas investors can only own condominiums rather than landed homes unless they operate a business in the country.

Any person owning property in Thailand must declare their taxes and whilst it is their responsibility to do so, note that the local government can perform checks to ensure that the necessary payments have been paid. As well as collecting arrears, a fine might be enforced too.

The Condo Apartments and Buildings and Land Tax relate to any income generated from a condominium unit or a leasehold apartment, just like any tax that is levied on a profit of any business transaction.

The amount of this tax will depend on the owner’s personal situation as it will be influenced by any other income that they might receive. Any person buying a property in Thailand that already has a tenant in situ, then as soon as the ownership of transfer has been completed, the new owner will be liable for this tax.

Another tax to be aware of is the Building or Housing and Lax Tax which only applies to landed homes and therefore not condominiums. Paid yearly at the end of February, this tax is either 12.5% or the annual rent or of its assessed value. The figure of the latter is declared by the local government and the tax collected will be the higher of the two amounts.

The last tax to take heed of is the Thai Companies and Building and Land Tax. This law was established to close the loophole of foreigners owning land in Thailand through the means of a Thai company who then either rented this property out or let a company director use it as their home.

Due to the nature of this tax, even if the property is left empty the Thai Companies and Buildings and Land Tax still applies to ensure that those companies that were set up purely for the purpose of land ownership still need to pay.