There are no laws in Thailand which dictate who pays what when property is bought and sold. This will usually be part of your negotiations with the seller.
If you are buying from a developer, check your sales and purchase agreement to see what taxes and fees the developer expects you to pay before you commit.
Remember, who pays what is governed by your agreement with the seller.
This can add as much as 6.3% to the price of your property.
So what are all the Taxes and Fees?
1. Specific Business Tax
Specific Business Tax is only payable on freehold property sales.
And only if the property has been owned by the seller for less than 5 years.
If the seller has owned the property for more than 5 years, no Specific Business Tax is due. Instead Stamp Duty is payable.
The rate of Specific Business Tax is 3% – or 3.3% including local taxes.
This tax is calculated on the declared sale price recorded at the Land Department. But you should know that if officials consider it too low, they can reassess the value of your property and adjust the tax accordingly.
Who pays?
The seller is responsible for paying any Specific Business Tax due.
2. Stamp Duty
Stamp Duty is only payable on freehold property sales and when Specific Business Tax does not apply. That is, when the property has been owned by the seller for over 5 years.
The rate is 0.5%. Calculated on the declared sales price of the property, or the official government assessed value – whichever is higher.
Who pays?
If you buy from a developer who has no Specific Business Tax to pay, Stamp Duty is usually shared 50:50. If you buy from an individual, it’s common for the buyer to pay the Stamp Duty.
3. Withholding Tax
This is basically a prepayment of income tax by the seller.
It is paid directly to the Land Department when the property’s ownership is transferred.
Withholding Tax is calculated on the declared sale price of the property or the government’s assessed value – whichever is higher.
The rate is 1% if the seller is a company.
As an individual, the rate of tax you pay depends on how long you have owned your property.
It’s a complicated calculation. Basically the liability reduces the longer you own your property.
Who pays?
Withholding Tax is the seller’s responsibility.
4. Transfer Fees
Transfer Fees are payable at the Provincial Land Office when your property is transferred and registered.
The rate is 2% of the declared sale price or the government assessed value of your property – whichever is higher.
Who pays?
Usually Transfer Fees are split 50:50 between the buyer and seller.
5. Lease Registration Fee
This is 1.1% of the registered sale price, including local taxes. It is payable when your lease is registered at the Provincial Land Office.
Who pays?
Usually the Lease Registration Fees are split 50:50 between the buyer and seller.
6. Local Department Tax
This tax is payable by anyone who owns land.
The rate varies depending on the Land Department’s appraised value of your land.
But at the moment the rates are so low officials don’t even bother to collect this tax.
7. House and Land Tax
If you plan to rent out your property you’ll have to pay House and Land Tax.
The current rate is 12.5%. This is calculated using the estimated annual rental value of your property, or your actual rental income based on your accounts -whichever is higher.
8. Withholding Tax on Rental Income
If you rent your property as an individual to another individual then there is no withholding tax to pay in Thailand.
But if you use an agent to rent your property, they must deduct withholding tax by law – before they pay you.
The current rate is 5% in Thailand. But if you have your rental income paid to you outside Thailand, 15% will be withheld. This must be paid to the tax department and will be credited against your personal income tax. So make sure you allow for it when you calculate your rental prices. And if you are offered a rental guarantee you should deduct it from the income you expect to receive.
