Tax rate for property transaction
Tax for property transaction and property tax
1) Stamp Duty
Stamp duty of 0.5% ,only the transaction change by using income tax criteria. If use Special business tax, stamp duty of 0.01 %
2) Transfer fee
Transfer fees of 2%
3) Income tax and Special business tax
3.1 Special business tax
In Thailand, there’s no capital gain tax but we use 2 kinds of tax when purchase or sell the property (use either one)
Business tax of 3.3 % (levied against a vendor who has been in registered possession of the property less than 5 years) is also charged, along with income tax (similar to capital gains tax) at a variable rate.
In case for new project development, in Thailand use only special business tax 3.3%
Exemption to use income tax instead of for the property hold less than 5 years
By law, if the owner shows a proof of reside in the property such as household registration (foreigner eligible to get a household registration at government office), the owner are eligible to use income tax criteria which is lower tax rate in calculation
3.2 Income tax
Income tax derived from the sale of immovable property is taxed at the standard income tax rates. The capital gains can either be included in the aggregate income or taxed separately.
If the gains are taxed separately, the tax liability is subject to a special computation and the maximum tax rate applicable is 20%.
The taxable gains earned from selling a Thai property are computed as the selling price or the market value of the property less some deductions. The deductions are percentages of the gross amount, and these percentages depend on how long the property was held before the sale or the transfer.
STANDARD DEDUCTION FOR INCOME TAX
| HOLDING PERIOD | DEDUCTIBLE EXPENSES |
|---|---|
| 1 year | 92% |
| 2 years | 84% |
| 3 years | 77% |
| 4 years | 71% |
| 5 years | 65% |
| 6 years | 60% |
| 7 years | 55% |
| 8 or more years | 50% |
The actual expenses incurred can be deducted, especially if they are higher than the standard deductions stated above, but it must be supported by documents.
The balance from the above computation will be divided by the number of years the property was held, whereby the outcome is taxed at the appropriate tax rate. The resulting tax liability will then be multiplied by the number of years the property was in the taxpayer’s possession to arrive at the final tax liability.
But if the property was acquired as a gift or by inheritance, 50% of the proceeds (selling price or market value) are deductible as expenses. The balance or 50% of the proceeds will be divided by the number of years the property was held, and the outcome taxed at the appropriate tax rate. The resulting average tax liability will then be multiplied by the number of years the property was held to arrive at the final tax liability.
Property Tax
Land Tax
This is an annual tax levied on land ownership. The amount is often so small that in practice the body charged to collect it rarely bothers to do so. When they do collect it, it is usually after several years when the amount has accumulated.
Structures Usage Tax
This only applies to commercially used properties. The rate is 12.5% on the actual or assessed gross rental value of the property. However, this notional value is well below the commercial market rental value.
If the property is purchased through a company, you need to remember that corporate tax is higher than personal tax, and the cost of setting up the company must be considered as part of the initial investment.
Tax on Rental Income
This tax is charged at between 10 and 30% of the rental income, depending on the type of property leased.
Inheritance Tax
No inheritance tax is charged in Thailand for all family members.