Thailand is a beautiful, exotic, friendly and very relaxed destination. It may also seem a world away from many Western countries. But, taxes and fees related to property still apply.
There are various taxes and fees to consider when renting or buying property in Hua Hin, Thailand. If you decide to rent out your sea view condo on the beach or your private pool villa nestled in the hills overlooking Hua Hin, you are legally required to pay tax on the rent that you generate. Any property that is classed as immovable property that is rented is liable to House and Land tax set at 12.5%. This is based on the yearly annual rental value of the property.
Regarding sales of property, there are four taxes to consider:
Withholding Tax if the seller is a company is calculated at approx. 1% of the assessed or actual price of the property.
Specific Business Tax is calculated at approx. 3.3% of the assessed or actual price of the property.
Transfer Fee is calculated at approx. 2% of the assessed price by the Land Department.
Stamp Duty must also be paid by the Seller – unless in the case that Specific Business Tax is liable.
Note: taxes and fees can go up and down regularly and are a guideline line only
As you can see, Specific Business Tax is the highest tax here. This tax has been implemented by the government with the purpose to try to stop speculators buying property and selling it on quickly or ‘flipping’ it in order to make healthy profits. Specific Business Tax is also commonly known as speculative taxation.
If you were to buy a property and own it for less than 5 years and then sell it, you could be liable to tax up to approx. 6% of the total value of the property. As an example, a house valued at 5 million THB could pay transfer fees and taxes of approx. 250,000 THB.
If you were to buy a property and sell it after 5 years the cost is reduced by approximately half that amount.
In general, at the point of a property sale as a goodwill gesture to seal the deal, most buyers and sellers usually happily sit down together and agree to share the transfer fees and taxes 50-50 anyway.
Author: Simon Pinnock