Once an investment in property has been made, the next tax to be aware of is the Building or Housing and Land Tax.This annual tax is payable by the end of February each year. It is set at 12.5% of the total yearly rent or the assessed value as calculated by the local authority. The higher amount being the taxable one. The local government where the property is located in collects this tax. The local jurisdiction can adjust the rates if they feel that the amount declared is too low, so it best to be honest.
The Building or House and Land Tax is not applicable to owner-occupiers, but should an individual own more than one property, the tax is levied against these. To be tax efficient foreigners should look carefully at the ownership structure. It is advisable only to lease the land and not both the land and the house itself. Likewise, should the house been owned through a company then the land and house should be divided with the land being held as an asset.
As foreigners are not permitted to own land in Thailand, non-Thai citizens will need to purchase a property through a Thai company. Hence the Thai Companies and Building and Land Tax. This tax is applicable to any property that is owned by a Thai company which is either the home of a director of the company, a holiday home or even if it is rented out. Regardless of whether the property generates any income, this tax still applies. Similarly, the tax is levied if the company fails to operate suggesting that it was formed for the sole purpose of the property purchase. Finally, if a foreigner residing in the property aren’t not classed an owner-occupier, so the tax is still due.
Most of the taxes we have spoken about relate to landed houses. However, the Condo Apartments and Building and Land Tax ensures that anyone leasing out a condo unit or leasehold apartment are also subject to local taxes. New owners of such property naturally inherit these taxes upon transfer.