Real Estate ROI vs. Taxes in Thailand?

It is not enough to buy a villa in Thailand, it is more important to have your financial plan drawn in a manner that maps the profits, the expenditure, and the possible taxations attached to that property. Only then will you be able to estimate your capital and know the exact expected interest over a property?

Since 2022, the return on investment over landed properties or realty investments has fluctuated between 5% to 15% in Thailand. That is, you can expect to have a minimum of 5% interest or profits by the end of a calendar year, or you may have more, up to 15% depending on how lucrative business is, the location of your property, the quality and features of the property, and how well you can weather the storms of various socio-economic factors.

Real Estate ROI vs. Taxes in Thailand?

Nevertheless, there are certain factors that every realtor must keep in mind whilst entering into the Thai real estate industry.

Indices To Consider in Your Investments

According to Thailand-Real.Estate, some of the indices can affect profit margins and reduce the outcome of real estate investments. However, these factors can be managed and maintained over the property to increase yield and profits.

Property Taxes

Generally, no property taxes should give you much worry in Thailand. Here is a breakdown of the taxes that are payable over land as of December 2022.

– Taxes payable upon purchase or transfer of property
If you are buying a condo in your name, the following taxes must be paid (the law does not stipulate who is to pay the taxes, in practice, they are usually settled in pre-contract agreements before the sale is concluded – so if you haven’t discussed taxes, please do).

1. A transfer levy of 2 percent is chargeable on any freehold sold or transferred from one person to another. This is calculated from the value/ valuation of the property. If the property is worth 100 000 Thai Baht, know that you may need to pay 20 000 transfer fees.
2. A business Fee of 3.3 percent of the sales value. This is placed on the seller to pay. Here, if the property is worth 100 000 Thai Baht, the business fee will be 33,000.
3. Stamp Duties of 0.5 percent of the registered valuation of the property.
4. Withholding tax: this is a 1 percent tax charged against a company whose name is used to purchase a landed property; whilst an individual’s tasks are calculated based on the  

– Facts to note:

Sometimes, the government discounts taxes to encourage foreign trade. For example, in 2022, the transfer tax was reduced from two percent to 0.01 percent, but the promo is slated to stop in 2022.

– Taxes or Ground Rents payable over Landed properties
If you own a Condo or any other form of landed property, regardless of its level of development (even if it is vacant land), you will be required to pay an annual fee of 0.03 percent of the value of the land as tax. If your residential property is worth more than 10 million Thai Baht, you may be eligible for a tax exemption, do well to speak to your lawyer and ask for any likely waiver you may be entitled to.

In a nutshell

In a nutshell, the taxes payable in Thailand are quite affordable and accessible; even in the year of the transaction, you may not be required to pay above 5%, and in subsequent years, it is a small sum of 0.01 percent, which is even waivable. It is, as such, very clear that the government of the day is trying hard to encourage real estate and foreign investment whilst also trying hard to ensure that the bulk of its land stays in the hands of its citizens. 

Additionally, a perusal of the taxes reveals that they are low and not likely to obstruct commercial benefits over land. You can run your business, put your premises on rent or even convert it to other uses without feeling the harsh sting of the law or taxes. It is safe to conclude that taxes in Thailand are not high enough to affect the return on investments detrimentally.