Thailand Land and House tax

Land and House tax Act B.E. 2475:

For individual property owners; if they lease out their property Building and Land Tax shall be collected at the rate of 12.5% of the yearly rental according to the lease agreement or the annual value assessed by the Land Department, whichever is higher. The annual assessed value means the amount of money which the property may reasonably be gained from the lease out of a property for each year if the property is offered for lease.

		If the land and buildings or any other improvements is owned by a company and used for residence by the foreign director the company is required to pay building and land tax, irrespective if they rent the property from the company or not, or if the company receives any income out of it.

Who pays building and land tax

This is the responsibility of the owner/ lessor. If the owner rents out his immovable property Building and Land tax is calculated at 12.5% of the yearly rental or assessed value. Most property owners/ Thai lessors want the hirer (lessee) to pay these taxes for them as part of the lease agreement (as they don't want to lose 12.5% of their revenue).

A common clause in a lease agreement in Thailand:

'The lessee agrees to pay to the Lessor any and all taxes, if any, beginning with taking possession of the property and during the term hereof which may be levied upon or assessed against the property and all interests therein and all improvements and other property thereon, whether belonging to Lessor or Lessee. The Taxes are payable annually in advance beginning on the Commencement Date and subsequently at the first of each calendar year whereby for the first year of the term hereof the Taxes shall be prorated as of the Commencement Date and taxes for the last year of the term hereof shall be prorated as of t he expiration of the term'.

Note: for tax reasons (including to reduce lease registration fees) it is common practice that long term leases are registered at the Land Office for lower lease price than the actual lease price, however, if anyone leases a property at a rent lower than a reasonable rent, the lessor could be taxed on what the rent should have been.

• Owner-occupied residences are exempt from Building and Land tax for the first property (the second or more properties are not exempt). If the owner of the house leases out the house he is responsible for paying Building and Land tax. It is the owners responsibility to inform the local authorities (Or Bor Tor or Municipality) and pay building and land tax before the end of February each year.
• In any long term real estate lease structure it is recommended for the foreigner to have separate ownership over the structures. Not only will this improve the foreigner's (lessee's) rights towards the property it will reduce building and land tax learn more...

The relevant authorities are not very active in collecting building an land tax (they could send a reminder), as it is the responsibility of the lessor to come forward and pay building and land tax, and on his turn collect if from the lessee (if agreed).

There is also a tax on non-rental property (local development tax) imposed upon the person who either owns or is in possession of the land without a building. The rate depends on location and land classification and assessed value, and varies from 0.25% to 0.95% a year.

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