New Land and Building Tax Act - explained
The new Land and Building Tax Law is cuased a lot of questions for foreigners in Thailand. There is something to think about, there are a lot of different options and tax rates. Even lawyers find it difficult to understand, but we hope this article will clarify what is happening.
We will mention some main situations with foreign ownership for real estate and answer some questions.
1. I own one apartment in the condominium for personal use with the price of 12 million baht. How to pay tax?
A) My name is registered in the house book (yellow)
I have the right to deduct 10 million baht from the price of the apartment - a non-taxable amount. The remaining 2 million is taxed with a rate of 0.02%, which means I will pay 400 Baht of tax annually.
B) My name is not registered in the house book (blue)
I am not entitled to a tax deduction. All 12 million will be taxed with a rate of 0.3%, annually I will pay 36,000 baht.
2. I have three apartments for personal use: 1) 12 million baht, 2) 10 million baht, 3) 2 million baht. My name is in the house book (yellow) of the first apartment, the rest are not
1) The first apartment - I have the right to deduct 10 million baht from the price of the apartment - a non-taxable amount. The remaining 2 million is taxed at a rate of 0.02%, which means I will pay 400 Baht of tax annually.
2) Second apartment - in any case, it is considered as commercial. And so I do not have the right for deduction, and the tax rate will be 0.3%. From this apartment I will pay 30,000 Baht tax annually.
3) The third apartment (and all subsequent ones) will also be commercial. I cannot use a tax deduction, a tax rate is 0.3% and I will pay 6,000 baht annually.
3. I have one apartment which I rent out. The cost of apartment is 3 million baht.
Renting is a commercial purpose. And so I do not have the right for deduction, the tax rate will be 0.3%. I will pay 9,000 Baht tax annually.
4. I have a house, its registered on the company name but I use it for my personal purposes. The cost of the house is 5 million baht.
If the owner in chanot is a company, this property is commercial in any case. It is believed that the director of the company rent this house from the company, even if he does not pay rent.
So the tax deduction does not apply to me. The tax rate is 0.3%. I will pay 15,000 Baht tax annually.
5. I have one apartment, I use it for personal purposes, but only 2 weeks a year when I come on vacation. I do not have a yellow house book. The cost of the apartment is 1 million baht.
I am not entitled to a tax deduction. The rate is 0.02%, I will pay 200 Baht annually.
But if suddenly, concierge, security guard or neighbors established that the apartment is idle, I will pay tax with rate of 0.3%, that is 3,000 Baht annually.
1. Who can get the yellow house book:
- A foreigner with a long-term visa (with a tourist stamp or visa - does not work).
- The owner of one apartment. For all subsequent ones, you can only get a blue house book without a name.
2. What is the process of getting a yellow book
In addition to the documents for the apartment, you are required to translate your passport into Thai, certify the translation by your Consulate (the passport will need to be legalized at the Thai Ministry of Foreigner Affairs). Certificate of residence from immigration. Photography and Thai witnesses.
3. Can I get a yellow book on a house that belongs to my company?
You can. To do this, you need a rental agreement with your company. BUT the yellow book in this case will not exempt you from paying tax at a commercial rate of 0.3%.
4. Having any property on a company name: apartment, house, land - can I get a deduction or somehow reduce the tax rate?
Any real estate registered on a company is considered as commercial. There will be no deduction for it. The tax rate will be 0.3% of the cost.
5. Who will evaluate the property? Can I say that it costs three times less than it actually is?
In Thailand, all taxes are calculated from the estimate price of real estate (or, if you declare that the value is higher than the estimate price, then on the declared high price). The estimate price for today is determined by the Land Department. It can be verified with the copy of chanot. The estimate price is recalculated every 4 years.
All above mentioned we have stated based on the results of studying new legislation, as well as on the basis of responses received from City Hall in Pattaya. We want to note that they could not answer many questions regarding the procedure and order fof paying tax. In January 2020, when the law procedures will be supported by secondary legislation, rules and regulations, we will update the information.
Despite the fact that there is not much information for today, we recommend to receive yellow house books before the beginning of 2020. For the purposes of the law, the status of real estate will be determined on January 1 of the year. If the yellow book is issued on January 5, this year it will not be taken into account.
For all questions of taxes and obtaining a yellow house book, please call us: + 6687-348-57-03.
Author: Aleksandra Agapitova
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