Real estate transfer tax/other taxes
Transfer of real property is subject to property transfer fee at the rate of 2% on the government assessed value. There will be stamp duty at 0.5% when the real property is transferred, except in cases where the seller is subject to a specific business tax. There is a specific business tax on the transfer of real property at the rate of 3%, plus a municipal tax of 10%, assessed on the amount of the specific business tax, bringing the total tax to 3.3%.
The transfer of real property would not be subject to the specific business tax if the seller is an individual and meets the following conditions:
- The seller has possessed the property more than five years before the transfer.
- The seller transfers the real property to the legal heir or an heir by a will.
- The seller transfers the real property to a legitimate child, but not including an adopted child.
- The seller transfers the real property without consideration to government agencies.
- The seller transfers the real property without consideration to temples, churches or mosques. The exemption is limited to the transferred portion which does not make the total area of the estate acquired by temples, churches or mosques exceed than 80,000 square meters.
- The transferred real property has been used as the principal place of residence, and the seller’s name appeared in the house register for not less than one year from the date of acquiring such property.
- The property transferred was acquired through inheritance, etc.
In addition, the transfer of real property would not be subject to the specific business tax if the property is sold to or sold by the Property Loan Management Organization, or limited companies set up by financial institutions under the law in order to manage property loans with the approval of the Bank of Thailand, or the property is sold by the Property Fund (Type I fund), Property Fund for resolving financial institution problem (Type II fund), or Property and Loan Fund (Type IV fund).
The buyer of property who is a corporate entity must deduct, from payment made to a seller who is a corporate entity, 1% on account of corporate income tax. The tax can be credited against the income tax of the seller.
Temporary rate reduction
In order to boost the real property sales business and the real property development business, the Thai government has granted temporary reduction on specific business tax rate from 3.3% to 0.11% on gross sales. Unless extended, this reduced rate applies only to transfers of real property taking place before 28 March 2010.
Moreover, the transfer fee rate is also reduced from 2% to 0.01% in case of transferring a house under land appropriation law, a condominium under condominium law, an office building under building control law or the transfer is under the debt restructuring plan provided that the registration at the Land Department is made within 28 March 2010.
Other relevant taxes
House and land tax is payable by owners of a house, building or structure and land, which is rented or otherwise put to commercial value. The rate is 12.5% of the assessed annual lease value of the property. Stamp duty is levied at the rate of 0.1% on the rental value over the period specified in a lease contract.
A new house and land tax has been passed the Thai government's legislation process and will be replaced with a new more general housing and land tax law, probably within 2011.