What Is Property Rental Income Tax?
Property rental income tax is one category of assessable income that is subject to Personal Income Taxation (PIT). This income is grouped with any other assessable sources, calculated as a total, and taxed based on progressive PIT rates.
Rental income is listed as an assessable income source in Section 40 (5) of the Thai Revenue Code. It’s defined as income that was gained from either rent, breach of a hire-purchase contract, or breach of a sale contract where the seller regains ownership of the property without forfeiting the funds from the sale.
How Does Rental Income Tax Differ Depending on Property Ownership Structure?
Rental income tax differs depending on property ownership structure in that some individuals and companies are taxed at progressive rates while others face a flat rate. There are major differences based on the residency of the individual and company, with non-residents paying a flat tax rate.
1. Personal Name (Tax Resident)
Personal name-registered properties that are rented out count as an assessable income source that’s added to total taxable income. From this total, Thailand residents (those who have stayed in The Kingdom for at least 180 in the year) would then calculate your personal income tax due from Thailand’s progressive tax rate table. This process involves removing allowances and deductions, the main one being a percentage-based deductible based on property type from 10-30% of gross income.
The progressive tax rates for individuals are as follows:
| Yearly Taxable Income in Baht (USD conversion as of July 2024) | Taxation Rate |
| 0-150,000 (0-4,069 USD) | 0% |
| 150,001-300,000 (4,069-8,137 USD) | 5% |
| 300,001-500,000 (8,137-13,561 USD) | 10% |
| 500,001-750,000 (13,561-20,346 USD) | 15% |
| 750,001-1,000,000 (20,345-27,128 USD) | 20% |
| 1,000,001-2,000,000 (27,127-54,255 USD) | 25% |
| 2,000,001-5,000,000 (54,254-135,612 USD) | 30% |
| Over 5,000,000 (over 135,611 USD) | 35% |
For example, if a rental house in Bangkok generated 500,000 Baht in rental income over the course of a year, 30% would be deducted based on the house category of deductibles, leaving 350,000 Baht in taxable income. The total taxes for that amount would then be 7,500 (for the 150,001 – 300,000 bracket) and 5,000 Baht (for the remaining 300,001 – 500,000 bracket). This leaves a total tax burden of 12,500 Baht.
Any other assessable income under Section 2.1 of the Thai Revenue Code, such as salary from a job, income from dividends or interest payments, and royalty or copyright payments, count toward the total assessable tax base. Adding this total to your rental income will raise the total tax due.
What Is the Formula for Calculating Personal Income Tax?
The formula for calculating personal income tax in Thailand is as follows:
Total assessable income – deductions – allowances = taxable income
You would then take the total taxable income and apply it to the progressive tax table, adding up the total taxes due at each level of taxable income. Foreign individuals with real estate rental income are subject to personal income tax in Thailand and can also claim the basic 30% rental income deduction if they qualify as a tax resident.
How To Optimize Property Rental Tax Payments in Thailand?
To optimize property rental tax payments in Thailand, you need to document your expenses via receipts and apply a deductible based on the property category. The deductible categories are as follows:
- Land and wharf buildings such as floating houses are allowed a 30% deductible.
- Land used for agriculture is allowed a 20% deductible.
- Non-agricultural land is allowed a 15% deductible.
- Vehicle rentals are allowed a 30% deductible.
- Other properties are allowed a 10% deductible.
Note that if actual costs surpass the 30% threshold, you may be eligible for more deductibles with supporting documents.
2. Individual Person (Non-Resident)
Non-resident individuals are subject to a flat 15% withholding tax rate regardless of the total rental income. Thai law determines residency based on the total number of days residing in The Kingdom in one year. Those staying less than a total of 180 days are subject to the 15% WHT rate whereas those staying 180 days or longer would face the progressive rates.
3. Thai Company
Thai companies are subject to a progressive corporate tax rate that ranges from 0-20% of income after deductibles. The complete tax table for Thai companies is as follows:
| Corporate Taxable Income in Baht (USD conversion as of July 2024) | Taxation Rate |
| 0-300,000 (0-8,137 USD) | 0% |
| 300,001-3 million (8,137-81,379 USD) | 15% |
| Over 3 million (over 81,379 USD) | 20% |
Depending on how much money you’re generating from income, setting up a Thai registered company may give you preferable tax rates. Registering an existing foreign-operated company in Thailand may also be beneficial.
Are Rental Properties Owned by Companies Subject To Value Added Tax?
No, rental properties owned by companies are not subject to Value Added Tax on rental income. However, services provided for a fee within the property may be subject to a VAT of 7%.
For example, properties can charge money for services such as cleaning, security, and furniture rental. This would be subject to VAT if the total income exceeds 1.8 million Baht in a year. The separate rental income is subject to either withholding tax or personal income tax.
4. Foreign Company
Foreign companies not registered in Thailand are subject to 15% withholding tax on rental income generated in The Kingdom. This percentage is taken at the source of the income. On top of that 15%, a further 15% is taken in the event that the money is remitted outside of the country.
What Is House and Land Tax?
House and Land tax is a type of property and rental income tax that was introduced via the Land and Building Tax Act B.E. 2562 (2019). The House and Land tax rate on total yearly rental income is 12.5% and must be paid before the end of February each year.
How To Reduce Rental Income Tax
One way to reduce rental income tax is to make two separate lease agreements for furniture rental services and the actual property rental fees. This can reduce taxes as only the property rental fee counts as assessable income for the purposes of personal income tax. Furniture rental fees would fall under Value Added Tax, which is only applicable after 1.8 million Baht in yearly income. [ps_block_search]
Another option that may be available to some would be to apply for a partial refund of any withholding tax paid during your year-end tax filing. This could be an option if your total rental income falls in one of the lower progressive tax brackets and you’re in possession of a Thai tax ID.
Understanding property rental tax is essential for those looking to make a profit from real estate. For ideas on how to get the most out of your rental property, reach out to PropertySights Real Estate’s team of experts today.
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