Renting out property , paying tax ect.

[Countryman]

My Wife will start to rent out a property ,she is not registered to pay tax ,so that will be first thing to do right ?

So I suppose tax will be due after one year of rental and it's 15 % ,is that correct ?  can you deduct maintenance

expenses from  tax due , like servicing A/c ,any repairs ,  any other advice will be welcome  thanks Countryman

 

[ChaiyaTH]

What are you talking about, if she is a personal owner the received rent simply becomes additional income and she will be taxed according to her income. Due after one year? Of course not, you are due every calendar year to report your income, even you only rented it for 1 week.

 

A company can deduct expenses, a person can not. This is why being a employee sucks too with taxes. Income = Income. The Thai way? Just get your rent in cash. It can be so worth it having a company in Thailand, you can deduct endless things and even buy a company car etc etc to make taxes little to zero.

Edited April 4 by ChaiyaTH

[Mike Lister]

14 minutes ago, Countryman said:

My Wife will start to rent out a property ,she is not registered to pay tax ,so that will be first thing to do right ?

So I suppose tax will be due after one year of rental and it's 15 % ,is that correct ?  can you deduct maintenance

expenses from  tax due , like servicing A/c ,any repairs ,  any other advice will be welcome  thanks Countryman

 

Same rules apply to domestic rental:

 

PROPERTY RENTAL INCOME

 

1) Most property rental income that is remitted to Thailand is considered to be assessable income and is taxable here, unless of course it has been taxed in the home country and/or the DTA prohibits its taxation (which seems improbable).

 

2) "All rental properties are subject to a House and Land Tax, which is 12.5% of the annual rental income. On top of that, the rental income is taxable, and owners will have to pay Thai income taxes on the money. Thai income taxes are calculated using a progressive scale ranging from 0-37%".

 

3) Overseas property owned by Thai tax residents are not liable to Thai tax on that property.

[Mike Lister]

https://www.thailandlawonline.com/article-older-archive/property-tax-land-and-building-tax

[freeworld]

2 hours ago, Countryman said:

My Wife will start to rent out a property ,she is not registered to pay tax ,so that will be first thing to do right ?

So I suppose tax will be due after one year of rental and it's 15 % ,is that correct ?  can you deduct maintenance

expenses from  tax due , like servicing A/c ,any repairs ,  any other advice will be welcome  thanks Countryman

 

Your wife ID number is her tax number. She just goes along to RD to register her name, ID number and address details.

 

Can read the following link from Duengsing Kippen - Attorneys & Arbitrators

 

https://www.duensingkippen.com/thailandpropertylawblog/?p=28

 

Note also income from rent there is an additional personal tax filing PND94 at the end of September

Edited April 4 by freeworld

[Mike Lister]

5 hours ago, Mike Lister said:

Same rules apply to domestic rental:

 

PROPERTY RENTAL INCOME

 

1) Most property rental income that is remitted to Thailand is considered to be assessable income and is taxable here, unless of course it has been taxed in the home country and/or the DTA prohibits its taxation (which seems improbable).

 

2) "All rental properties are subject to a House and Land Tax, which is 12.5% of the annual rental income. On top of that, the rental income is taxable, and owners will have to pay Thai income taxes on the money. Thai income taxes are calculated using a progressive scale ranging from 0-37%".

 

3) Overseas property owned by Thai tax residents are not liable to Thai tax on that property.

 

5 hours ago, Mike Lister said:

https://www.thailandlawonline.com/article-older-archive/property-tax-land-and-building-tax

Somebody very kindly PM'd me to say that the two posts above are not correct and that the 12.5% tax is understood to have been repealed in 2020. The fact is I don't know any longer because I can't find definitive proof either way but I am still looking. If anyone else knows of a reliable link for this, I'll be grateful.

[NativeBob]

I've been renting for many years and owners never mentioned paying taxes. Not even declare!

What would happen if revenue dept. will find out that I paid almost a million and RD got "banana"?

Just curious

[Mike Lister]

9 minutes ago, NativeBob said:

I've been renting for many years and owners never mentioned paying taxes. Not even declare!

What would happen if revenue dept. will find out that I paid almost a million and RD got "banana"?

Just curious

The penalties for tax evasion here are harsh, up to 200k and 7 years.

[NativeBob]

1 hour ago, Mike Lister said:

The penalties for tax evasion here are harsh, up to 200k and 7 years.

Interesting! if those are so harsh why nobody pay them? (we talk about renting properties). Maybe they (RD) can't enforce it so people will begin to follow those rules?

[Mike Lister]

4 minutes ago, NativeBob said:

Interesting! if those are so harsh why nobody pay them? (we talk about renting properties). Maybe they (RD) can't enforce it so people will begin to follow those rules?

Tax collection rates here are very low, about 7% of the workforce pay taxes and only 11% file a tax return, that is changing slowly.

[donx]

This topic is of interest to me as well since my wife is in a similar situation to the OP. We don't live in Thailand and my wife has never paid tax in Thailand even when she was living there many years ago. However, she now receives rental income for her townhouse that is available to rent through Airbnb. I asked her about taxes and she said she has a friend that works in the government (revenue department?) that can explain what she needs to do. Airbnb collects VAT but I'm sure she will need to start paying personal income tax on top of the VAT.

 

Perhaps she should establish a Thai company so she can deduct expenses to reduce her tax liability.

[topt]

12 hours ago, Mike Lister said:

Thai income taxes are calculated using a progressive scale ranging from 0-37%".

Seems like this is either old or plain wrong - even in the guide you authored it was confirmed at 35% was it not?

https://www.rd.go.th/english/6045.html

[mstevens]

16 hours ago, ChaiyaTH said:

What are you talking about, if she is a personal owner the received rent simply becomes additional income and she will be taxed according to her income. Due after one year? Of course not, you are due every calendar year to report your income, even you only rented it for 1 week.

 

A company can deduct expenses, a person can not. This is why being a employee sucks too with taxes. Income = Income. The Thai way? Just get your rent in cash. It can be so worth it having a company in Thailand, you can deduct endless things and even buy a company car etc etc to make taxes little to zero.

 

My understanding is that what you say here is wrong. I was always of the belief that rental income is taxed at a fixed 15% tax rate.

[john donson]

my ex rented out our old house for years and never paid 1 satang tax

 

soon she will be renting out 2 houses and get a good 100k a month, all black money...

 

 

[advancebooking]

On 4/4/2024 at 9:01 AM, Countryman said:

My Wife will start to rent out a property ,she is not registered to pay tax ,so that will be first thing to do right ?

So I suppose tax will be due after one year of rental and it's 15 % ,is that correct ?  can you deduct maintenance

expenses from  tax due , like servicing A/c ,any repairs ,  any other advice will be welcome  thanks Countryman

 

Dont be rediculous. You do not have to pay taxes on rent here. Do you think rich Thai people who own multiple properties do that. This is not a western country. Rev dept here is incompetent. 

 

My accountant says as long as in a 12 month period.... theres not more than 200 transaction and/or greater than 1 million deposit to a bank account then dont have to pay tax. If you get close to this criteria just go open an account at a different bank and start again. Nuff said. 

[advancebooking]

On 4/4/2024 at 8:09 PM, donx said:

This topic is of interest to me as well since my wife is in a similar situation to the OP. We don't live in Thailand and my wife has never paid tax in Thailand even when she was living there many years ago. However, she now receives rental income for her townhouse that is available to rent through Airbnb. I asked her about taxes and she said she has a friend that works in the government (revenue department?) that can explain what she needs to do. Airbnb collects VAT but I'm sure she will need to start paying personal income tax on top of the VAT.

 

Perhaps she should establish a Thai company so she can deduct expenses to reduce her tax liability.

haha. stop thinking like a westerner. Its thailand

 

You do not have to pay taxes on rent here. Do you think rich Thai people who own multiple properties do that. This is not a western country. Rev dept here is incompetent. 

 

My accountant says as long as in a 12 month period.... theres not more than 200 transaction and/or greater than 1 million deposit to a bank account then dont have to pay tax. If you get close to this criteria just go open an account at a different bank and start again. Nuff said. 

[advancebooking]

On 4/4/2024 at 3:17 PM, NativeBob said:

I've been renting for many years and owners never mentioned paying taxes. Not even declare!

What would happen if revenue dept. will find out that I paid almost a million and RD got "banana"?

Just curious

just keep changing the bank account to another bank every 6months or a year. You can have 12 different bank accounts here ie yellow bank, pink bank, ktb, scb etc. Change the bank so that theres not more than 1 mill per yr deposits. 

[sungod]

They cant even find a way to collect a 500 baht speeding ticket here.....Thats with a car plate number and an address.

I think you should be OK.

Edited April 5 by sungod

[mstevens]

6 hours ago, advancebooking said:

Dont be rediculous. You do not have to pay taxes on rent here. Do you think rich Thai people who own multiple properties do that. This is not a western country. Rev dept here is incompetent. 

 

My accountant says as long as in a 12 month period.... theres not more than 200 transaction and/or greater than 1 million deposit to a bank account then dont have to pay tax. If you get close to this criteria just go open an account at a different bank and start again. Nuff said. 

 

And what happens when you have a dispute with your tenant and he visits the Revenue Department with his girlfriend and shows all the transfers he has made in to the account of the landlord who just happens to be your wife. I guess your accountant would say mai pen rai!

[Mike Lister]

1 hour ago, mstevens said:

 

And what happens when you have a dispute with your tenant and he visits the Revenue Department with his girlfriend and shows all the transfers he has made in to the account of the landlord who just happens to be your wife. I guess your accountant would say mai pen rai!

Exactly

[Dan SG]

I can't comment from the perspective of a thai renting out, but I can say that as a foreigner trying to get a tax ID to declare the rental income I received was very difficult - i made a couple of attempts to get one through accountants and each time it got rejected.  I literally had to plead with them to give me a tax ID so i could pay the small amount of tax due - i know this sounds quite incredible but is true.  Most advisors and real estate agents I consulted with told me not to bother and that the tax department aren't interested in collecting a small amount of tax and most people don't bother (I was told a similar thing to the above that if there aren't a lot of transactions it won't raise any red flags) but I wasn't really comfortable with this and in the end I managed to get one.  You can deduct your expenses but in practice I think there is a flat rate deduction that most people claim and will avoid having to substantiate your expenses.  I use a thai accountant to prepare the return and I need to file an interim return that doesn't lead to any taxes payable and a final return after the year end.  I hope that helps.  

[Mike Lister]

38 minutes ago, Dan SG said:

I can't comment from the perspective of a thai renting out, but I can say that as a foreigner trying to get a tax ID to declare the rental income I received was very difficult - i made a couple of attempts to get one through accountants and each time it got rejected.  I literally had to plead with them to give me a tax ID so i could pay the small amount of tax due - i know this sounds quite incredible but is true.  Most advisors and real estate agents I consulted with told me not to bother and that the tax department aren't interested in collecting a small amount of tax and most people don't bother (I was told a similar thing to the above that if there aren't a lot of transactions it won't raise any red flags) but I wasn't really comfortable with this and in the end I managed to get one.  You can deduct your expenses but in practice I think there is a flat rate deduction that most people claim and will avoid having to substantiate your expenses.  I use a thai accountant to prepare the return and I need to file an interim return that doesn't lead to any taxes payable and a final return after the year end.  I hope that helps.  

I've seen similar reports in the past about TIN's and the attitude towards rental income, so yours is no surprise. I think that the more remote/rural and the further away it is from a large metropolitan center, the more this is prevalent. I wouldn't recommend that everyone in the country  view the above behaviour as carte blanche to avoid TIN's and declaring income because times and attitudes are changing, what works today, may well not work tomorrow.

 

When my wife first went to register for tax four years ago, because of the business she had started, the tessaban tax office was only two people who also lived in the community. When it came to tax filing time, one officer who helped my wife with her first return, completely fabricated the return in order for her to avoid all tax. I realised what had happened and we went to the District Office to say the return needed to be changed. When we explained things, the officer there just rolled her eyes and said she understood. We later had a call from Region asking us why the return had been changed and we were now paying tax when previously we said none was owed. Again, the situation was explained and the matter put to rest. Today, our tessaban tax office is very efficient and proper and there's none of the old shenanigans 

 

[Dan SG]

3 hours ago, Mike Lister said:

I've seen similar reports in the past about TIN's and the attitude towards rental income, so yours is no surprise. I think that the more remote/rural and the further away it is from a large metropolitan center, the more this is prevalent. I wouldn't recommend that everyone in the country  view the above behaviour as carte blanche to avoid TIN's and declaring income because times and attitudes are changing, what works today, may well not work tomorrow.

 

When my wife first went to register for tax four years ago, because of the business she had started, the tessaban tax office was only two people who also lived in the community. When it came to tax filing time, one officer who helped my wife with her first return, completely fabricated the return in order for her to avoid all tax. I realised what had happened and we went to the District Office to say the return needed to be changed. When we explained things, the officer there just rolled her eyes and said she understood. We later had a call from Region asking us why the return had been changed and we were now paying tax when previously we said none was owed. Again, the situation was explained and the matter put to rest. Today, our tessaban tax office is very efficient and proper and there's none of the old shenanigans 

 

Agree re times changing and not working in the future.  If governments get their way all transactions will be on a blockchain and tax will be collected on a real time basis rather than through self-assessment / tax returns (I know it sounds futuristic but that's where things are heading rightly or wrongly).  If you've had a property for 20 years and never declared you could find yourself in a difficult spot especially as the old guard in the tax office make way for new - or even there's no guard - its all automated and you suddenly get a demand for backdated taxes for 20 years......that just gets deducted from your central bank digital currency.  Its scary I know!!

[advancebooking]

On 4/6/2024 at 2:37 AM, mstevens said:

 

And what happens when you have a dispute with your tenant and he visits the Revenue Department with his girlfriend and shows all the transfers he has made in to the account of the landlord who just happens to be your wife. I guess your accountant would say mai pen rai!

I bet the revenue dept would do nothing. 

 

Actually I didnt mention something. If either the tenant or the landlord go to the rev dept with the lease agreement and buy legal stamps from them and stick them on the actual contract then you know 100% you have to pay taxes. This is the only circumstance by which any thai pays taxes on rent. 

[worgeordie]

On 4/5/2024 at 8:22 PM, advancebooking said:

haha. stop thinking like a westerner. Its thailand

 

You do not have to pay taxes on rent here. Do you think rich Thai people who own multiple properties do that. This is not a western country. Rev dept here is incompetent. 

 

My accountant says as long as in a 12 month period.... theres not more than 200 transaction and/or greater than 1 million deposit to a bank account then dont have to pay tax. If you get close to this criteria just go open an account at a different bank and start again. Nuff said. 

The problem is the government is looking to collect as much tax as it can ,Farang overseas tax ,tax on everything coming into Thailand no matter

how small a  value , both new taxes, and so easy for them (the taxman ) to check on addresses of Farangs with Immigration, then check if they

are renting ,and if landlord is paying tax on rental fees ,   OK easy not to pay tax on rentals in the past,but i can see that's going to change  ,the government

needs revenue ,they need Billions of Baht just to do the wallet thing , 

 

regards worgeordie

[donx]

33 minutes ago, advancebooking said:

Actually I didnt mention something. If either the tenant or the landlord go to the rev dept with the lease agreement and buy legal stamps from them and stick them on the actual contract then you know 100% you have to pay taxes. This is the only circumstance by which any thai pays taxes on rent. 

Since my wife has an agreement with Airbnb and they are including VAT as a charge against her profits, wouldn't this information be similar to the situation you posted where she will need to pay taxes on her rental income?

[itsari]

On 4/6/2024 at 2:37 AM, mstevens said:

 

And what happens when you have a dispute with your tenant and he visits the Revenue Department with his girlfriend and shows all the transfers he has made in to the account of the landlord who just happens to be your wife. I guess your accountant would say mai pen rai!

Be a well behaved landlord and you should avoid that scenario.

[NativeBob]

We tried to threaten "landlord" with report to RD. No effect at all. Seems they got no fear )))

However "the thai landlord" and "farang" are different stories, no?

dumb farangs who buys condoes as an "investment" are indeed dumb, if they don't study Thai taxation.

[topt]

56 minutes ago, worgeordie said:

The problem is the government is looking to collect as much tax as it can ,Farang overseas tax ,tax on everything coming into Thailand no matter

how small a  value , both new taxes,

Scaremongering and factually wrong..........

They changed the interpretation of one directive in the tax code and the main reason was to stop Thais not having to pay tax on income from abroad by remitting them the following calendar year. But hey you knew that didn't you.........

 

[sometimewoodworker]

On 4/4/2024 at 9:16 AM, Mike Lister said:

3) Overseas property owned by Thai tax residents are not liable to Thai tax on that property.

That depends on if the rental income is remitted to Thailand, if it is it is subject to Thai income tax (since 1 January 2024), if it is held permanently overseas it is not subject to Thai tax.