Thai wife rent out condo - deduct mortgage interest (+ other expenses) from tax liability?

[bosphorus]

Trying to find clear information on this. Forums post on rental tax seems to degenerate into talking about TRD is not even able to collect tax.

 

Assuming I (OK, my wife) is a good citizen and intends to pay tax on the rental property, can I deduct expenses? I expect the rental income to be 200,000+ THB per month, and mortgage + insurance to be not far behind. Given that we recently bought the condo, most of the mortgage payment is the interest.

 

If we find our rental income is below the interest portion of the mortgage payment, do we owe 0 tax on rental property income?

Also what is this flat "rental tax at a rate of 12.5%" about? Do I read this right - if you rent out property (even for a few months), you are expected to pay 12.5% of the annual expected rental rate. What was the incentive behind that rule?

 

Thanks

[bkk6060]

24 minutes ago, bosphorus said:

expect the rental income to be 200,000+ THB per month

WOW, must be a really nice place.

[Peterw42]

You probably need an accountant to be structured correctly to claim mortgages/expenses against income etc.

There is information on websites like below about the tax system and deductions. It appears, for an individual, only mortgage interest is deductible . Otherwise it appears a rental property would need to be set up as a company to get full deductions for mortgage, expenses etc. Which sort of makes sense as an individual isn't a business.

 

https://phuketrealtor.com/blog/tax-on-rental-income-in-thailand-what-should-you-know

 

https://www.expattaxthailand.com/thailand-expat-tax-rates-allowances-and-deductions/

[bosphorus]

"Interest on a mortgage in your own name for buying or building a home in Thailand can be deducted up to 100,000 baht."

upto 100,000? I'm sorry what? 100,000 THB per year? My mortgage interest is 150k+ per month in the early part of the loan

[bosphorus]

Sorry, I can't believe that is true. Can any authoritative source confirm that I can only deduct up to 100K THB per year of mortgage interest?

If true, can someone confirm if I structure as a business I can get full deductions (and what are the cons to doing it as a business).

 

Can anyone recommend a source/company/agency who knows there stuff on these maters. If they're good there is a good chance I'd use them to manage my properties.

 

[ChaiyaTH]

6 minutes ago, bosphorus said:

Sorry, I can't believe that is true. Can any authoritative source confirm that I can only deduct up to 100K THB per year of mortgage interest?

If true, can someone confirm if I structure as a business I can get full deductions (and what are the cons to doing it as a business).

 

Can anyone recommend a source/company/agency who knows there stuff on these maters. If they're good there is a good chance I'd use them to manage my properties.

 

Not that hard to believe, usually the tax benefits are always for businesses. To be able and deduct your mortgage interest for as much as you want, is in some countries maybe the case but certainly not a standard.

[bosphorus]

Then I guess I have to figure out if turning it into a business makes sense and what are the cons. Can I move my property with its existing mortgage into a business entity? 
 

can anyone recommend someone to speak to? 

[Celsius]

This is Thailand not the west. You pay taxes even if you sell or rent at the loss.

 

Unless you talk to accountant and structure it as a business which is even more money wasted for zero return as you said it yourself most of it is interest.

 

This is something you should talk to accountant, not a coupon clipping website like AseanNow. Wow, did you really go into this without any clue?

[anrcaccount]

Great question.

 

Can anyone clarify whether mortgage interest is a deductible expense for a Thai rental property?

 

Can "actual costs" be deducted and does this include mortgage interest, typically the biggest cost?

 

Pretty basic question, but seems that it is not clear!

 

 

[john donson]

40 million baht condo?  200k x 200 months

 

good luck

[anrcaccount]

18 hours ago, anrcaccount said:

Great question.

 

Can anyone clarify whether mortgage interest is a deductible expense for a Thai rental property?

 

Can "actual costs" be deducted and does this include mortgage interest, typically the biggest cost?

 

Pretty basic question, but seems that it is not clear!

 

 

 

Really?

 

No one knows this?

 

No readers / their families/ friends have ever owned a rental property in Thailand with a mortgage?

 

Be great to get some experiences on this. 

 

 

[Dan SG]

Hi, I think the 100k deduction is just a general deduction anyone can take to encourage home ownership - irrespective of whether they have a home they live in or rent out (sort of like what the UK had years ago - MIRAS).  If you're renting out a property you have two options - either a deemed deduction (30%) or actual expenses - based on my discussions with tax advisors the interest would be an expense of renting out the property and in theory deductible.  However, they always recommend taking a deemed deduction since a claim for actual expenses will be scrutinised and require documentation etc.  Of course, if you can support it - which I am sure you can - then no reason to not claim if gives you a better outcome but given the uncertainty at the moment re offshore income remitted etc you may not want the tax office sniffing around your tax return but that really depends on your circumstances.  

[PJ71]

Why even declare the rental income?

[Dan SG]

On 10/30/2024 at 7:21 PM, PJ71 said:

Why even declare the rental income?

Because despite what you think, the tax authority now have loads of big data at their disposal that they could easily use to identify people that rent out their property! Not worth not declaring especially if most your costs cover the rent. 

[PJ71]

5 hours ago, Dan SG said:

Because despite what you think, the tax authority now have loads of big data at their disposal that they could easily use to identify people that rent out their property! Not worth not declaring especially if most your costs cover the rent. 

You are joking right?

 

Example, you have a condo you want to rent, you advertise or get it rented out by word of mouth, make up your own contract and receive the money to a personal account, how would they find out?

 

There's gotta be 100's of thousands of people that do this, i've done it myself in the past.

[Dan SG]

On 11/1/2024 at 10:56 AM, PJ71 said:

You are joking right?

 

Example, you have a condo you want to rent, you advertise or get it rented out by word of mouth, make up your own contract and receive the money to a personal account, how would they find out?

 

There's gotta be 100's of thousands of people that do this, i've done it myself in the past.

Yes I totally agree in the past but you need to understand where things are heading to understand why its not worth taking any risks now - financial transactions are all becoming digital and tax authorities are working with central banks so they see transaction real time.  So, it will be very hard to hide anything in the future which opens up risk around what happened in the past - the tax authorities have the right to go back many years if they suspect someone of tax evasion; in your case all they need to see are your bank statements and they'll see past monthly payments into your account.  It's either salary or rent.  Either way they can tax it plus interest, penalties etc.

[PJ71]

2 hours ago, Dan SG said:

Yes I totally agree in the past but you need to understand where things are heading to understand why its not worth taking any risks now - financial transactions are all becoming digital and tax authorities are working with central banks so they see transaction real time.  So, it will be very hard to hide anything in the future which opens up risk around what happened in the past - the tax authorities have the right to go back many years if they suspect someone of tax evasion; in your case all they need to see are your bank statements and they'll see past monthly payments into your account.  It's either salary or rent.  Either way they can tax it plus interest, penalties etc.

Yeah, in the real world what you mention is correct but well, you know, this is Thailand so it's very unlikely what you mention is a reality here imo.

 

But to each their own.