Renting Properties

[mthaivisa]

Hi, how are you there?

I have some spare rooms in condo, on my name. 2 rooms. I am here on Holiday. Can I rent it out? I have tourist visa.

Bye!

[Sumitr Man]

OK - I'll play! You own the condo, or you rent the condo? If you own it, you can pretty much do what you want. If you rent it, you need to check and see if you have a sub-lease clause in your rental agreement.

Whether or not you have to pay income tax on any revenue you may generate is a completely different issue....

[mthaivisa]

Hi.

I own the condo. Happy that I can rent it. So I just have to pay tax. Good.

Thanks for the advice.

[Sunbelt Asia]

The only problem is if you have a dispute with the tenant. Immigration is adamant to rent out a property in Thailand, you need a WP.

Legal ways around it such as hiring a property management group to manage it but I certainly wouldn't want to be reading about your case in the Thaivisa.com forum several moinths from now. Something like this..

Blacklisted in Thailand.

I rented out my condo that I owned to get some extra money. Everything went fine until the tenant started dating a bargirl. One night in a fit of rage of jealousy, she put all the guys’ clothes in the middle of the condo and set it on fire. I notice the damaged floor the next month I picked up the rent. I only wanted 115K extra to fix the floor. The guy sucker punched me because he felt he was not responsible as he hadn't started the fire.

The police came and asked a bunch of questions. One was if I had a work permit? The next thing I know, I'm in a paddy wagon, taken to Sua Suan Plu. Taken to a hellhole jail. I was deported and fined 5,000 Baht. I now find I have a red stamp in my passport that says "persona non grata" Can I sneak across the border or lose my passport and apply for another? I now need to sell my condo and that is difficult being 5,000 miles away! Why are Thais against foreigners?

--------------------------------

Now the odds are very slim of this happening but still, could it happen? YES! You also could just be fined 5,000 Baht and deported and then allowed to come back into Thailand the next day. Just to let you know, the risk and reward if you enter into a lease contract yourself. Another problem that could happen, the tenant doesn't pay rent on time and you can't get him out. How do you protect your rights?

www.sunbeltasia.com

[Sumitr Man]

Thanks Sunbelt - that's good info to know. Previously I had thought this policy only applied if you were renting out more than 1 property - but so long as you were only renting out a single property it was OK.

However, I do agree with your comments regarding the [potential] eviction of any tenant...

Just out of interest, what sort of fees are property management companies charging these days?

SM

[Sunbelt Asia]

With calls to several officers at immigration produce the same response" If you rent and get income on any property, you need a work permit. "

Property Mgmt companies in Thailand seem to charge around 5% to 8% on the rental income collected.

[Sumitr Man]

I don't doubt you are right (you usually are), but it does seems strange to me.

My initial reaction to this would be: "do you need a WP to invest in the Thai Stock Exchange - and receive income from that?" That you may need to pay income tax/withholding tax I could understand; but, a WP?

[Sunny Valentine]

Sunbelt, do you know how the chances are to get a WP on the grounds of owning property (Condo) for rental?

Say, you buy a Condo (2 Mill Bt) for rental purposes, expected yearly income maybe 200000 Bt.

Would you have to start a Company in this case, even when the Condo is registered in your name?

Sunny

[simey]

Surely it depends on whether you live in the country or not. If I rent out my villa while I am away living in oz then I don't beleive I need a work permit in Thailand for this?

Management companies (in my experience) take a lot more than 8%. For example, just to advertise my villa on a company webite is 10%, to have the full management (maid etc) would cost 25%.

[Sunbelt Asia]

My initial reaction to this would be: "do you need a WP to invest in the Thai Stock Exchange - and receive income from that?" That you may need to pay income tax/withholding tax I could understand; but, a WP?

I understand if you want to open a stock market account and live in Thailand. The brokerage will ask you for your work permit. I have never open an account but just asked a friend who trades and he said he was asked for his work permit. How bout others, were you asked for it?

Sunbelt, do you know how the chances are to get a WP on the grounds of owning property (Condo) for rental?

Say, you buy a Condo (2 Mill Bt) for rental purposes, expected yearly income maybe 200000 Bt.

Would you have to start a Company in this case, even when the Condo is registered in your name?

Thats what the Labor Department advised when asked today.... " they should form a limited company and rent it that way"

Surely it depends on whether you live in the country or not. If I rent out my villa while I am away living in oz then I don't beleive I need a work permit in Thailand for this?

I would think you are correct. As long as the money goes directly to you overseas.

Management companies (in my experience) take a lot more than 8%. For example, just to advertise my villa on a company webite is 10%, to have the full management (maid etc) would cost 25%.

That could be. I know several that do it for 8% in Chaing Mai. For large apartment complexes in Bangkok, they stated in the Bangkok Post paper several months ago the 5-8% fee.

www.sunbeltasia.com

[mthaivisa]

I, now I am little bit confused. I start this forum about the possibility to rent condo. So, I understand I cannot. But I cannot even get, once out of Thailand, a Businnes visa to rent out my condo. Or can I? I think I cannot. So then I understand I can rent only one. Then I understand I can rent via a real estate company that manage for me. Or I even have to make a company myself. Or I have to rent when I am not here. So, what you suggest to me to do? Not rent at all? Or only one? As long as I keep for me or my friends or my family is not a problem, but if I make a contract to a therd party is it?

Thanks if you can clarify me little bit more.

Bye

[Sunbelt Asia]

But I cannot even get, once out of Thailand, a Business visa to rent out my condo. Or can I? I think I cannot.

Depends which Consulate you go to, some will so you can form a company.

So then I understand I can rent only one.

Immigration states only with a work permit

Then I understand I can rent via a real estate company that manage for me. Or I even have to make a company myself.

Either way would be legal as long as you got a work permit when forming the company.

Or I have to rent when I am not here.

If you were not in Thailand. Cannot see how that would be illegal.

As long as I keep for me or my friends or my family is not a problem, but if I make a contract to a therd party is it?

Labor Department says it illegal working without a work permit

www.sunbeltasia.com

[piet pompies]

On the same thread, question for Sunbelt and Sumitr man. we are buying a house in Chiangmai, company, 39%foreigners, we will be directors, non residents of Thailand, the company will rent the house, are there any implications for non resident directors other than tax which is paid by the company. No distributions to directors other than dividends.

One step further, If we lease the house 30 years from the above company and then rent it out, are there WP implications? Or should we avoid the lease.

[Sumitr Man]

are there any implications for non resident directors other than tax which is paid by the company. No distributions to directors other than dividends.

Sunbelt could most probably give you a fuller answer here - more their field.

That said, are all your company directors going to be non-residents? If so, you'll likely have a problem here. My initial thoughts on this are 2:

1: you still have all your Thai director duties, such as duty to file accruate accounts, etc., even though you are non-resident (some, but not all, of the duties have criminal liability if not complied with);

2: having "no" resident Thai directors will give a sham look to the company. Also, if your non-resident directors are resident in the UK, you may find you have a real UK tax issue with this arrangement. I'm no longer up-to-date on UK tax law, but it used to be the case that such an arrangement may mean that the income derived from the company in Thailand could fall within the ambit of UK revenue department if no directors of the Thai company were residents.

Thus, IMHO, you should have at least one resident Thai director - even if they're not a shareholder. You could even split the directors into Class A directors and Class B directors to make sure they have no power beyond having a fancy title on their door. But at least that way you'll have at least one resident director.

BTW: dividends will paid as a result of being a shareholder, not a director - right?

One step further, If we lease the house 30 years from the above company and then rent it out, are there WP implications? Or should we avoid the lease.

There could be a number of problems here:

Number one: no sublease is enforceable under Thai law unless the land owner has agreed to it - so, even if you lease from the company, then lease to a third party - the lease agreement between you (as individuals) and the third party will need to be signed/approved by the company.

Number two: if you lease from the company at a discount rate, then rent to a third party at market rate, the other shareholders of the company will say you (as directors of the company) are not putting the best interests of the company first and that you have a conflict of interest.

Because of the above, if you wanted to structure it this way, I would suggest you get shareholder approval for the company to rent the house to you [and possibly that you rent to a third party].

Overall though, I wouldn't recommend a structure like this.

[Sunny Valentine]

Sunbelt, how about this scenario:

Start a Ltd. Company, with the foreigner (married to Thai Wife, on 1 Year permission of stay on the 400000 Bt rule)holding 49%. Pay up 1 Mill Baht Capital. Company buys a Condo (might have to check if it would be more appropriate to hold only 39%, but that's not the point here.) for the 1 Mill.

Foreigner now applies for a WP.

Expected rental income is 200000 Bt a Year. Allow 50000 a Year for expenses, and pay out a monthly income of 12000 Bt to the director.

Would that work?

Sunny