Renting A House And The Law

[rocky]

I have several questions and hope you may be able to help with some information. If I

was to own three houses in Pattaya 1 to live in and the other 2 to rent, and at the end

of each year I pay to the solicitor the amount of 12000bht for the company and tax.

(1) Do I have to pay more tax, what is the tax %

(2) is it better to have each house in a separate company or under 1.

(3) Do I need a work permit to show new tenants to the property and also collect the

rent.

(4) In a Thai friend was to collect the rent do I need a work permit)

(5) Do you have any other information that might be helpful to me.

Thank you for your time and help in advance

Kind regards

[bartender100]

If you can afford to own all these houses,why don't you spend some money on a Thai accountant,who could answer your questions?

[andyadam]

If you can afford to own all these houses,why don't you spend some money on a Thai accountant,who could answer your questions?

<{POST_SNAPBACK}>

[Digger]

I have several questions and hope you may be able to help with some information. If I

was to own three houses in Pattaya 1 to live in and the other 2 to rent, and at the end

of each year I pay to the solicitor the amount of 12000bht for the company and tax.

(1) Do I have to pay more tax, what is the tax %

(2) is it better to have each house in a separate company or under 1.

(3) Do I need a work permit to show new tenants to the property and also collect the

rent.

(4) In a Thai friend was to collect the rent do I need a work permit)

(5) Do you have any other information that might be helpful to me.

Thank you for your time and help in advance

Kind regards

<{POST_SNAPBACK}>

12,000 is out of date. You should be declaring in full on your company tax return the full rental income from each of the houses your company own. From this rental income you have to pay from memory 15% of that rental income value in a property rent tax over and above the normal corporation tax. The rental income can be an element of the total rent i.e you charge rent for the house and then a fee for furniture and fee for services (eg communal charges, gardening, pool cleaning if you have it). Assuming your total monthly fee was say 25,000baht, you could split the rent for house, furniture fee, service fee 3 ways and then you pay 15% only on the rental income as opposed to the full 25,000 charge to occupy the property. Your contracts need to reflect this exactly. Some Thai landlords say only 10% of the total rent is for the accomodation, other 90% split between furniture and services. However I feel that is taking advantage and difficult to justify to any tax authorities.

If you are the only signing director and are resident in Thailand, then you should obtain a work permit however many do not. If its in Pattaya, there is a very strong liklihood that the tax office WILL thoroughly audit you to ensure your paying taxes correctly. They have done it to me and because I followed the above principals and pay tax on the income, they were very happy. Technically you are working unless you contract out the management of the property to another 3rd party and get proper receipts and contracts however that can be expensive. I have a work permit already and was advised that no need to get a second one added to my blue book for this property interest. Multiple houses might be worthwile to consider a work permit.

If you structure as one company and then decide to sell a house, your company will pay a large amount of tax as it will have to be shown as a one off profit on the company. Odds are you will not have a correct invoice from whomever you are buying it from, therefore you could hit big time - corporation tax is typically 20% on company under 5,000,000 baht capitalisation, which could dent any profit that you may realise from a sale. Also land transfer taxes have to be taken into account but that may fall to the buyer.

You must keep the furniture receipts if your charging for furniture and they must be considered acceptable receipts (i.e your company name on the bill along with the name and address of the seller) - again a good accountant can assist you here.

Furthermore if you go down the work permit route, you must be registered for VAT and then the payments for services and furniture will be VATable. House rental is not VATable.

You should take proper advice on this from a reputable accountant and not some local legal advisor in a real estate office. Tax authorities are getting very hot on this in Pattaya as its an easy income stream for them and very easy for them to track who is owning what via companies. By the way you will also need to pay rent on the house you occupy into your own company. Unless your getting a very good return from the property, the fee's and taxes may well outweigh any financial benefit in doing it.

Hope this helps

[rocky]

Digger thank you very much for this information, I have taken advice in Pattaya, but sometimes it is difficult to get to the real information.

Thank you once again