TO DISCUSS YOUR PROJECT OR LEARN MORE ABOUT OUR SERVICES:

  • This field is for validation purposes and should be left unchanged.

Leasehold Tax Hitting Foreign Property Buyers

Category: Real estate, Posted:30 Apr 2009 | 08:25 am

For many overseas investors purchasing apartments, and villas leasehold has been their only option due to foreign ownership restrictions in Thailand. While a 12.5% municipal tax on house and land has been in place, there previously was little enforcement due to limited manpower in the municipalities. Most Or Bor Tor's on the island are now taking serious steps in making assessments on developments and this is hitting real estate investors in their back pockets. I spoke to one of the leading tax advisors on property in Thailand Paul Ashburn of BDO Richfield in Bangkok who has this to say on the issue:

"Leasehold apartments are clearly subject to tax, even if there is a ownership structure above in which a foreign entity is connected and provides the lessees control of the owning company the nature of the foreign ownership law precludes this and ultimately the determination is that the property is held under lease.
In the case where the project is a condominium and while 49% foreign ownership on freehold would not apply, those under the 51% lease entitlements would be subject to tax.
Villas and freestanding homes also would fall under this provision is the property is registered under a lease.
The tax calculation is based on 12.5% of annual rental value, or in the case of leasehold then the lease amount of the annual recognized lease.
Currently the Government has said they are currently looking at reforms and a revision to the tax law under which a wider scope of application would be made and increase in property tax calculations. "
Its interesting to note that gray area in interpation between rent and lease that no doubt look to caused confusion in the assessment process and the 12.5% tax by law should be applied to units being rented out by owners and agents. While the law states the tax does not apply for owner occupied units, the structure of leasehold nullifies this for foreign owners. As we talk the municipalities are now hitting the tax trail and we are starting to see the impact of the enforcement of this tax, which will look to also start viewing the short term and vacation rental market as well as long term lets.

Other News

Read more

Phuket’s Pavilions Headed To Palawan

Category: Real estate, Posted:06 Aug 2020 | 11:03 am Phuket born Pavions Hotels and Resorts has inked a deal for a 96-villa luxury resort in El Nido, Palawan, Philippines. The mixed use property will offer one and two bedroom villas and a twenty over-water villas with private pools. A series of hotel branded properties are being sold from USD250-500,000. An opening is expected in […]
Read more

All Zoomed Out. How Collaboration Has Become the Kill Switch of Hotel Creativity

Category: Opinion, Posted:03 Aug 2020 | 09:20 am There is no mistaking the sound of a flushing toilet. It’s not a sudden rainstorm, or the whoosh of a juiced up, flash mob of joggers on steroids passing by on the street. Arguably, it’s a dirty little low-pitched thunder from down under that somehow triggers the gag reflex. Remember Trainspotting?  Welcome to the world […]
Read more

Are Hong Kong’s Global Luxury Hotel Brands Headed for an Identity Crisis?

Category: Opinion|Hotels, Posted:02 Aug 2020 | 08:50 am Hong Kong’s position as one of the leading worldwide host cities for luxury hotel brands has long been an envious one. The line-up that includes Mandarin Oriental, Peninsula, Shangri-La, Rosewood and Langham is rapidly finding that the unique sense of corporate place has become a perilous balancing act. Mind you, I sit on no political […]