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Thailand rental Condos are earning money

Turn your Condominium into a working investment.
An Investment in Properties was a good idea in past, it is right now and it will be in the future. Anyway the functions of the property market today are already complex and can be quite confusing. If you are looking for a save investment with good margins, you have to set up your investment goals, choose the right products and stick to a clear strategy. The property market is full of investors who all want to earn money. If you want to be more successful than your competitors, you need a lot of knowledge, proper information and the strengths to do your own decisions. It will take a bit time to work out an entire investment strategy, but you can start right now with the properties you already own. If you own Condos as an investment, and you think the performance could be better, the following information could be helpful for you:

Actual situation:
1. Your property doesn’t generate any money, and it’s difficult to sell it.
2. Your liquid Capital is blocked, and your situation doesn’t look healthy for your bank.
3. On the property market, there is a lot of Supply but low demand for your kind of property.

The Goals:
1. Let your property earn money!
2. Get liquid capital!
3. Get a stronger market position!

The solutions:

1. Furnish the units
- An unfurnished Condo looks empty, dirty and dead.
- An unfurnished Condo can’t be used.
- An unfurnished Condo will cost money.
- An unfurnished Condo appears as an object without value.
+ A furnished Condo looks like a Home and a place where you want to be.
+ A furnished Condo can be promoted on the Internet
+ A furnished Condo can be rented out.
+ A furnished Condo can be used.
+ A furnished Condo can generate income
+ A furnished Condo appears as a valuable object

2. Rent them out
A condo which is rented out will produce money every day, and renting out is the best support for a quicker sale because:
o Rental tenants are also potential Buyers
o A Condo with people and life is much more attractive for every potential buyer
o A condo which is earning money is attractive for an investor

3. Sell with finance
Work like a bank: don’t pay interest, get it!
o The Condo is much quicker to sell, because much more people can effort it.
o Liquid capital is available.
o The buyer is paying a nice interest.
o No risk involved.
o Every Bank loves steady income.
o A financed sale offers some tax benefits.

Thailand Rental Condos, how to save tax

Foreign investors looking to purchase rental properties inThailand will often have the choice of purchasing the property in their own name or in an offshore company. The preferred ownership structure will require a careful analysis of the respective costs and benefits, taking into account the particular circumstances of the owner.
From a tax perspective, this will require consideration of the tax laws in Thailand as well as the tax laws in the owner’s home jurisdiction and an analysis of the impact on the investment returns after tax if an offshore company is interposed between the owner and the property. An important tax issue to consider is the taxes payable on rental income.
Taxes on rental income Foreign individuals will be subject to Thai personal income tax on rental income generated from real estate situated in Thailand. In most cases,15% withholding tax will be deducted from rental receipts paid to foreign individuals that are not tax residents of Thailand. The tax withheld is not a final tax. On the other hand, if the property is held in a foreign company’s name and the rents are similarly taxed at 15% at source, the withholding tax is considered a final non-refundable tax paymentfor the company.

How to pay less than 15% tax.
A foreign property owner residing outside Thailand could actually end up paying much less
than 15% tax in Thailand if he has purchased the property in his own name. For a foreigner to pay less than 15% tax on rental income, the first step will be to file personal
income tax returns with the Thai Revenue Department to declare the rental income. The
withholding tax deducted from rents can then be used as a tax credit to offset the tax payable on the return. The reward for fi ling a tax return is that the taxpayer can then request a refund of surplus withholding tax credits from the Thai Revenue Department.
Preparing and fi ling a personal income tax return in Thailand is not a difficult exercise. Rental income is normally assessed on a cash basis and should be easily determined from the property manager’s rental reports. A property owner is allowed a standard deduction
of 30% against rental income, no questions asked. A personal taxpayer does have the option of claiming the actual expenses incurred in deriving the rental income which are necessary and reasonable, but the expenses claimed must be supported by documentary evidence, which may very well need to be furnished for audit before the tax refund is approved.

Tax rates
A personal taxpayer can earn net income up to Baht 150,000 (approx. USD 4,500) in a tax year and not pay income tax in Thailand. Unlike some countries that seek to tax foreigners at higher rates or deny them the tax free threshold, the tax scales for residents and non-residents are the same in Thailand.

Individuals are liable to personal income tax in Thailand on their net income, after deduction of expenses and allowances, at the following rates:

Net taxable income                                       Marginal rate 
(Thai Baht)

1 – 150,000                                                                 0%
150,001- 500,000                                                       10%
500,001- 1,000,000                                                    20%
1,000,001- 4,000,000                                                 30%
More than 4,000,000                                                  37%

As the rates of tax are greater than 15% for net income over Baht 500,000 (approx USD 15,000), there will come a point where the tax payable will be greater than the withholding tax credits.

By my reckoning, the property would need to be generating around USD 90,000 per annum in gross rentals before it came to the point where the withholding tax credits would not be enough to cover the income tax payable when the personal income tax return is filed. The benefit of filing a tax return is best illustrated by an example. Let’s take the case where a property generates gross rental income of Baht 1,000,000.00 (approx USD 30,000) for the tax year.

The following tax calculation for a typical property owner illustrates the potential tax refundable in this case.

Taxable net income                                                               Thai Baht
Gross rental income                                                                 1,000,000.00
Less: rental expenses (30% standard deduction)                          (300,000.00)
Less: taxpayer allowance                                                             (30,000.00)
Total deductions and allowances                                                  (330,000.00)
Net income                                                                                 670,000.00

Tax calculation
Tax payable on net income                                                          69,000.00
Less: withholding tax credits (15% of gross rental income)           (150,000.00)
Tax payable (refundable)                                                            (81,000.00)

The tax payable in this case is equal to 6.9% of the gross rental income, resulting in more than half of the withholding tax deducted from rents during the year being refundable.
The figures speak for themselves and clearly demonstrate one distinct tax advantage for foreigners owning Thai rental properties in their own name.

This article was written by Paul Ashburn, Senior Partner, BDO Advisory Limited.

Visit the BDO website at

- (THB)
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