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07.07.2011
Apartments for rent: a tax on income of an individual
Number of expats in Thailand is growing and many of them buy apartments for their personal use. But most foreigners regard the purchase of real estate as a good investment that will live "in his apartment," while on vacation, and after its completion - to rent an apartment for rent, and a small but all the same income. A small income can grow into a larger amount of the order, it all depends on the subject of the lease.
So, many rent their property, but not many remember the existence of the state represented by the tax authorities, which must be shared. And should it? - The eternal question of the Russian people.
To answer this question, propose to consider a few examples. But first some theory.
According to the Tax Code of Thailand income derived from the leasing of real estate in the state, including foreigners, are taxed on the income of an individual. The tax rate is progressive and depends on the amount of annual income:
|
Annual income, Bat
|
tax rate
|
|
0 – 150 000
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0%
|
|
150,001 - 500,000
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10%
|
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500,001 - 1,000,000
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20%
|
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1,000,001 - 4,000,000
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30%
|
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4,000,001 и более
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37%
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Landlord income before determining the taxable amount is reduced by 30% (especially for the operation of rent) and another 30 thousand - a standard for the understatement of all taxable transactions. This is a general rule, out of it and we will proceed.
How does all this apply in practice
Example № 1
The property has a flat average cost in annual revenue from its lease of 100 000 baht.Subtract 30% and 30 thousand, we get 100 000 - 100 000 * 30% - 30 000 = 40 000 Baht. Refer to the table above. The resulting amount is in the range 0 - 150 000 Baht, the tax rate is 0%. The tax is not paid accordingly.
Example № 2
Income from renting an apartment (one or more) for the year amounted to one million Baht. Substituted in the same formula: 1 000 000 - 1 000 000 * 30% - 30 000 = 670 000 150 000 Baht out of this amount is not taxed. 350 000 is taxed at a rate of 10% tax, the remaining amount 170 000 - at 20%. The total amount of tax 69 000 Bath
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№
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The range of incomes, Bath
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The taxable amount, Bath
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tax rate
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The amount of tax Bath
|
|
1
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0 – 150 000
|
150 000
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0%
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0
|
|
2
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150 001 – 500 000
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350 000
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10%
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35 000
|
|
3
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500,001 - 1,000,000
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170 000
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20%
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34 000
|
Example number 3
Rental income amounted to 10 million Baht. Calculate the tax base:
10 million - 10 million * 30% - 30 000 = 6.97 million Baht. By simple calculations, we conclude that the state will have to pay more than 2 million Baht, an amount which part is not so easy. In addition millions of revolutions of the lease provide a good chance to get under the close supervision of tax authorities. Is there a way to protect yourself from a legal point of view, and may even reduce taxes?
Business registration in this case is not the worst option. Yes, there will be some costs for the establishment and maintenance company, but the benefits are obvious. On the one hand, provide bookkeeping records of all costs, and thus reducing the amount of paid taxes. On the other hand, claims by the state will be kept to a minimum.
The calculation of tax liability is not the most pleasant, but very useful exercise.Calculations are performed before the start of the lease, you will be able to adjust theirfinancial plans and, of course, to avoid any unpleasant surprises in the future.
Information courtesy of ABC Asian Legal Service
See also
Thailand Real Estate News
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News in Thailand, Pattaya
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