Thailand: Overview

RENTAL YIELDS

Bangkok yields good at 7.4%

Thai property prices have dropped moderately from the average of US$2,520 per sq. m for Bangkok apartments to US$2,384 per sq. m. Nevertheless, gross rental income on apartments stayed within the same range at 7.4% average.

The usual 120-sq. m apartment has a yield of around 7.72% and sells for US$2,491 per sq. m. Smaller units generate higher yields, up to 10.26% for 40-sq. m apartments.

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TAXES AND COSTS

Income taxes in Thailand are high

Effective Tax Rate on Rental Income
Monthly Income	US$1,500	US$6,000	US$12,000
Tax Rate	6.3%	12.7%	15.8%
Click here to see a worked example
Source: Disclaimer

Rental Income: Non-residents pay tax on income derived from property located in Thailand at progressive rates from 10% to 37%. Gross rent is subject to 15% withholding tax, which can be credited to the actual income tax due.

Property Tax: The House and Land Tax, levied on rental properties, is payable annually at a flat rate of 12.5% of the assessed annual rental value of the property

Capital Gains: Gains derived from the sale of immovable property are taxed at standard income tax rates.

Inheritance: There are no inheritance or gift taxes in Thailand.

Residents: Residents are taxed on their worldwide income.

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BUYING GUIDE

Buying costs are now low

With the government's tax incentive programme implemented since March 29, 2008, total roundtrip costs are now low at around 4.8% to 7.1% of the property value. The Special Business tax has been reduced to 0.11% from 3.3% while transfer tax has been cut to 0.01% from 2%. Real estate agent's commission range from 3% to 5%.

There are complications surrounding the computation of the buying costs; stamp duty and specific business tax are based on the assessed value or declared value, whichever is higher.

Read Buying Guide  »

LANDLORD AND TENANT

The landlord can call the police in Thailand

Given the absence of formal legislation, Thailand is pro-landlord.

Rent: The contract prevails on issues regarding the rent, rent adjustments, and notices.

Tenant Security: If the tenant refuses to leave after the contract and/or the notice to vacate expires, the police can be called upon to forcibly remove the tenant. However, landlords are not allowed to take abandoned appliances and furniture as compensation for unpaid rent and damages.

Read Landlord and Tenant  »

ECONOMIC GROWTH

Political uncertainties and economic slowdown

Thailand is a middle income (GDP per capita of US$2,800) constitutional monarchy. It is the only country in the region which was never colonized.

Thailand attracts enormous numbers of tourists because of its culture, beaches, cuisine, and heart-warming hospitality. Apart from the metropolitan cities of Bangkok and Chiang Mai and the beach havens of the South (Phuket is the most popular), most of the country remains rural.

The political crisis brought by efforts to force Thaksin to resign ended in a bloodless coup in September 2006. A military junta was installed with a former general appointed as interim prime minister. Elections are expected in October 2007, but it is still unclear if this will push through.

The junta said to have the blessings of Thailand’s King Bhumibol Adulyadej, the world’s longest serving monarch. As the junta continues to contribute to economic uncertainty, GDP is expected to rise by 4.9% in 2007, after rising by 4.8% in 2006. GDP growth rate reached its highest level since the Asian Crisis in 2003, at 7%.