We will discuss main rules and rental laws in Thailand in this article. This is important information for both tenants and those who want to rent out their property. Renting out real estate is one of the most popular ways to get passive income from various properties for investors. If you are planning to purchase real estate in Thailand to rent it out, this article may be helpful to you.
It is important to mention that you can rent out or rent apartments in Thailand either through an agent or on your own. A management company or a developer can act as an agency. If you contact the agency, its representatives will prepare the necessary documents for you and check their compliance with the law.
However, if you decide to rent a house from a private person or rent out your property without intermediaries, you should carefully study Thailand’s legislation. When drawing up a contract, you should consult a lawyer.
Content:
- Real estate rental agreement in Thailand
- A short-term rental
- Is the Airbnb service legal in Thailand?
- Rental income and taxes
- Avoiding double taxation
- Registering tenants
- A long-term lease for over 3 years
- Transferring lease rights. Sublease
- A deposit
Real estate rental agreement in Thailand
In 2018, Thailand changed the legislation on renting houses and apartments and amended the relevant laws. These amendments are still being applied in the country.
First, you need to know that a foreign owner has the right to rent out real estate, such as apartments and houses. The lessor may be a person who has acquired real estate in the Kingdom under a freehold and leasehold agreement on equal terms.
According to the 2018 amendments, the contract must be drafted in Thai. It is also possible to draw up a second copy in English or another language. The contract must also include an inventory listing all items and household appliances in the house or apartment and indicating the state of the property. The inventory may include photos. The document must be signed by the tenant confirming that he has read it and agrees with the information.
Contracts are concluded in two copies of equal legal force. After signing, the tenant must receive one of them.
A short-term rental
According to the legislation, a private house can be rented out for any period. However, apartments in condominiums are allowed to be rented out only for a long time — a month or more. At the same time, the management company and the council of residents can change this requirement, for example, to allow rent only from a year or, conversely, to allow daily rent. Daily rent is allowed in condominiums in tourist areas such as Pattaya. You should ask these questions before buying an investment property.
Is the Airbnb service legal in Thailand?
In many apartment buildings, you can find an ad in the lobby saying that Airbnb is illegal in Thailand. That's not true. Airbnb or similar services are not prohibited by the Kingdom's laws. However, it is necessary to pay attention to the house rules as mentioned above. If short-term rentals are not allowed in houses in Thailand, you can rent out your apartment for a long time through Airbnb.
Rental income and taxes
Income from renting out real estate in the Kingdom is taxable. If you use the agency's services, it will do it without you. If you rent out your property on your own, you can also deal with taxes yourself or hire a local accountant.
If you rent out your property through a management company or other legal entity, you will have to pay tax twice: an advance (Withholding Tax), which is withheld upon payment of money, and the second part, which is an additional payment or refund of overpayment by state authorities at the end of the year. The management company will withhold a tax advance of 5% if you have an INN (your taxpayer identification number) when it transfers rental income to you. If you do not have a Thai INN, the rate will be 15% of the rent in the contract. When registering a Thai taxpayer number, the process is more complicated but more profitable: you need to file an income tax return once a year. You can get a personal deduction of 30,000 baht per year for one taxpayer and a 30% deduction for rent. However, you should keep in mind that when purchasing a leasehold property, you are not the owner of this property, but you can rent it for a long time. Thus, when you rent out such a property, it will be considered a sublease. In this case, you are not entitled to a deduction.
The amount of annual income after deductions is taxed on a progressive scale. The rates are valid for 2023 and will be recalculated in 2024:
| The amount of income (baht) | A tax rate |
|---|---|
| 0–150,000 | Not taxed |
| 150,000–300,000 | 5% |
| 300,000–500,000 | 10% |
| 500,000–750,000 | 15% |
| 750,000–1,000,000 | 20% |
| 1,000,000–2,000,000 | 25% |
| 2,000,000–4,000,000 | 30% |
| >4,000,000 | 35% |
Avoiding double taxation
Thailand has an agreement to avoid double taxation with 48 countries. This helps to avoid income tax both at the place of residence and at the place of citizenship.
Registering tenants
All foreign tenants must be registered with the immigration service on the TM.30 form. TM.30 is also called a "Notification from House-Master, Owner or the Possessor of the Residence where Alien has Stayed." A foreigner needs this document for legal stay in the country, along with a visa and a "90-day report", which the foreigner must submit every 90 days of stay in the country to the local immigration center (or online). The homeowner must issue TM.30. If a foreigner does not have this document, they may not receive a visa extension, and the landlord will be fined. In most regions of Thailand, TM.30 can be issued online. In some regions, foreign tenants and property owners will need to report to the immigration service.
The document contains the foreign national’s and the owner’s personal information as well as the address of the housing. According to the law, TM.30 must be issued within 24 hours after the foreigner moves into the housing.
A long-term lease for over 3 years
According to Thai rental laws, the rental of real estate for over 3 years must be formalized and registered in the land act (a document on the ownership of land or a condominium), which is stored in the registers of provincial or local Land departments. The term of the registered lease agreement cannot exceed 30 years.
Transferring lease rights. Sublease
The lease agreement must include the tenant's right to sublease or assign the lease. Otherwise, according to Thai laws, the lessee is not allowed to sublet or assign the lease to another person.
A deposit
In Thailand, tenants have to pay a deposit to rent a house. However, they get the money back after the lease agreement expires. By law, such a deposit should be equal to one month of rent. However, landlords take an amount equal to two months of rent. The contract must contain the amount of the deposit and the terms for its return. By law, the deposit must be returned within 7 days after the rental contract expires, and the tenant must leave the housing.