Freehold vs Leasehold for Foreign Buyers
The four legal structures available to foreign villa buyers — leasehold, Thai company, BOI, Thai spouse — with costs and practical implications.
Read the structure guide →Property Tax in Thailand — A Villa Owner's Guide
Thailand's property tax landscape changed significantly when the Land and Building Tax Act came into force in 2020, replacing the old House and Land Tax and Local Development Tax. This guide explains each tax a Koh Samui villa owner is likely to encounter — annual holding tax, rental income obligations, VAT, and what happens when you sell.
General guidance notice: This guide is based on our 10+ years operating villa rentals on Koh Samui — not legal or tax advice. Thai tax legislation is complex, and individual circumstances vary significantly. Always engage a qualified Thai tax advisor and/or property lawyer before making decisions on the basis of this information.
Land and Building Tax — The 2020 Act
The Land and Building Tax Act B.E. 2562 (2019), effective from 2020, replaced Thailand's legacy property tax system. It levies an annual tax on land and buildings based on the government appraised value and the designated use of the property.
How the Tax is Calculated
The tax base is the Land Department's official appraised value — not the market value or the price you paid. The Land Department reappraises property values on a periodic cycle. In many areas of Koh Samui, the official appraised value is materially lower than market value, which means the effective tax rate as a percentage of market value is lower than the headline rate suggests.
The annual tax is calculated as: Land Department appraised value × applicable tax rate
Tax Rates by Property Use
| Property Use | Tax Rate | Notes |
|---|---|---|
| Agricultural use | 0.01–0.1% | Coconut farming qualifies on Samui; rates escalate for uncultivated agricultural land |
| Primary residence (owner-occupied) | 0.02–0.1% | Tiered; first THB 50M of appraised value exempt if name matches Thai ID/house register |
| Second home / non-primary residence | 0.02–0.1% | No exemption threshold; applies to villas used as holiday homes but not rented commercially |
| Commercial / rental use (including short-term villa rental) | 0.3–1.2% | Applies to villas rented to guests; rate escalates with appraised value; 0.3% is the common rate for most Samui villas |
| Vacant / undeveloped land | 0.3–3% | Rates increase every 3 years of vacancy; substantial penalty for holding undeveloped land |
When is the Tax Paid?
Land and Building Tax is assessed annually by the local authority (in Koh Samui's case, Or Bor Tor Koh Samui or the municipality depending on location). Tax notices are typically issued in January–February, with payment due by April 30 of each year. Late payment attracts a 1% per month surcharge.
For villas held in a Thai company, the company is responsible for the tax. For villas held under a long-term lease, responsibility for the tax is a contractual matter specified in the lease agreement — commonly borne by the lessee (the foreign buyer), though this varies by individual lease terms.
Tax on Rental Income
Rental income generated by a Koh Samui villa is assessable income in Thailand. The applicable tax depends on whether the owner is an individual or a company, and whether they are a Thai tax resident.
Withholding Tax on Rental Payments (Individuals)
Under the Thai Revenue Code, rental income paid to individuals is subject to 5% withholding tax at source. If you're a non-resident individual receiving rental income from Thailand, the withholding tax agent (typically the management company) is required to withhold 5% from each rental payment and remit it to the Revenue Department on your behalf. This withholding represents your final tax obligation if you have no other Thai-source income and are not a Thai tax resident.
Personal Income Tax (Thai Tax Residents)
If you are tax resident in Thailand (spending 180+ days per year in the country), your worldwide income — including rental income — is potentially assessable for Thai personal income tax at progressive rates:
| Assessable Income (THB/year) | Tax Rate |
|---|---|
| 0 – 150,000 | Exempt |
| 150,001 – 300,000 | 5% |
| 300,001 – 500,000 | 10% |
| 500,001 – 750,000 | 15% |
| 750,001 – 1,000,000 | 20% |
| 1,000,001 – 2,000,000 | 25% |
| 2,000,001 – 5,000,000 | 30% |
| 5,000,001+ | 35% |
Rental income is categorised as Section 40(5) income under the Thai Revenue Code. You may deduct either 30% of gross rental income as a standard deduction (without documentation) or actual expenses (documented) against rental income. The applicable deductions and exemptions depend on your individual tax position — a Thai tax advisor will model the most efficient approach for your situation.
Corporate Tax for Thai Company Structures
If the villa is held in a Thai company, rental income is assessed as corporate income and taxed at the standard Thai corporate income tax rate of 20% on net profit. The company must file annual tax returns, and dividends distributed to foreign shareholders may also be subject to withholding tax at 10%. The company model requires proper accounting — engaging a licensed Thai accountant for annual filings is not optional.
VAT on Villa Rental Income
Value Added Tax (VAT) at 7% applies to accommodation services in Thailand, but only once annual gross revenue crosses the registration threshold.
The VAT registration threshold for accommodation services is THB 1.8 million in annual gross revenue. If your villa's total annual rental revenue (across all channels) exceeds this figure, you are required to register for VAT, collect VAT from guests on bookings, and remit it to the Revenue Department on a monthly basis.
For owners of a single villa in the mid-market category with ADR of THB 5,000–7,000 and 50% occupancy, annual revenue will often sit below THB 1.8M. For luxury villas or owners with multiple properties, exceeding the threshold is likely. Once registered, you can claim input VAT on business-related purchases (utilities for the rental business, renovation costs, management software) against your output VAT obligation.
VAT registration does not automatically increase your revenue — you must decide whether to absorb the VAT in your listed rates or add it as a separate line item on guest invoices. Discuss this with your management company and tax advisor before registering, as it affects your pricing strategy.
Transaction Taxes — At Purchase and Disposal
Several taxes arise at the point of purchasing or selling a villa. These are one-time transactional taxes, not annual obligations.
| Tax / Fee | Rate | Base | Who Pays | Notes |
|---|---|---|---|---|
| Transfer Fee | 2% | Land Dept appraised value | Typically split 50/50 | Paid at Land Department on transfer date |
| Stamp Duty | 0.5% | Higher of sale price or appraised value | Seller (negotiable) | Applies only if SBT is not applicable (property held 5+ years) |
| Specific Business Tax (SBT) | 3% + 0.3% Municipal Tax = 3.3% | Higher of sale price or appraised value | Seller (negotiable) | Applies if property held less than 5 years; replaces Stamp Duty |
| Withholding Tax (seller's) | Progressive (individuals) / 1% (companies) | Appraised value (not sale price) | Seller | Withheld at Land Department; seller's income tax obligation on the gain |
Tax rates and thresholds are based on Thai tax legislation current as of April 2026. Rates are subject to change. Always verify current rates with a qualified Thai tax advisor at the time of your transaction.
Related Owner Guides
How to Buy a Villa on Koh Samui
Legal structures, due diligence, costs, timelines and red flags — the complete buyer's guide from our 10+ years on Samui.
Read the buyer guide →Frequently Asked Questions
What is the Land and Building Tax rate for a rental villa in Thailand?
Under the Land and Building Tax Act B.E. 2562 (2019), a villa used for commercial purposes — including short-term rental — is assessed as a commercial/other property at a rate of 0.3% of the government appraised value per year, up to a ceiling of 1.2% for very high-value properties. The tax base is the Land Department's official appraised value, which is typically lower than market value on Koh Samui.
Do I pay withholding tax on rental income in Thailand?
Yes. Rental income paid to non-resident individuals is subject to 5% withholding tax at source. If you are a Thai tax resident, rental income is added to your assessable income and taxed at progressive rates (5–35%). Always consult a qualified Thai tax advisor to confirm your residency status and full tax obligations.
When does VAT apply to villa rental income?
VAT (at 7%) applies if your annual gross revenue from accommodation services exceeds THB 1.8 million. Below this threshold, VAT registration is not required. For individual villa owners with a single property and mid-market ADR, gross revenue often stays below this threshold, but high-ADR or multi-villa owners may exceed it.
What is Specific Business Tax and when does it apply?
Specific Business Tax (SBT) is charged at 3.3% (including 0.3% Municipal Tax) on the disposal of property held for less than 5 years. SBT is paid by the seller at the Land Department on the date of transfer. If the property has been held for 5 years or more, SBT is replaced by Stamp Duty at 0.5%.
Are transfer fees split between buyer and seller?
Transfer fees (2% of the Land Department appraised value) are most commonly split equally — 1% each — by negotiation in the sale and purchase agreement. The split is negotiable; clarify before signing any agreement.
What happened to the old House and Land Tax?
The House and Land Tax Act (1932) and the Local Development Tax Act were repealed and replaced by the Land and Building Tax Act B.E. 2562 (2019), which came into full effect in 2020. The new system is based on annual appraised value with tiered rates depending on property use. If you paid House and Land Tax under the old system, you are now assessed under the 2020 Act.
Book a 30-Min Strategy Call with Adam
Adam Tokar, our Portfolio Manager, can introduce you to the Thai tax advisors and property lawyers we work with — and help you model the real annual cost of ownership for any target villa.