Hold a Thai property for ten years: what actually comes back to you
Three things: the net rent you actually collected, the principal you repaid, and whatever the price did. The first two can be worked out in advance, the third cannot, and Thai tax law draws two lines that decide how long holding pays. One at five years, one at ten.
Most long-hold plans are built on rent and hoped-for appreciation alone, and meet those two lines for the first time sitting at the land office.
The first line at five years, worth 2.8 per cent of the whole price
Royal Decree No. 342 of B.E. 2541, issued under the Revenue Code, provides in section 4(6) that a sale of immovable property made within five years of the date of acquisition is treated as a sale in the course of trade or for profit, which attracts specific business tax.
The rate is 3 per cent of gross receipts before any deduction, and a local tax of a further 10 per cent of that specific business tax is payable alongside it, making 3.3 per cent in total. The base is the actual sale price or the assessed capital value, whichever is higher.
Where specific business tax does not apply, stamp duty of 0.5 per cent applies instead. You pay one or the other, never both.
| Selling at 3,000,000 baht | Sold in year 3 | Sold in year 6 |
|---|---|---|
| Specific business tax at 3.3% | 99,000 baht | None |
| Stamp duty at 0.5% | None | 15,000 baht |
| Difference | 84,000 baht | 84,000 baht |
There is one way round it. Section 4(6)(c) exempts the sale of immovable property used as the seller's principal residence, where the seller's name has been in the house register for not less than one year. So a home you actually live in and are registered at does not have to wait five years.
For a unit bought to rent out, the house register entry is not yours, which makes the five year line the one that counts.
The second line at ten years, where the law stops rewarding you
Personal income tax withheld on a property sale is not calculated on the profit you made. It is calculated on the assessed capital value, less a flat deduction that depends on the number of years held, under section 4 of Royal Decree No. 165 of B.E. 2529.
| Years held | Flat deduction, per cent of income |
|---|---|
| 1 year | 92 |
| 2 years | 84 |
| 3 years | 77 |
| 4 years | 71 |
| 5 years | 65 |
| 6 years | 60 |
| 7 years | 55 |
| 8 years or more | 50 |
Read alone that looks like a penalty for holding longer. The other half of the formula is that what remains after the deduction is divided by the number of years held before the progressive rates are applied, and the result is then multiplied back by the same number of years. That division is what drops the annual figure into lower brackets.
And this is where ten appears. The Revenue Department's counting rule is that where the holding period exceeds ten years, only ten years are counted, and part of a year counts as one year.
The divisor stops growing at ten. Year eleven, year fifteen, year twenty, the law still counts ten. The tax benefit of holding longer is fully used up at year ten, and holding beyond that has to earn its keep some other way.
The part-year rule matters more in practice than it looks. Selling in the first month of year six and selling in the last month of year six count as the same number of years, which is worth knowing before rushing a deal across a year boundary.
The actual figure depends on the assessed value of the specific property. The Revenue Department publishes a free calculator for taxes on property sales on its website, where you can enter the assessed value and the years held and compare.
The ten year return comes from three pots, not one
Put real numbers on it. Say a condominium at 2,500,000 baht, 250,000 down, 2,250,000 borrowed over 30 years at a flat assumed 5 per cent a year, let at 11,000 baht a month.
On those terms the instalment is around 12,079 baht a month.
| First ten years | Amount |
|---|---|
| Total instalments paid | About 1,449,000 baht |
| Of which reduced the principal | About 420,000 baht |
| Of which was interest | About 1,029,000 baht |
| Gross rent collected | 1,320,000 baht |
| Net rent after voids, common fees, repairs and agent fees, at about 70% | About 924,000 baht |
The second and third rows are the ones to stare at. You paid in over 1.4 million and the debt fell by 420,000, because the first ten years of a thirty year loan is when interest takes the largest share.
Across the ten years you put in about 250,000 as the deposit plus about 525,000 to cover the gap between net rent and the instalments. What you got back was 420,000 of debt repaid, plus whatever the price did.
| Sale price in year 10 | Left after clearing about 1,830,000 of debt |
|---|---|
| Unchanged at 2,500,000 | About 670,000 baht, before selling costs |
| Up 2% a year, to 3,047,000 | About 1,217,000 baht, before selling costs |
If the price never moves in ten years, roughly 775,000 baht of cash in comes back as roughly 670,000 before transfer costs and tax. That is a loss. Only the 2 per cent case produces a return worth calling one.
These are stated assumptions meant to show the shape, not a price forecast. Move the interest rate or the rent slightly and the result moves. How to separate gross from net yield properly is in the return you see and the return you get.
What quietly eats the return over a decade
- The building ages, the land does not. After ten years the structure is ten years older every time. What resists time is the land underneath it, and a condominium gives you only a small proportionate share of that.
- Common fees never go down. A ten year old building is where lifts, pumps and electrical systems reach their replacement cycle. A juristic person that cannot collect will either levy a special payment or let the service decline.
- The renovation cycle. A unit let for ten years needs at least one round of reinvestment to keep commanding the same rent.
- Voids between tenants. One empty month a year is 8 per cent of the year's income gone.
- Annual land and building tax. The rate depends on the use category and the value band, so check the applicable rate with the municipality or subdistrict authority where the property sits.
Condominiums and houses do not age the same way
| Condominium | House on its own land | |
|---|---|---|
| Share of value held in land | Low, a proportionate co-ownership share | High, and it does not depreciate |
| Effect of a ten year old building on price | Large, because it is compared directly with newer towers nearby | Smaller, because the buyer is buying the land too |
| Long-term shared costs | Compulsory, and special levies are possible | More within your own control |
| Liquidity at resale | Higher next to mass transit | Slower, but the buyers intend to live there |
The practical conclusion is that the longer you plan to hold, the more the share of value sitting in the land matters, because it is the only part time does not consume.
Checklist before committing to a ten year hold
- Get the first ten years of instalments split into principal and interest. Any bank will produce the schedule on request.
- Build voids into the rent assumption from the start rather than modelling twelve full months.
- Budget one renovation round inside the plan, not as a surprise later.
- If rates fall, refinancing mid-way changes the principal to interest ratio considerably. The method is in refinancing in a lower-rate cycle.
- If you intend to sell around year four or five, check the acquisition date first, because a few months can be worth tens of thousands of baht.
- If you have held ten years and are undecided, decide on rent and building condition rather than on tax, because the tax benefit is already fully used.
A tenanted property and an empty one do not fetch the same price at sale, compared in selling with a tenant in place or selling empty. If you are ready to sell, see the house selling service.
Frequently asked questions
What extra tax applies when selling within five years?
Specific business tax, under section 4(6) of Royal Decree No. 342 of B.E. 2541, at 3 per cent of gross receipts before deductions, plus local tax of 10 per cent of that amount, making 3.3 per cent.
What applies instead after five years?
Stamp duty at 0.5 per cent of the sale price or assessed capital value, whichever is higher. One or the other applies, never both together.
Does being on the house register really help?
Yes. Section 4(6)(c) exempts the sale of a property used as the seller's principal residence where the seller's name has been in the house register for not less than one year.
At what point is the flat deduction lowest?
From year eight onwards, at 50 per cent, which is the lowest figure in the table under section 4 of Royal Decree No. 165 of B.E. 2529.
Why does tax stop improving after ten years?
Because the Revenue Department's counting rule caps the holding period at ten years, so the divisor in the formula stops there. The benefit of a long hold is fully used at year ten.
Does the month of sale matter?
It can, because part of a year counts as a full year. Early and late in year six count the same, but moving from late year five to early year six changes the number of years used.
How much debt is repaid in ten years?
Less than most people expect. On a 2,250,000 baht loan over 30 years at 5 per cent, ten years of instalments total about 1,449,000 baht while reducing the principal by about 420,000. The rest is interest.
Condominium or house for a long hold?
It depends on how much of the value sits in land. A house on its own land holds a far larger share there and land does not depreciate, while a condominium wins on liquidity next to mass transit.
Key takeaways
- A long hold returns net rent, principal repaid and price movement, and the first two can be calculated in advance.
- Selling within five years of acquisition attracts specific business tax at 3.3 per cent instead of stamp duty at 0.5 per cent, a 2.8 point gap on the whole price.
- The exception is having your name in the house register of that residence for at least one year.
- The flat deduction falls from 92 per cent in year one to 50 per cent from year eight, but the income is divided by the years held before tax is calculated.
- Holding beyond ten years counts as ten, so the tax benefit is fully used at year ten.
- The first ten years of a thirty year loan repay little principal, because that is when interest is heaviest.
- The longer the intended hold, the more the share of value sitting in land matters, since the building depreciates and the land does not.