Property Owner Taxes: Freehold vs Leasehold

Everyone is familiar with the key difference between freehold and leasehold: the former represents ownership, while the latter is a right of use (lease). The scope of rights differs significantly — and so does taxation.

Land and Building Tax (for properties valued up to 50 million THB)

Freehold (owner-occupied residential use): 0.02%
Leasehold (in all cases): 0.3%

This difference is explained as follows:

For freehold, the residential tax rate applies when the property is used for living purposes
For leasehold, the residential rate does not apply, as the legal owner remains the developer, and a company cannot own property for residential use
In practice, developers usually pass this tax obligation to the leaseholder under the contract

As a result, two neighbors owning identical apartments valued at 10 million THB will pay very different taxes:

Freehold owner: 2,000 THB per year
Leaseholder: 30,000 THB per year

However, even for freehold, if the property is rented out (commercial use), the 0.3% commercial rate applies.

Tax notices are issued by the local administration at the location of the property. If you believe the tax has been calculated incorrectly, you must prove your case with the local authority.

Personal Income Tax on Rental Income

Freehold owners are entitled to a 30% standard deduction (or actual expenses) when calculating taxable rental income.

Leaseholders are not entitled to deductions, as they are not considered property owners.

Let’s assume the same two neighbors earn 1,000,000 THB per year from renting out their apartments.

Both can apply a personal allowance of 60,000 THB, but only the freehold owner can apply the additional deduction.

Taxable income:

Freehold:
1,000,000 − 60,000 − 300,000 = 640,000 THB
Leasehold:
1,000,000 − 60,000 = 940,000 THB

Applying the progressive PIT rates:

Freehold: 48,500 THB
Leasehold: 103,000 THB

Conclusion

While leasehold may appear more accessible at the purchase stage, the tax burden for leaseholders is significantly higher — both in terms of annual property tax and income tax on rental income.