Leasehold Assignment (Resale): Unexpected Taxes

We have previously explained that taxation on the sale of leasehold property differs significantly from freehold. In practice, this often comes as a surprise to property owners.

What taxes are paid at the time of registration?

When registering a leasehold assignment with the Land Department, the parties pay only 1.1% of the transaction value:

1% — Transfer Fee
0.1% — Stamp Duty

For comparison, when selling freehold property, taxes amount to:

approximately 3.3% if the property has been owned for more than 5 years
approximately 6.3% if owned for less than 5 years

However, the key difference is:

for freehold, these taxes are final
for leasehold, they are not

Where does the main tax arise?

In a leasehold assignment, personal income tax (PIT) is not withheld at the time of registration.

Instead, it is calculated later by the Revenue Department, which:

reviews the transaction
determines the income
applies the progressive tax rates
issues a tax assessment notice

Example of PIT calculation

Let’s consider a case from our practice:

Purchase: March 1, 2019 — 10,000,000 THB
Sale: September 1, 2025 — 12,000,000 THB
Holding period: 6.5 years

Calculation:

Depreciation:
10,000,000 × (6.5 / 30) = 2,166,666.67 THB

Residual value:
7,833,333.33 THB

Income:
12,000,000 − 7,833,333.33 = 4,166,666.67 THB

Less registration expenses (1.1%):
132,000 THB

Less personal allowance:
60,000 THB

Taxable income: 3,974,666.67 THB

Under the progressive PIT rates:
Tax payable: 957,400 THB

Can the transaction value be understated?

Theoretically — yes. In practice — risky.

Possible consequences:

The Land Department may refuse to register the transaction
The Revenue Department may request clarification
Significant deviation from market value may trigger tax scrutiny

If the actual price is 12,000,000 THB, but only the residual value is declared, this may be treated as tax evasion.

How to optimize taxes legally?

1. Accounting for all expenses
The taxable base can be reduced by including:

agent commission
additional transaction-related expenses

2. Structuring the transaction
For example:

leasehold assignment — separately
compensations (e.g., sinking fund reimbursement) — separately

Such payments are not always treated as taxable income.

Important note

A lawyer handling the registration of the transaction typically:

does not calculate personal income tax
does not provide tax optimization advice

This is a separate scope of work requiring tax expertise.

Conclusion

The low registration taxes for leasehold (1.1%) often create a false sense of advantage.

In reality, the main tax arises later — and may be significantly higher than expected.

Therefore, it is important in advance to:

calculate the tax liability
structure the transaction properly
account for all possible expenses