Holding Rental Property Personally or Through a Thai Company — Tax, Costs, Succession and the Foreign-Ownership Line You Must Not Cross

As landlords accumulate properties and rent rises, progressive personal income tax becomes noticeable, prompting the question: would holding property in a company reduce tax? The answer is "it depends," and usually more complicated than expected. This guide gives a basic comparison framework so you can have an informed conversation with an accountant or tax adviser.

Taxation as an Individual

Rent received by individuals is Section 40(5) income, deductible at a flat rate by property type or actual expenses with evidence, then combined with other income such as salary and taxed progressively. It's simple, needs no complex bookkeeping, and the flat deduction for buildings works well for most people. The downside: with high total income, extra rent is taxed in higher brackets.

Taxation as a Company

Companies pay corporate income tax on net profit after actual expenses incurred in earning income — loan interest, depreciation of buildings and furniture, repairs, common fees and management. The standard rate is 20% of net profit, with reduced rates on the first tiers of profit for qualifying SMEs. But money in the company isn't the shareholders' yet: when paid as dividends, individual shareholders suffer dividend withholding tax, or may elect to include it in their return with a tax credit under conditions. Total tax must be counted at both levels.

Key Comparisons

Issue	Individual	Company
Tax calculation	Progressive rates after flat or actual deductions	Corporate rate on net profit, plus dividend tax when distributed
Deductible expenses	Flat by type, or actual (hard to prove)	Actual, including depreciation and interest
Accounting burden	Light	Bookkeeping, audit and annual financial statements
Running costs	Low	Accounting, audit and administration fees
Succession	Transfer assets one by one, or via inheritance	Transfer shares — more flexible for dividing among heirs
Personal use	Unrestricted	Personal use of company assets raises tax issues

The Cost of Moving Existing Property Into a Company

Often overlooked: transferring property held personally into a company is a sale or transfer for value, incurring transfer fees, withholding income tax and specific business tax or stamp duty on the same basis as a sale. This cost can be high enough to consume the expected tax savings for years. Often it's better for the company to buy future properties rather than taking in existing ones.

The Foreign-Ownership Line: Don't Cross It

Under Thai law, foreigners generally cannot own land. A Thai company with foreign shareholding above the legal threshold, or otherwise deemed foreign under the law, also cannot own land. Using Thais as nominee shareholders so a company can hold land on a foreigner's behalf is an offence, and authorities do scrutinise such structures; consequences can include criminal penalties and orders to dispose of the land. Foreigners wanting Thai property should use lawful routes such as buying condominium units within the foreign quota or long-term leases.

When a Company Is Worth Considering

1. Large portfolio, high income — when marginal personal rates clearly exceed the company's combined tax burden.
2. High actual expenses — substantial interest and depreciation deductible in the company.
3. Reinvesting profits — retaining profit to buy more property rather than paying dividends.
4. Succession planning — dividing shares among heirs more flexibly than transferring assets one by one.
5. New purchases — avoiding the cost of transferring existing property.

FAQ

I have two or three rental units. Should I form a company?

Usually not yet — accounting, audit and transfer costs typically exceed the tax benefit. Filing correctly as an individual with the flat deduction is usually sufficient.

Can spouses split rental income?

Rent from marital property can be split half each between spouses, spreading income into lower brackets — simpler planning than a company.

Can foreigners invest in a Thai rental company?

Within the limits the law allows on shareholding and business type, but a company holding land must genuinely not be foreign under the law. Consult a specialist lawyer.

Conclusion

A company isn't an automatic answer to rental tax. Count both tax layers, accounting costs and the cost of moving existing property. It usually pays only for large portfolios, high actual expenses or new purchases — and foreigners must use lawful routes only. Always consult an accountant first. Read more on rental income tax and portfolio building on the MyProperty blog.