Is rental income taxable?

Is rental income taxable? For houseowners who earn income from renting out real estate, whether houses or condos, and if so, how is it calculated correctly according to the law?

Is rental income taxable?

The answer is yes, it is taxable. According to the Revenue Code, income from renting property is considered assessable income under Section 40(5), which is income type 5. Therefore, all landlords have a duty to include this income in their annual personal income tax return.

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How to Calculate Rental Income Tax

The tax calculation has 4 main steps:

1. Sum of rental income for the year: Add up all rental income received during the tax year. For example, if the rent is 15,000 baht per month, the total annual income will be 15,000 x 12 months = 180,000 baht.

2. Deduct expenses: Landlords can choose to deduct expenses in 2 ways (choose only one):

– 30% flat rate deduction: The easiest and most convenient method. Simply multiply your annual rental income by 30%. For example, 180,000 x 30% = 54,000 baht.

– Actual deduction: Suitable for those with expenses higher than 30%, such as repairs, maintenance fees, or loan interest. Receipts and supporting evidence are required.

3. Calculate net income: Combine rental income (after deducting expenses) with other income (if any), then deduct various allowances such as personal allowances, life insurance, or SSF/RMF funds.

Formula: (Annual income – Expenses – Allowances) = Net income

4. Calculate tax according to progressive rates: Compare the resulting net income to the personal income tax rate table.

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Guidelines for reducing rental income tax burden:

1. Net income below the threshold: If rental income, after deducting expenses and allowances, results in a net income of less than 150,000 baht, no tax is payable.

2. Utilize all available allowances. Planning to purchase life insurance, health insurance, SSF/RMF funds, or utilize tax deductions for parents/children can help reduce your net income and lower your tax liability.

3. In the case of a tenant who is a legal entity (company): If the tenant is a company, the law requires the company to withhold 5% tax at source on the rental income before paying you and submitting it to the Revenue Department. You will receive a withholding tax certificate (Form 50), which can be used as a tax credit to deduct from the tax payable at the end of the year.

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What tax return form should I file for rental income?

– Half-year tax return (Form 94) for rental income earned during the first 6 months of the year (January – June) must be filed by September of that year.

– Year-end tax return (Form 90) summarizes all income earned throughout the year (including rental income) and must be filed by March 31 of the following year (online filing often extends the deadline). (Please check with the Revenue Department)

Caution: Rental income cannot be filed using Form P.N.D. 91, as it is reserved for those with income solely from salaries.

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Preparing for Filing Rental Income Tax

1. Keep all documents complete. Collect rental agreements, proof of payment, expense receipts (if choosing actual deductions), and withholding tax certificates (if applicable).

2. Plan your expense deductions. Assess in advance which method will save you more tax: a 30% flat rate deduction or actual deductions.

3. Study tax deductions. Research and utilize all available deductions to maximize your benefits.

4. Don't forget to file your half-year tax return (Form P.N.D. 94). Filing the half-year tax return is a legal obligation; neglecting it may result in penalties and surcharges.

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Summary: Is rental income taxable? Know the law to pay rental income tax correctly.

Is rental income taxable? In summary, yes, it is taxable. It's considered Category 5 income, which must be included with other income and filed twice a year (Form P.N.D. 94 and P.N.D. 90). Understanding how rental income is calculated, choosing appropriate deductions, and utilizing various tax allowances will help you pay your taxes correctly and plan your finances well in the long term.

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Thank you for the helpful information from DD Property.