VAT on New Condos in Thailand: Who Pays 7% and How to Minimise the Bill

When you purchase a new condo directly from a registered developer in Thailand, you pay 7% VAT on the full purchase price. The developer either folds this into the advertised price or lists it as a separate line in the Sale and Purchase Agreement. Understanding exactly how this tax works - and when it applies - can save you between 200,000 and 1,000,000 THB on a typical transaction in 2026.

VAT applies exclusively to new condo purchases from a VAT-registered developer. Resale transactions between private individuals do not attract VAT; instead, other costs apply: Specific Business Tax (SBT) or Stamp Duty, depending on how long the seller has held the property.

As of 2026, the Thai government has confirmed the rate remains at 7% and no increase to the 10% statutory ceiling is planned (source: Phuket Times, 2026). That confirmation matters for long-term investment modelling.

Quick Answer

• VAT rate in Thailand: 7% (statutory ceiling is 10%, temporarily reduced to 7% since 1997, renewed through 2026 by royal decree)
• VAT is paid by the buyer on new condo purchases from a corporate developer
• Resale (secondary market) transactions do not attract VAT - SBT of 3.3% or Stamp Duty of 0.5% applies instead, depending on the seller's holding period
• Developers are legally required to issue a Tax Invoice itemising the VAT amount on every payment instalment
• Phuket condo prices rose 10-14% year-on-year in early 2026 (MORE Group, April 2026), making accurate tax modelling more important than ever
• Land and Building Tax notices in 2026 are issued in May, with payment due by end of July (Wochenblitz, 2026)
• Thai authorities have officially warned that '0% tax' claims targeting foreign buyers are misleading and potentially illegal (The Phuket News, 2026) - every property in Thailand carries tax obligations regardless of the buyer's nationality

Scenarios and Options

Scenario 1 - Buying a New Condo from a Developer

You purchase an off-plan apartment for 5,000,000 THB. The developer is a VAT-registered corporate entity. Your actual payment obligation:

• Property price: 5,000,000 THB
• VAT at 7%: 350,000 THB
• Total: 5,350,000 THB

The single most important due-diligence step is checking the contract wording. There are two fundamentally different formulations:

• 'Price inclusive of VAT' - the 7% is already embedded in the headline price
• 'Price exclusive of VAT' - 350,000 THB (on a 5M deal) is added on top

Many Phuket developers advertise inclusive prices but not all. Verify before you sign the reservation agreement, not after.

The standard payment structure in 2026 for off-plan projects runs approximately 30% on booking, 30% on construction commencement, and 40% on handover (MORE Group data). VAT is calculated and invoiced on each individual payment instalment, not just the final tranche.

Scenario 2 - Buying on the Resale Market from a Private Seller

No VAT applies. The costs that arise instead are:

• Transfer Fee: 2% of the Land Department's appraised value, paid at registration
• Specific Business Tax (SBT): 3.3% - applicable if the seller has held the property for fewer than 5 years
• Stamp Duty: 0.5% - applicable if the seller has held for 5 years or more (SBT and Stamp Duty are mutually exclusive)
• Withholding Tax: calculated on a progressive personal income tax scale

Transfer costs are typically negotiated between buyer and seller - split 50/50 or allocated entirely to one party depending on market conditions.

Note: Thai nationals buying new condos priced up to 7,000,000 THB benefited from a temporary 0.01% transfer-fee stimulus running through 30 June 2026. Foreign buyers are not eligible and continue to pay the standard 2% Transfer Fee regardless of purchase price.

Scenario 3 - Purchasing Through a Thai Company

If the condo is registered in the name of a Thai legal entity, the 7% VAT still applies at the point of purchase. However, a company that is itself VAT-registered can offset input VAT against output VAT - provided the property is used for a taxable business activity, for example renting through a professional management company that generates annual revenue above 1,800,000 THB.

This is one of the few legally compliant VAT optimisation strategies available in Thailand. That said, running a property through a corporate structure carries its own costs: annual accounting, audit fees, corporate income tax filings, and additional compliance obligations.

Main Risks and Mistakes

1. Believing '0% tax' marketing. Thai authorities have explicitly and publicly warned in 2026 that claims of zero taxation for foreign property buyers are misleading and potentially illegal (The Phuket News, 2026). Every condo in Thailand attracts taxes - VAT at purchase, Land and Building Tax annually, and income tax on rental proceeds. There are no nationality-based exemptions.

2. Misreading the VAT inclusion clause. If your contract reads '5,000,000 THB plus VAT', you owe 5,350,000 THB. If it reads '5,000,000 THB inclusive of VAT', the tax is already embedded. Overlooking this single clause costs buyers hundreds of thousands of baht on mid-range transactions.

3. Underestimating Land and Building Tax in 2026. This is the first year the Land and Building Tax is being collected at its full statutory rates, following the Covid-era discounts that ran from 2020 through 2024. For condos valued above 10,000,000 THB, the annual ownership cost has increased meaningfully. Budget for it.

4. Forgetting the Thai Tax ID for rental income. Any foreigner earning rental income in Thailand must obtain a Thai Tax Identification Number and file a personal income tax return by 31 March of the following year. Tax rates are progressive, from 0% to 35%. A standard expense deduction of 30% of gross rental income is available on residential property.

5. Confusing VAT with Transfer Fee. These are two entirely separate charges. VAT (7%) is paid to the developer on a new purchase. Transfer Fee (2%) is paid to the Land Department at the time of title registration. On primary market purchases, both costs stack on top of each other.

FAQ

Does a foreign buyer pay the same 7% VAT as a Thai national? Yes. Nationality has no bearing on the VAT rate. The 7% applies equally to Thai and foreign buyers purchasing new condos from a registered developer.

Will VAT increase to 10% in 2026? No. The Thai government has confirmed there are no plans to raise the rate (Phuket Times, 2026). The 7% level has been in place since 1997 and is renewed periodically by royal decree.

Can I reclaim VAT on a condo purchase? A private individual cannot. A VAT-registered legal entity may offset input VAT against output VAT under specific conditions related to taxable business use.

What taxes apply annually after purchase? The Land and Building Tax (LBT) is the primary recurring obligation. In 2026, notices are issued in May with payment due by the end of July. For a non-primary-residence condo, the effective LBT rate typically falls in the 0.02-0.10% range of the appraised value.

Is VAT charged on each instalment payment? Yes. On a 30/30/40 payment schedule, each tranche carries 7% VAT. The developer is required to issue a Tax Invoice for every payment.

Who pays Transfer Fee when buying from a developer? Practice varies by developer and project, but the most common arrangement is a 50/50 split. Always confirm the allocation in the contract before signing.

Does rental income attract VAT? Only if your total annual income from all sources exceeds 1,800,000 THB. Most individual unit owners fall below this threshold. Operators managing multiple units frequently exceed it and are required to register as VAT payers.

Is buying new or resale more tax-efficient? Secondary market purchases typically carry a lower combined transaction tax burden - roughly 3-8% of value versus approximately 9% on a new purchase. However, new developments in Phuket offer competitive per-square-metre pricing, flexible off-plan payment schedules, and in 2026 have appreciated 10-14% year-on-year, so total return calculations need to account for both acquisition cost and capital growth.

How do I verify whether VAT is included in the advertised price? Request the draft Sale and Purchase Agreement before paying a reservation deposit. Locate the price clause and confirm whether it reads 'inclusive' or 'exclusive of VAT'. This one sentence determines your actual acquisition cost.

Source: Alestria Property / Thailand Property Tax for Foreign Buyers (2026 Guide) - https://alestriaproperty.com/blog/is-thailand-tax-efficient-for-foreign-property-buyers

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