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Property Tax
What is Por Bor Tor 5 (Local Tax Land) in Thailand?
Fact-checked by a REMAX Thailand Real Estate Expert
The Definition
"Local Tax Land" refers to the Land and Building Tax (LBT) under Thailand's Land and Building Tax Act B.E. 2562 (2019). It is a nationwide annual tax levied on nearly all land parcels and buildings based on government-appraised value, replacing outdated rental-based taxes.
The Thai Legal Context
Governed by the Land and Building Tax Act B.E. 2562 (2019), LBT uses conservative Treasury Department appraisals and applies progressive rates by use. Unlike Western systems, foreign buyers rarely qualify for full residential exemptions since they require Thai house registration (tabien baan) on January 1. Foreigners often hold land via 30-year leases where tax liability can shift contractually. Decentralized collection by local offices can lead to variable enforcement and disputes, and escalating rates penalize underused land.
Benefits & Risks
Advantages
- Low rates (0.02-0.30% residential) on appraised values make it cheaper than many Western property taxes.
- Encourages productive use via escalating vacant land rates, while exemptions shield primary homes for local owner-occupiers.
Risks & Disadvantages
- No exemptions for companies or foreigners without a tabien baan, raising holding costs.
- Decentralized collection leads to inconsistent notices and disputes over property use classification.
Showcase: How It Works
Let’s look at a real-world scenario to understand how Por Bor Tor 5 (Local Tax Land) is applied during a property transaction.
The Scenario
- A foreign expat leases a 1-rai plot for 30 years and builds a villa.
- They register as a resident with a tabien baan by January 1.
- The lessor pays the 0.30% land tax, while the lessee pays building tax on value exceeding the THB 10 million exemption.
The Result
By splitting the tax liability through the lease and utilizing the tabien baan exemption, the expat minimizes their tax burden on the building, leaving the land tax to the lessor.
Outcome:Total LBT: THB 17,000/year (Land: THB 15k, Building: THB 2k)
Frequently Asked Questions
Who pays LBT on leased land with my villa?
The lessor pays land tax (by use, e.g., residential 0.3%), while you pay the building tax (exempt up to THB 10M if tabien baan-registered).
Can foreigners get the THB 50M exemption?
No, this requires being a natural person in the tabien baan as an owner-occupier on Jan 1. Foreigners on leases get partial building relief only.
What if the land is considered 'vacant'?
Tax starts at 0.3% and rises 0.3% every 3 years to a maximum of 1.2%, penalizing speculators and pushing for development.
Related Terms
Why It Matters
Ignoring Local Tax Land (LBT) erodes returns on Thai properties via escalating vacant rates and lease pitfalls, potentially costing 1%+ of value yearly. Verifying liabilities pre-purchase prevents blocked transfers.
đź’ˇ REMAX Pro Tip
Always demand a 3-year tax clearance from the local office during due diligence and include LBT indemnity clauses in leases—this saves clients from unexpected surprise bills.
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