In October 2026, three of Thailand's leading property industry associations jointly proposed doubling the mortgage interest deduction ceiling to 200,000 THB per year and standardising the Land and Building Tax rate for residential properties at approximately 0.03%. Our analysts are tracking both proposals for their practical effect on the total cost of acquiring and holding property for a foreign buyer active in Phuket or Koh Samui.
The proposals cover the window from 1 November 2026 to 31 December 2027 and are positioned as a response to tightening mortgage credit conditions. According to October 2026 reporting from Nation Thailand, the Housing Business Association, the Thai Real Estate Association and the Thai Condominium Association collectively cite declining buyer purchasing power and rising unsold inventory as the primary justifications. The central question for any international investor is not whether these measures pass, but which of them actually apply to a non-resident foreign buyer and how they interact with the real cost calculation.
Quick answer
- The mortgage interest deduction (up to 200,000 THB per year) is available only to individuals filing Thai personal income tax (PIT). A foreign buyer with no Thai-source taxable income cannot access this relief directly
- The Land and Building Tax at approximately 0.03% of assessed value applies to every residential property owner, including a foreigner holding a condominium unit on a freehold title
- On a condo valued at 10 million THB (roughly 1.15 million PLN at the indicative 2026 rate of 0.115 PLN/THB), annual property tax at 0.03% would be approximately 3,000 THB (around 345 PLN), a marginal figure relative to total holding costs
- A villa held through a Thai company (Thai Co., Ltd.) can in principle benefit from the interest deduction if the company or a Thai co-shareholder with PIT liability takes the mortgage. In practice, per our estimates, fewer than 5% of foreign villa buyers in this structure use a Thai mortgage
- Per Bangkok Post data from October 2026, the new residential price index in Bangkok rose by only 0.2% year-on-year to 131.5 points, confirming a stagnation phase that is driving the push for relief measures
- Developers are already absorbing transfer costs in 31.4% of active promotions, effectively providing an alternative route to savings that in many cases outweighs the proposed tax changes
Options and scenarios
Scenario 1: Foreign buyer holds a condominium unit on freehold title
This is the most common ownership model for international investors in Phuket (Bang Tao, Layan, Kamala, Surin) and Koh Samui (Bophut, Maenam). The buyer is the direct registered owner. Land and Building Tax is assessed on the value determined by the Revenue Department, not the transaction price. The residential rate currently sits at 0.02-0.03% depending on the classification applied locally. Standardisation at 0.03% removes the risk of an empty condo being reclassified as a commercial or unutilised asset, where the rate can reach 0.3%, ten times higher.
The mortgage interest deduction is effectively unavailable in this scenario. Thai commercial banks do not as a rule extend mortgage finance to non-resident foreigners. Even where a buyer secures financing through a Singapore or Hong Kong-based lender with Thai operations, the deduction still requires filing Thai PIT - a condition that a non-tax-resident foreign buyer does not meet.
Scenario 2: Villa held through a Thai company (Thai Co., Ltd.)
This structure is typically used when a foreign buyer wants to hold land with a villa - for example in Rawai or Nai Harn in Phuket, or in Lamai on Koh Samui. The company owns the property and is liable for Land and Building Tax. The 0.03% rate applies when the property is used as a residence. If the villa sits vacant or is operated as a short-term rental, the local revenue office may reclassify it as commercial or unutilised, pushing the effective rate to 0.3-0.6%.
The interest deduction is theoretically accessible if the company or a Thai co-shareholder with PIT liability carries the mortgage. In practice, companies with a majority foreign shareholding attract regulatory scrutiny, and bank financing for such structures is limited. Based on our estimates, fewer than 5% of foreign buyers using this structure hold a Thai mortgage.
Scenario 3: Leasehold (30-year lease)
Under a leasehold arrangement the investor is not the registered property owner. Land and Building Tax falls on the landowner (typically the developer or a Thai individual). The interest deduction does not apply to the lessee. This scenario is neutral relative to the proposed tax changes, but we include it as a cost baseline for comparison purposes.
Comparison table
| Parameter | Freehold condo (foreign buyer) | Villa via Thai company | 30-year leasehold |
|---|---|---|---|
| Land and Building Tax rate (residential) | 0.02-0.03% of assessed value | 0.02-0.03% (reclassification risk up to 0.3%) | Falls on the landowner |
| Annual tax on 10 million THB asset | Approx. 2,000-3,000 THB | Approx. 2,000-3,000 THB (or 30,000 THB at commercial rate) | No direct liability for lessee |
| Mortgage interest deduction (up to 200,000 THB) | Not available (no Thai PIT filing) | Theoretically possible (requires Thai PIT and qualifying mortgage) | Not applicable |
| Maximum annual tax benefit from deduction | 0 THB | Up to 70,000 THB (at 35% PIT marginal rate) | 0 THB |
| Reclassification risk | Low | High (vacant villa, short-term rental use) | None |
| Mortgage availability | Very limited for non-resident foreigners | Limited for foreign-majority companies | Not applicable |
Risks and mistakes
Risk 1: Industry proposals are not enacted law. As of October 2026, the association submissions remain at the lobbying stage and have not been formally adopted by the Thai government. The proposed effective date of 1 November 2026 may slip if the legislative process extends. We do not recommend structuring an investment decision around relief measures that have not yet been signed into law.
Risk 2: Property reclassification by the revenue office. A villa or condo that is not in active residential use can be reclassified as unutilised or commercial. The rate difference is tenfold: from 0.03% to 0.3% of assessed value. In Phuket districts such as Cherngtalay and Kamala, our on-the-ground monitoring has documented cases where vacant villas were reclassified after two consecutive years without a registered occupant.
Risk 3: Assuming a foreign mortgage qualifies for the Thai deduction. Some buyers assume that holding any mortgage - including one taken against a property in their home country - entitles them to the Thai interest deduction. This is incorrect. The deduction applies only to interest on a loan secured against a Thai property and reported within a Thai PIT filing.
Risk 4: Currency exposure dwarfs the tax saving. At the indicative 2026 rate of 0.115 PLN/THB, a 5% move during the payment schedule on a 10 million THB purchase represents a difference of approximately 57,500 PLN. The annual tax saving from the proposed rate change is around 345 PLN. The currency risk is more than 100 times larger than the potential property tax benefit.
Risk 5: Hidden costs of the Thai company structure. Maintaining a Thai Co., Ltd. (accounting, statutory audit, annual registration fees) costs 30,000-80,000 THB per year based on our estimates. Even the maximum interest deduction benefit (up to 70,000 THB at a 35% PIT rate) may not fully offset these running costs, making the structure tax-neutral or marginally negative in many cases.
FAQ
Will a foreign freehold condo owner in Phuket pay less property tax if these proposals are adopted?
Yes, if the standardised 0.03% residential rate is enacted, a freehold condo owner will be assessed at that rate. On an assessed value of 5 million THB, that works out to approximately 1,500 THB per year. The change removes the risk of an inflated rate, but the absolute tax amount is small and does not materially alter the investment return calculation.
Can a foreign buyer deduct mortgage interest in Thailand?
Only if the buyer files Thai personal income tax and holds a mortgage secured against a Thai property. In practice, a non-tax-resident foreigner without Thai-source income cannot access this deduction. A mortgage taken against an overseas property does not qualify for the Thai relief.
What is the annual property tax on a villa in Koh Samui valued at 15 million THB?
At the residential rate of 0.03%, approximately 4,500 THB per year (around 520 PLN at the indicative 2026 exchange rate). If reclassified at the commercial rate of 0.3%, approximately 45,000 THB (around 5,175 PLN). The applicable rate depends on how the property is used and whether residential occupancy is registered.
When might the new tax measures come into force?
The industry associations have proposed the period from 1 November 2026 to 31 December 2027. As of October 2026, the proposals remain at the lobbying stage and have not been formally approved by the Thai government.
Are Phuket developers offering their own incentives in place of government relief?
Yes. Per October 2026 data, 31.4% of active developer promotions include coverage of ownership transfer costs, and 30.5% involve direct cash discounts. In districts such as Bang Tao and Surin, our monitoring shows promotions bundling full furnishings and air-conditioning in the purchase price (present in 38.1% of observed promotions). These developer incentives can deliver more immediate value than the proposed government tax changes.
How does PLN/THB currency movement compare to the tax saving?
On a 10 million THB purchase, a 5% currency shift translates to a difference of roughly 57,500 PLN. The annual property tax saving from the proposed rate change is approximately 345 PLN. Currency exposure is therefore more than 100 times the scale of the potential tax benefit, and in our view deserves proportionally more attention in any cost model.
Is leasehold more tax-efficient than freehold for a foreign buyer?
In the narrow context of Land and Building Tax, yes - the liability falls on the landowner rather than the lessee. However, leasehold carries separate structural risks (finite tenure, dependency on the land title holder) and does not build equity in the same way as freehold ownership. The tax differential alone does not make leasehold the preferable structure.
Does a Thai company with a foreign shareholder realistically benefit from the interest deduction?
In theory, if the company or a Thai co-shareholder with PIT liability carries the mortgage. In practice, based on our estimates, fewer than 5% of foreign buyers using this structure hold a Thai mortgage. Annual company maintenance costs of 30,000-80,000 THB frequently offset or exceed any potential deduction benefit.
Based on available data, our analysts assess the proposed tax changes as having a limited effect on the total cost of property ownership for a foreign investor. Land and Building Tax at 0.03% amounts to approximately 1,500-4,500 THB per year for the typical property price range we monitor across Phuket and Koh Samui. The mortgage interest deduction is inaccessible to the majority of foreign buyers under standard ownership structures. We recommend concentrating analytical attention on PLN/THB currency risk, transaction costs (transfer fees, specific business tax), and developer promotional packages, which in the current market phase can deliver a measurable benefit in the range of 2-5% of the purchase price.
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