Paying taxes is an important duty for every citizen, especially for those whose income meets the specified threshold, as they must pay "income tax" every year. However, the government has established "tax deduction measures" to help alleviate the burden and promote spending in various designated areas. Certain expenses can be deducted from taxable income. Many people may be familiar with tax deductions from life insurance premiums or investments in certain mutual funds, but there is another significant benefit that should not be overlooked for those currently paying off a home loan: "Home loan interest" included in the monthly mortgage payments can also be deducted from taxes.

How much home loan interest can be deducted?

For those currently paying off a home loan with financial institutions operating in Thailand, whether it’s a single-family home, duplex, townhouse, commercial building, or condominium, you can deduct "home loan interest" without needing to have lived in the property for a full year. This can be used to reduce personal income tax based on actual payments, with a maximum deduction of 100,000 Baht per year. If you have taken out loans for more than one property, you can apply for deductions for each property. For example, if you have two properties, with the first property incurring interest payments of 50,000 Baht and the second 60,000 Baht, you can deduct a total of 100,000 Baht, even if the actual interest paid is 110,000 Baht. The deductible interest must come from a loan agreement for purchasing or constructing a residence, whether it’s a house, condominium, or building on your own land, and the property must be mortgaged as collateral for the loan.

If there are co-borrowers for the property, the deduction rights will be divided among the number of co-borrowers, regardless of whether the co-borrowers have income or choose to use this home loan interest deduction. The calculation formula is: total home loan interest, up to 100,000 Baht, divided by the number of co-borrowers. For instance, if the total interest paid is 100,000 Baht and there are two co-borrowers, each co-borrower is entitled to a deduction of 100,000 ÷ 2 = 50,000 Baht (even if one person pays more of the mortgage or interest).

Steps to Declare Home Loan Interest Tax Deduction

Currently, the process for submitting and requesting information to deduct home loan interest from taxes is no longer complicated. You simply need to give consent to the bank to request the exemption for income tax so that they can send your home loan interest payment information directly to the Revenue Department. The bank will then forward the interest payment data to the Revenue Department’s database, allowing customers to use the home loan interest tax deduction immediately without needing to fill out the information themselves, thus simplifying the process and reducing the hassle of preparing and submitting documents (the bank will still provide a loan interest certificate (Form L.Y. 02) to customers as usual).

For TTB home loan customers, if you wish to declare your tax deduction rights, you can do so yourself through the TTB Touch app or via the bank's website by clicking https://www.ttbbank.com/th/rd-tax.

The tax deduction received from home loan interest may reduce the taxable income or result in a tax refund if the income has already had withholding tax deducted. You can use that amount to benefit further by applying it to reduce the principal of your home loan, which will help lower interest costs since home loans are calculated on a reducing balance basis, and help you own that home sooner, ultimately improving your financial situation in every aspect.

If you are interested in reading more articles about home loan interest tax deductions, click https://www.ttbbank.com/link/rdtaxforhomeloan_pr.

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