Buying Property

For many expats and foreigners, Thailand still represents an attractive location in which to buy or invest a house or condo. As mentioned, the property market and development  in Thailand continues to grow, as does the booming tourism industry.

The benefits of using a Real-Estate Agent like Asia Trading Service:
• Extensive inventory of properties – not trying to sell only 1 property
• Market expertise & knowledge of area and buildings
• Assist in navigating legal, tax & financing questions
• Negotiate better terms & conditions and price
• A good agent will make sure you consider all costs
• Commissions normally paid by seller (unless buyer enters into a Buyer’s Agent Agreement)
• Assistance with “after-sales” services

Foreigners:
Since you will be looking for property in a foreign country you need expert local assistance. The agent knows how to communicate in Thai and they’re familiar with the geographical area. The agent will save you valuable time in selecting and showing you the property in your price range that meets your needs.
Purchasing directly from the developer isn’t going to save you money as compared to buying it from an agent. A quality property for sale in Thailand is generally offered at a fixed price by the Seller. The best benefit of using a property agent like ATS is that they will act as a liaison between you and the Seller. They will obtain a fair price for you and act on your behalf to represent your best interests throughout the entire process.

Condominium Benefits:
• Ownership in Foreign name possible
• Better security
• More & better amenities
• Building maintenance
• Stronger resale market
• Many condos located at or near beach
Drawbacks
• Restricted privacy
• Rules & regulations (e.g. no pets)
• Generally higher price than house

Price Indicators for Different “Markets”
• Starter/entry 35,000 THB per sq.m.
• Budget 35,000 to 60,000 THB per sq.m
• Moderate 60,000 to 85,000 THB per sq.m
• High 85,000 to 125,000 THB per sq.m
• Exclusive 125,000 THB per sq.m and above

NOTE: these Indicators are for condos. House prices are generally at least 30% lower

Title Deed Search
Before purchasing property in Thailand it is very important to perform a Title Deed Search. This search will serve to identify if the property has any outstanding debts, if the seller has ownership, and the type of documentation which has been issued. Additionally, when purchasing a condominium, a title deed search can reveal the status of the 49/51% foreign ownership ratio.

Asia Trading Service will assist in gathering and reviewing the ownership documents and land/title deeds. We can visit the appropriate land department and verify the details directly.

What are the restrictions on foreigners owning property in Thailand?
Previously, apart a few very minor exceptions, foreigners were unable to legally buy a house, condo or any other kind of property or land in Thailand. However, from 1997 onwards, Thailand has relaxed its laws on foreigners owning property in the country.

Today, some restrictions still remain in place but it is now much easier for foreigners to purchase property, as Thailand’s ever expanding foreign property market shows.

In nearly all situations, foreigners are unable to own land in Thailand directly, although foreigners can take out a legally registered lease in their own name that offers them security throughout the duration of the lease. With regards to property ownership, the good news is that foreigners can own property in Thailand completely in their own name, without any restrictions whatsoever.

With regards to condominiums, foreigners can buy a condo freehold without restrictions, and indeed this is a popular option for many expats, but only in a building where more than 51% of the total number of units are Thai owned, otherwise a foreigner can only buy through lease or Company.

Foreign ownership with a Thai Limited Liability Company.
A popular method involved setting up or taking over a Company, in the form of a Thai Limited Liability Company. Under Thai law, the Thai national would need to be the majority shareholder. An agreement would then be put in place that would result in the Thai entity handing over complete power of attorney to the foreign shareholder, which would then provide him with a significant degree of security in the Company, and in turn in the ownership of the property.

Long term leasehold agreements
Another way for foreigners to own property in Thailand is to go down the route of opting for a long term lease (30 years), which is extendable. Whilst this practice doesn’t obviously secure title ownership, long term leaseholds are common with foreigners buying property in Thailand and are also very secure.

The following taxes apply for purchases of property in Thailand:
1. Transfer Fee of 2 % of the official appraised value.
2. A specific business tax of 3.3% of the sales price or the official appraised value, whichever is higher, must be paid in cases that a seller has a property in his possession for less than 5 years.
3. Stamp Duty of 0.5 % of the official appraised value must be paid only when a specific business tax is not applicable.
4. The land office will charge a withholding tax (from 0 to 37%) which is based on the income of the seller. The basis of the tax is the government appraised value less a deduction of between 50% and 92%, depending on how long you own the property. The longer you own the property, the lower the deduction from the appraised value, and therefore your withholding tax liability is higher.

CONDOMINIUM TRANSFER TAX AND FEES
Transfer tax, income withholding tax, fees, stamp duty, business tax are paid at the land office

Condo conveyancing fees and taxes

CONDOMINIUM TRANSFER tax in Thailand is a tax imposed by the Thai government and paid at the local land office when transferring ownership of a condominium in Thailand. There are a variety of taxes and fees involved when transferring a condominium unit in Thailand; transfer fee, stamp duty, withholding tax (personal or corporate) and specific business tax (if applicable).

Transfer tax in case of a re-sale of an existing condo

Total transfer fees and taxes could range from a small amount to a relatively larger amount depending on the amount of income tax involved for the seller. Another variation of the transfer taxes and fees in case of a re-sale condominium relate to the agreement between the seller and buyer and how the buyer and seller of the condominium unit have agreed to share these costs.

Transfer tax and fees in a off-the-plan condominium project

Developing and selling new condominiums is a contract controlled business in Thailand and must comply with government regulations. One condition is that the buyer of a new unit or in an off-the-plan purchase of a condominium cannot be charged more than half of the 2% ownership transfer fee only. All other duties and taxes related to the registration and transfer of ownership must be paid by the developer. It is common that developers of condos in Thailand try to pass on transfer costs to the buyer for which they are by law responsible.

How to divide the conveyancing costs of an existing re-sale condo

How ownership transfer fees and taxes are split in a private sale, and at what percentage, depends on the agreement between the seller and buyer. As there is in a private sale no fixed rule or legal requirement how to split these costs it can vary from seller pays all to buyer pays all (which could include paying the seller’s personal withholding tax). It is advisable for a purchaser of a re-sale condominium to clearly confirm with the seller in the condominium sale and purchase agreement who will be responsible for transfer fees and all taxes and/or at what percentage.

The local custom in Thailand in a private sale of a condominium is to divide the taxes and fees involved with the transfer of a condominium as follows:

Transfer fees rate= 2.0 % the buyer’s duty or shared
Specific Business Tax (SBT) rate= 3.3 % the seller’s duty
Stamp duty rate= 0,5 % the seller’s duty
Withholding tax (income) rate= 1,0 % the seller’ duty (as this relate to the seller’s
or progressive rate** personal or corporate income tax)

Note: stamp duty does not have to be paid if specific business tax is applicable. When a privately owned condo is sold within 5 years of acquisition the sale is considered ‘sale of an immovable property in a commercial or profitable manner’ (section 91 bis Revenue Code) and subject to 3,3 % specific business tax (assessment tax) calculated over the government appraised value (meaning the once every 4 years assessed market value of the condo in the opinion of the land and treasury department) or actual sale price of the unit, whichever is higher. The transfer is exempt from specific business tax if the condo is transferrred without consideration, for example by inheritance to a legal heir or the owner transfers the condo to a legitimate child or when a privately owned condo is sold after 5 years from the date of acquisition. The transfer fee has a rate of 2 % and is always calculated over the government appraised value of the condo. Personal income withholding tax (retention tax) is calculated at a progressive rate based on the years of ownership using the government appraised value of the unit for calculation. Under Thai tax laws the land office must take the income withholding tax at the time of transfer, even if the the seller of the condo is a foreigner who is a resident in another country. When the condo is owned and sold by a Thai company the 3,3% specific business tax must generally be paid irrespective the years of ownership, and corporate income withholding tax is fixed at a rate of 1% of the registered sale value or appraised value, whichever amount is higher.

Sample clause Condominium SPA

Taxes and Expenses Relating to the Transfer of Ownership
The following taxes will be paid in full prior to the transfer of ownership of the Unit and will be paid by:

Transfer Fee : the Buyer and Seller equally
Stamp Duty : the Seller
Special Business Tax (if any) : the Seller

The Seller shall be solely responsible for individual income withholding tax and other necessary expenses, if any, incurred in relation to the registration of transfer ownership of the Unit.

Condo transfer taxes and fees relate to the transfer of ownership of a condominium unit. In case of obtaining a registered long term leasehold interest in a condominium there are lease registration fees of 1,1% over the total rental involved and rental income from renting out the condo is subject to personal income tax.

The Thailand transfer sample tax and fees indication below is based on the transfer of a condominium apartment unit in Thailand with an appraised and registered sale value of 5 million Thai Baht and 3 years of ownership by the current owner. Approx transfer tax and fees of a condo in Thailand (value of 5 million):

Transfer fee 2% over 5,000,000 THB = 100,000 THB
Specific Business Tax Local Tax 3.3% = 165,000 THB
Individual Withholding Tax approx 100,000 THB
Application fee and others approx. 300 THB

Buyers:
Whether you’re looking for your first house, condo, your dream home or an investment property, I’m committed to providing you with the highest quality and buyer service. When making the type of investment that buying a home requires, you deserve to have all the latest market information and the very best advice, at ATS we will guide and assist you with all the procedures regarding to buy the property.