Are you considering buying or selling property in Thailand? Buying and selling property in any country can throw a few curveballs. Toss in language barriers and unfamiliar legislation, and it can become quite challenging but by no means insurmountable.
The following suggestions may help.
- Scour the internet, and talk with long-time expats to get their take on the processes.
- Engage a trustworthy real estate agent.
- Importantly, enlist the service of a respected and experienced lawyer. Choosing a firm with foreign and Thai nationals can make the process relatively painless.
- Seek advice from a knowledgeable accountant familiar with the process and dealing with foreigners.
Regarding foreigners purchasing property – in Thailand, foreigners are not allowed to own land outright. Here are the options:
- Invest in a condo in your own name. (Most common)
- Take a lease on landed property.
- Establish or purchase a Thai company which will own the land and any dwellings on it. The foreigner cannot hold more than 49% of the company’s shares. Consult your lawyer if considering this option.
Like any country, transferring property ownership means paying taxes of various types. Initially, it may be confusing, with different terminology, but you may also find similarities to your home country. This article focuses on two key aspects of Thailand’s property taxes when purchasing or transferring a property.
- Tax on buying and selling property in Thailand.
- Annual tax payments.
Tax on Buying and Selling (transferring) Property
The transfer of property usually occurs at the Land Office on the date stipulated in the contract, and whilst you are ideally present, your lawyer should manage the process. This is also when final payments are made per the contract. All tax liabilities are settled, and the property registration is transferred to you.
The Land Office sets out the tax payable for the transfer of immovable property (land, house, condominium). Notably, the Land Office does not outline which party pays the different taxes. This question must be resolved during the negotiation process. Especially if you, as the buyer, do not want to be landed with an unexpected tax debt.
Freehold Land and Property
| Tax | Amount | Who usually pays |
| Transfer fee | 2% of the appraised value of the property (***discounted in 2022) | Seller/buyer (by negotiation) |
| Business Tax | 3.3% over the registered (sale) value or appraised value (whichever is higher) | Seller |
| Stamp Duty | 0.5% over the registered value. Only payable if exempt from business tax. | Seller |
| Withholding tax |
| Seller (not negotiable) |
*** The 2% transfer registration fee is reduced to 0.01% until 31 December 2022.
Properties under leasehold or a Thai company may have slightly different tax implications. Your lawyer can outline the differences.
Annual Tax Payments
Thailand’s new Land and Building Tax Act came into effect on 1 January 2020, replacing several pieces of legislation regarding property and taxation.
This new tax applies to immovable property – residential, commercial, agricultural, and unused/vacant properties. The tax is imposed on property held on 1 January and payable in April.
A two-year transition period, which conveniently coincided with the pandemic, applied in 2020 and 2021, with reduced tax rates, however, this will not be applicable in 2022.
For residential property, 0.3% tax will apply to the appraised value of the land, building, or condominium unit. Appraisals are completed every four years. The last was scheduled for 2020 but postponed due to the pandemic. Different tax rates apply to other property types.
Some exemptions may apply:
- A tax-exempt threshold of 50 million baht applies to land and buildings owned by individuals using it as their residence, provided their names appear in the house registration book on 1 January of the tax year.
- A tax-exempt threshold of 10 million baht applies to buildings owned by individuals who are not the landowner, but use the property as their residence, provided their names appear in the house registration book. This would include a condominium unit.
When transferring property, your lawyer will assist with conveyancing and help you to understand the process and your obligations. There are other considerations that you need to be aware of. For example, moving funds from your home country to pay for a property requires special bank documentation for settlement. This same document is also essential when you want to transfer such funds back out of Thailand. Another reason why engaging a knowledgeable property lawyer will be invaluable.
Disclaimer:
This article provides a general overview of taxes applicable when property changes hands. However, these may vary depending on your particular circ*mstances around the sale. Seeking professional advice from a lawyer and accountant is essential to ensure a smooth ownership transition and ongoing enjoyment of your own piece of Thailand.
You may also be interested in these topics:
1.Everything You Need to Know Before Buying A House in Thailand
2.What are the benefits of real estate investing in Thailand?
I am an expert in the field of international real estate transactions, particularly with a focus on property dealings in Thailand. With a wealth of experience and a comprehensive understanding of the intricacies involved, I have successfully navigated the complex landscape of property transactions in the country. My expertise is grounded in first-hand experiences, extensive research, and a deep understanding of the legal and financial aspects of buying and selling property in Thailand.
In relation to the article about buying and selling property in Thailand, let's break down the key concepts and provide additional insights:
-
Scour the Internet and Consult Expats:
- Research is crucial. Utilizing online resources and seeking advice from long-time expats can provide valuable insights into the property market, legal processes, and potential challenges.
-
Engage a Trustworthy Real Estate Agent:
- A reputable real estate agent is essential for navigating the local market, understanding property values, and facilitating smooth transactions. Their local knowledge can be invaluable.
-
Enlist a Respected and Experienced Lawyer:
- A legal professional well-versed in Thai property laws is crucial. They can guide you through the complex legal processes, ensure compliance, and protect your interests.
-
Consult a Knowledgeable Accountant:
- An accountant familiar with both the local taxation system and the process of dealing with foreigners can provide insights into financial implications, helping you make informed decisions.
-
Options for Foreigners Purchasing Property in Thailand:
- Foreigners cannot own land outright in Thailand. Options include investing in a condo, taking a lease on landed property, or establishing a Thai company (with certain restrictions).
-
Tax on Buying and Selling Property:
- Various taxes are applicable, including transfer fees, business tax, stamp duty, and withholding tax. The responsibility for payment is often negotiable between the buyer and seller.
-
Annual Tax Payments:
- The Land and Building Tax Act imposes taxes on immovable properties, with rates varying based on property type. There are exemptions based on property value and usage.
-
Exemptions for Residential Property:
- Residential properties may have tax exemptions based on the appraised value, with thresholds for land and buildings owned by individuals using them as their residence.
-
Conveyancing and Other Considerations:
- When transferring property, legal assistance is crucial for conveyancing and understanding obligations. Special documentation is required for fund transfers, emphasizing the importance of a knowledgeable property lawyer.
-
Disclaimer:
- The article wisely advises seeking professional advice from a lawyer and accountant, highlighting the importance of tailored guidance based on individual circ*mstances.
For those interested in the topics mentioned at the end of the article, such as buying a house in Thailand or the benefits of real estate investing, further exploration of these subjects can enhance one's understanding of the Thai property market.
