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Destination & Buyer Guides |
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Buyer Guide | FAQ | Taxes
 Buyer Guide
Titles
Overseas buyers can purchase Thai residential or commercial property without major restrictions.
If you plan to buy land, or a villa then you will be required to setup a Thai limited liability company which will cost around £1,000 and will also have on going fees of approximately £50 per month. Alternatively you will need to purchase through a leasehold agreement, totaling 90 years. Although a freehold title would be of distinct advantage, a leasehold title bears no specific disadvantage to the purchaser. Both forms of purchase are safe and effective means of property ownership by foreigners in Thailand.
Appointing a Lawyer
It is wise to appoint a lawyer who is fluent in your language so that you understand properly all the legalities and proceedings.
Lawyers will:
- Check the current owners have the correcttitleto the property
- Check for any charges and liabilities still owed on the property
- Check your contract and advise youon the obligations for both parties
- Help you through the payment/funds transfer
- Ensurethat the propertyis registered appropriately and in your name
The Initial Purchase Agreement
The initial purchase agreement will detail price, terms and conditions, settlement date etc. and in most cases a 10% deposit will be required to secure the property. This deposit is refundable should the sale not go through, as long as it is not your fault.
Reservation Fee
When buying a new condominium, an initial reservation deposit of about $1,250 is required and this amount is deducted at a later stage from the total price. Once an agreement is signed, usually 10 to 15 days after the reservation, the buyer is required to pay 10% of the total price. Depending on the terms of the contract, the balance then could be due in installments or as a lump sum at the time the title is transferred
Fees
As a general rule, for residential sales you can expect the total fees and taxes to work out to be approximately 2 to 3% of the property market value.
There is a stamp fee of 0.5%, a transfer fee of 2%, a business tax of 3.3 % (levied against an vendor who has been in registered possession of the property less than 5 years), and income tax (similar to capital gains tax) at a variable rate.
Property Taxes
There are 2 different types of tax levied on property in Thailand:
- Land Tax
This is an annual tax levied on land ownership. The amount is often so small that in practice the body charged to collect it rarely bothers to do so. When they do collect it, it is usually after several years when the amount has accumulated.
- Structures Usage Tax
This only applies to commercially used properties. The rate is 12.5% on the actual or assessed gross rental value of the property. However, this notional value is well below the commercial market rental value.
If the property is purchased through a company, you need to consider that corporate tax is higher than personal tax, and the cost of setting up the company must be considered as part of the initial investment.
Capital Gains Tax
There is no capital gains tax in Thailand and income tax (usually between 1.0 - 3.0%) on property is the comparable replacement.
Finance
Mortgages in Thailand are still difficult to arrange. However, recently a new branch of the Bangkok Bank has opened in Singapore, which has opened up borrowing possibilities for property investment in Thailand, financing as much as 70% over 10 years for property purchase. You should expect to get no more than 50% in finance, with the exception to some well-known developments where finance of nearer 70% is available.
HSBC has a presence in Thailand and can offer loans of between 1,500,000 and 35,000,000 Thai Baht. Typically they will lend up to 80% of the purchase price and interest rates can be fixed for up to three years.
To buy a condo or another property with a loan, many purchasers get a mortgage in their home country and then transfer the money to a Thai bank account, while using a lawyer to oversee the logistics of the process.
FAQ
 Can foreign nationals own property in Thailand?
Yes, you can own freehold property and there is a recognized process that is not too complicated. The property will be owned by a Thai limited company of which a foreign national can only own 39% with the other 61% being held by six Thai shareholders. On the day of company registration, the six Thai shareholders sign their share transfer forms, which are all blank and undated, and all proxy voting forms are signed and handed over.
This process is performed by reputable accountants and solicitors. The cost of setting up a company is approximately 25,000 Baht (£360). The only other company fee is 15,000 Baht (£215) a year.
However, the hassle-free way to own a property in your own name is to buy into a condominium development where Thai nationals own the majority of the units.
Why should I choose Thailand?
The conditions for investment in the property in Thailand have never been better and the relatively undiscovered nature of Thailand as a property investment destination has kept prices low. Today market growth stands at around 10-15% indicating a healthy investment climate.
Thailand has recently attracted significant foreign investment and has become one of the Asian economic leaders. It is a regional base from which many companies keep their employees working all around Asia.
Property is much cheaper in Thailand than elsewhere and an increase in overseas interest in property purchase has helped to create an economic recovery in Thailand.
An exotic destination with beautiful mountains, dense forests and stunning beaches, Thailand is an established and sophisticated tourist destination with great universal appeal. Thailand is one of the cheapest places to fly to in Asia. The completion of the Suvarnabhumi-Bangkok International Airport (SBIA) is expected to spur growth in commercial property markets in eastern Bangkok as well as make Thailand even more accessible by air.
Thailand has good schools, an efficient health care system and it is seen as a friendly country in which to live or visit.
What is the economic and political situation?
Thailand’s economy is continuously undergoing reforms, giving it a promising future in terms of economic growth (GDP 5.7 in 2005) and this directly translates to the property market.
Today, the Thai Prime Minister, Dr Thaksin Shinawatra, and his government see foreign investment as a great asset while the dropping of certain financial requirements now makes investment in Thailand an easier option than ever before.
After a series of coups after World War II, and mass protests forcing the military-backed government to resign, the country has enjoyed full political stability since 1992. Thailand is the only South East Asian country not to have been colonised by a foreign powers in the past.
Today, the Thai Prime Minister, Dr Thaksin Shinawatra, and his government see foreign investment as great asset while the dropping of certain financial requirements now make investment in Thailand an easier option than ever before.
How do we travel to Thailand?
Thailand has three international airports; Bangkok, Chiang Mai and Phuket.
A new international airport is opening in Pattaya, with flights at around £500 return from the UK.
Bangkok is building the new Suvarnabhumi Airport, expected to open by early 2007.
What is the direct flying time from UK to Thailand?
Flying time from Europe to Bangkok is approximately 12 hours.
 Is a visa required to enter Thailand?
You can stay in Thailand without a visa for up to 30 days, after which you should apply to the Thai Immigration Office before the visa expires.
If you will be in Thailand on business, you must apply for a "non-immigrant category B" visa.
Retirement visas are available for foreigners over 50 years of age and are issued according to financial means.
Taxes
Property Taxes and Costs
On all purchase/sale of property in Thailand Stamp Duty is payable at 0.5%. In addition, a Transfer Fee of 0.01% is charged and a Business Tax of 0.11%, which is levied against an owner who has been in registered possession of the property for less than 5 years.
Capital Gains Tax
There is no Capital Gains Tax in Thailand, unlike many other countries.
Income Tax
This is usually between 1.0 and 3.0% on property is the comparable replacement to capital gains tax. There are no established rules regarding who pays the income tax while this is simply another part of the bargaining process during purchase, as are all other costs relating to the transfer of ownership.
Property Tax
There are two types of tax levied for property in Thailand:
Land Tax
This is an annual tax levied on land ownership. The amount is often so small that in practice the body charged to collect it rarely bothers to do so. When they do collect it, it is usually after several years when the amount has accumulated.
Structures Usage Tax
This only applies to commercially used properties. The rate is 12.5% on the actual or assessed gross rental value of the property. However, this notional value is well below the commercial market rental value.
If the property is purchased through a company, you need to remember that corporate tax is higher than personal tax, and the cost of setting up the company must be considered as part of the initial investment.
Tax On Rental Income
This tax is charged at between 10 and 30% of the rental income, depending on the type of property leased.
Inheritance Tax
There is 0% inheritance tax for all family members in Thailand. |
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