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INTERNATIONAL BUYER'S GUIDE

 

Buying Property in Thailand has never been as easy as it is today. There are many preconceptions about what type of properties foreigners can and cannot buy in Thailand, and how best to go about purchasing property in the Kingdom. However, various revisions to the Thai law over the years have gradually made the entire process easier. As a foreigner, it is important that you understand the relevant laws and various steps involved. This guide is intended to help you make informed decisions when purchasing property in Thailand and aid you in steering clear of easily avoidable complications during the the buying process.

 

INVEST IN PROPERTY IN THAILAND?

 

When investing in property in Thailand, the first step is to consider the intended purpose of your purchase. Common reasons for investing in property here are as follows:

- Primary Residence

- Rental Income

- Holiday Home

- Office or Workspace

- Retirement Home

- Capital Appreciation Investment

 

By keeping in mind reasons to purchase, you will be able to better decide which prospective properties suit your needs and requirements. Thailand is an incredibly diverse country, which provides a range of options for property investors, from city condominiums to resort homes. Factors such as location, easy access to transport, accessibility, proximity to amenities, unit size, decor and other considerations will vary in importance depending on your reasons for buying. However, the most important factor to consider before all others is the type of property you wish to invest in.

 

TYPES OF OWNERSHIP STRUCTURES ARE AVAILABLE TO FOREIGNERS?

 

Freehold Condominiums

 

The best purchasing option in Thailand for foreign buyers is freehold condominiums. Condominiums in Thailand have a special status as outlined by the Condominium Act B.E. 2522 (1979), allowing foreigners direct freehold ownership of the condominium unit, as well as common property co-ownership. Freehold ownership offers absolute ownership of the property and is the best form of tenure that foreigners can be granted in Thailand. Foreigners can buy up to 49% of the total floor area of a condominium on a freehold basis. Therefore it is important to be aware of the condominium foreign ownership quota before purchasing.

 

Leasehold

 

Alternatively, foreigners may register the leasehold rights with the district Land Office. This may be the lease of a condominium or freehold land. Through this process, foreigners can effectively use land through a leasehold tenure and are permitted to own buildings or structures erected on that land. Thai law limits the duration of a lease to a maximum of 30 years, after which the lease term can be renewed as permitted under such law. 

 

Taxation

 

Taxation is another factor to take into consideration. Many individuals who have invested or are considering investing in property in Thailand are often unaware of the taxes that may arise in buying and selling property.

 

Details of the relevant taxes and fees are as follows:

 

- Transfer Fee

 

The transfer fee applies to purchases of freehold properties. The transfer fee is equivalent to 2% of the official appraised value of the property. Whether the buyer or the seller pays the transfer fee depends upon the terms agreed by both parties in the Sale and Purchase Agreement. At the date of the ownership transfer, the transfer fee is paid to the district land office where the property is located.

 

- Lease Registration Fee

 

If the lease term is less than 3 years, a lease registration is not required for the lease to be legally enforceable. Lease exceeding 3 years up to 30 years should be registered with the Land Office in order to ensure enforceability in court. Currently, the lease registration fee is 1% of the total rental fee over the entire lease term. This cost is often borne equally by the lessor and lessee upon mutual agreement by both parties.

 

- Specific Business Tax ( SBT )

 

SBT is payable by companies and individuals who wish to sell a property which they have held for less than a period of 5 years. The tax rate is 3.3% (including Municipal Tax) of the selling price or the official appraised value of the property, whichever is higher.

 

- Stamp Duty

 

Stamp duty is imposed at varying rates on certain legal instruments. Stamp Duty is only applicable in cases where SBT is not applied.

 

-Withholding Tax ( WHT )

 

Where the seller is a company, the WHT is calculated at 1% of the Land Department's official appraised value or the contracted sale price, whichever is greater. An individual who earns income from selling a property, which includes condominium units, is subject to withholding tax under the Revenue Code of Thailand. The withholding tax is calculated at a progressive rate based on the official appraised value of the property.

 

TO ACQUIRE PROPERTY IN THAILAND:

 

Reservation

 

A reservation agreement is made between the buyer and seller to secure the booking of a unit and a down payment deposit by the buyer. Reservation requires a copy of the buyer's National Passport. For foreign buyers who have previously purchased a property in Thailand, it is necessary to ensure that the spelling of the buyer's name in Thai is exactly the same as the name used for previous purchases. The down payment amount will vary depending on the project and the terms of the contract. For further information on the reservation process, buyers may contact the project's sales representative.

 

Payment Methods

 

In order to buy a condominium in Thailand, there are several methods by which buyers can make a payment for the purchase of a condominium as follows:

- Cash

- Bank Draft

- Swift Funds Transfer

 

Payment Procedure

 

The necessary information that the buyer needs to know for transferring a payment to a seller's bank account or other bank accounts designated by seller are as follows:

- Bank Account Name

- Bank Name

- Bank Account Number

- Bank Address

- SWIFT CODE

- Purpose of funds transfer (Purchase of a condominium in Thailand)

 

Source of Funds Declaration

 

It is necessary that foreigners who buy a condominium in Thailand present a source of declaration and documentation to the Land Office when registering ownership.

 

- Confirmation Letter

 

When transferring or bringing a foreign currency into Thailand valued at less than $50,000 USD (or equivalent in other currencies), the Bank will issue a credit note with a confirmation letter.

 

- Foreign Exchange Transaction Form (FET)

 

When transferring or bringing a foreign currency into Thailand valued at $50,000.00 USD or more (or equivalent in other currencies) the Bank will issue a Foreign Exchange Transaction Form (FET)

 

- Customs Declaration Form

 

In cases where buyer brings cash into Thailand for purchase condominium, you need to declare it to the customs officer and present a receipt from the customs to the Bank in order to issue a confirmation letter.

 

Remarks

 

- In cases of transferring funds from a foreign currency into Thailand, please take a note and keep in mind that the name of the beneficiary in the Foreign Transaction Form (FET) must be the same as name of buyer, as specified in the Sale and Purchase Agreement. 

- The total amount of transferred funds must be not less than the net price (Thai Baht) of the condominium unit as specified in the Sale and Purchase Agreement.

- In the transfer instructions, please clearly specify the purpose of the transaction as "For the purchase of a condominium in Thailand."

 

Final Points of Consideration

 

Although Thai property law is much easier to understand these days, it is recommended that foreign buyers consult an agent or a lawyer to assist with their property purchase in Thailand, particularly in cases where land is involved. As condominium purchases are relatively straightforward and standardizes throughout the local real estate industry, selecting a property developer with a known track record and history is also important to avoid investment risk.

 

The details above outline some of the key preliminary steps for purchasing property in Thailand. 

 

 

 

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