Laws Regarding Purchase of Property
The laws regarding the purchase of property in Thailand are fair and clear. Strict rules apply to the purchase of condominiums and land. Follow the rules and you will have no problems at all.
For foreigners who wish to buy condominiums otherwise known as apartments or flats in Thailand, the process is straightforward and easy. Condominiums can be bought freehold by foreigners in Thailand. You can buy them 100% in your own name and own them forever.
You must though, check that no more than 49% of the total floor space of the complete condominium complex has already been purchased by foreigners. This can be easily and safely checked via your reputable independent lawyer and with the Juristic office that will hold current records of the owners of the condos. In Hua Hin, the large majority of condos are usually purchased by Thais anyway, therefore, this is not really too much of an issue although it should always be checked.
A foreigner wishing to purchase a condominium in Thailand must also observe the law that the money they use to purchase the condo must be sent from overseas. Again, this is a straightforward step and as long as you retain all the records of your money being sent from overseas to Thailand, you can then purchase a condo freehold.
Also, should you ever wish to sell your condo at some stage in the future and send your money back to your home country, you can do so legally and easily with no taxes to pay unless of course you have a made a profit and you will be taxed on that profit.
It is generally not possible for foreigners to own land in Thailand in their own name. If you wish to purchase a house or pool villa you will then need to register a lease for the land. The maximum time period for a lease is currently 30 years and this must be registered at the official government Land Department.
A lease of less than 3 years does not need to be officially registered at the Land Department. The good news is that leases are 100% renewable and leases are 100% assignable.
More good news: although you cannot own land in Thailand, you may own the building that is built on the land. You will have two contracts when purchasing house and land. One will be a lease contract while the other contract will be a house purchase contract.
You must however apply for planning permission from the local municipality office and your building plans will have to be certified by a qualified engineer or qualified architect. It is also possible for a foreigner to buy property while overseas and not be physically present in Thailand.
By using power of attorney you can instruct a lawyer to act on your behalf to complete the whole process. However, and as previously outlined, in most cases, unless you know someone very well who can vouch for the property, area, build quality, developer, views etc, it is recommended that you visit the property and location in person in order to minimize any potential risk. Hua Hin Property For Sale do this for all our clients.
All sounds simple enough. So, I presume there is only one type of title deed in Thailand so I do not need to worry, right? Wrong. In Thailand there are different title deeds. You have the highest ranked, which is freehold title or chanote nor sor 4, which gives you complete rights over the land.
Then, you have Nor Sor 3 Gor, which is also safe and is just awaiting full title status and banks will give mortgages on this land. Then, comes Nor Sor 3, where the land has never even been measured so this could be highly risky. Finally, comes the Possessory Right – not recommended and not substantiated by the government.
Smart House 2 Villas, Hua Hin
Finally, your appointed legal advisor and real estate company will help you through the whole process step-by-step. As mentioned elsewhere, buying property in Hua Hin will be a very rewarding experience as long as you do not cut corners and employ highly reputable people to assist and advise you from start to finish.
Author: Simon Pinnock
Property Transfer Taxes and Fees:
A General Guide
Thailand is a beautiful, exotic, friendly and very relaxed destination. It may also seem a world away from many Western countries. But, taxes and fees related to property still apply.
There are various taxes and fees to consider when renting or buying property in Hua Hin, Thailand. If you decide to rent out your sea view condo on the beach or your private pool villa nestled in the hills overlooking Hua Hin, you are legally required to pay tax on the rent that you generate. Any property that is classed as immovable property that is rented is liable to House and Land tax set at 12.5%. This is based on the yearly annual rental value of the property.
Regarding sales of property, there are four taxes to consider:
Withholding Tax if the seller is a company is calculated at approx. 1% of the assessed or actual price of the property.
Specific Business Tax is calculated at approx. 3.3% of the assessed or actual price of the property.
Transfer Fee is calculated at approx. 2% of the assessed price by the Land Department.
Stamp Duty must also be paid by the Seller – unless in the case that Specific Business Tax is liable.
Note: taxes and fees can go up and down regularly and are a guideline line only
As you can see, Specific Business Tax is the highest tax here. This tax has been implemented by the government with the purpose to try to stop speculators buying property and selling it on quickly or ‘flipping’ it in order to make healthy profits. Specific Business Tax is also commonly known as speculative taxation.
If you were to buy a property and own it for less than 5 years and then sell it, you could be liable to tax up to approx. 6% of the total value of the property. As an example, a house valued at 5 million THB could pay transfer fees and taxes of approx. 250,000 THB.
If you were to buy a property and sell it after 5 years the cost is reduced by approximately half that amount.
In general, at the point of a property sale as a goodwill gesture to seal the deal, most buyers and sellers usually happily sit down together and agree to share the transfer fees and taxes 50-50 anyway.
Author: Simon Pinnock