thailand property taxes

8/13/2019 Thailand Property Taxes

1/22

Thailand Property Taxesfor Condo, Villa or House

Thailand property taxes and how they are calculated in Thailand. Speak to one of our property lawyers with regards toyour property taxes in Thailand.

THAILAND PROPERTY TAXES

Transfer fee 2% of the registered value of the property

Stamp Duty 0.5% of registered value. Only payable if exempt from

business tax

Withholding

tax

% of the appraised value of the property

!usiness tax "."% of the appraised value of the property if selling

#ithin 5 years. This applies to both individuals and

$ompanies.

.

TAXWHICH PARTY NORMALLY

PAYSAMOUNT

Transfer fee !uyer 2% of registered value

Stamp Duty Seller 0.5% of registered

value

Withholding

TaxSeller % of appraised value

!usiness Tax Seller "."% of appraised

value

.


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Buying a Villain ThailandSTEP 1 : FI!I" # H$%SE I TH#I!

eal &state in Thailand has ta'en off in the past de$ade or so #ith more foreigners( #ishing to live

in Thailand or ma'e Thailand their se$ond home. )any #ish to o#n a house* and it is important

that #hen pur$hasing a house to al#ays ma'e use of registered la#yers in Thailand and reputable

estate agents #hen buying a house. See the Thailand Real EstateOutloo'* the glossary of Real Estate

Termsand the Real Estate FAQ#hen you start your sear$h for a house in Thailand* be the house in

!ang'o'* +attaya* +hu'et or ,ua ,in. !e fully a#are that many of the problems that do arrise from

buying a house in Thailand $an be avoided early on in the property sear$h.-ou might need to read

theReal Estate pitfalls in Thailand#hen going out on your sear$h. s' the right /uestions to avoid $ostly

litigation.

STEP ' : SETTI" %P ($%) TH#I C$*P#(

On$e you have de$ided #hi$h house you are going to pur$hase* al#ays $onsult a la#yer before

signing any do$uments. oreigners may not o#n a house in their name1 ho#ever their Thai registered

companymay o#n the house. There are different forms of business entities in Thailand. The most

$ommonly used is a Thai Limited ompany. There is $ertain business registration $riteria(s for the

limited $ompany. TheThailand Amity Treatyis also still in existen$e for meri$ans and there are also

tax $onsiderations so $he$'orporate Tax in Thailandif you are going to do more than o#n a house orneed a Thai !ork "ermit.

STEP + : B%(I" # H$%SE I TH#I!

On$e #e registered yourThai Limited ompany#e do the follo#ing amongst other property ser#icesso

spea' to ourproperty lawyertoday. They #ould do a title sear$h and $he$' the $ontra$ts before signing.

lso note the type of Title $eeds in Thailand.f you are %uying a house off plan* you #ould need legal

advi$e as to buying in pre construction pro&ects. There is also the $ost of transfer for your $ondominium

andThailand property taxes.3se the property transfer $al$ulator to $he$' your fees payable. See the$ompressed version on%uying real estateand the mostcommon property pro%lems. l#ays $onsult a

reputable firm of attorneys before you embar' on the pro$ess of%uying a house in Thailand. f you are

loo'ing at finan$e and o%taining a mortgage %ond in Thailandthen as' online for more details.
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Property Inest-entin Thailand

The num%er of foreign nationals owning properties in Thailand is continually growing. The ma&ority of these propertiesare %eing used as a primary residence %y long'term residents %ut there is also a significant num%er of expats %uyingproperties for rental income in Thailand. Thai property can potentially yield strong rental returns particularly in main citiessuch as (angkok or hiang )ai and in well de#eloped tourist destinations such as *ua *in+ "huket and "attaya. )anyproperty owners are turning to rent in these areas in order to maximi,e their property-s true worth and also to takead#antage of the rapidly de#eloping rental markets.

I!E#& )ET#& P)$PE)T(

nlike the ma&or cities such as (angkok+ rental properties in tourist areas are targeted towards short to medium termrents with #aria%le rates depending on the season. /n (angkok+ properties typically rent out to the expat communitylooking for medium to long term stays. *ere+ studios or one %edroom units in the ($ area are most sought after usually%y international companies looking to house their foreign employees. Two to three %edroom units on the periphery of the($ are also popular among foreign nationals with families.

"roperties that are highly sought after in tourist areas+ howe#er+ ha#e a historical tendency to %e more la#ish as those onholidays tend to spend more. They will %e looking at luxurious condominiums+ ser#iced apartments or a 0uiet %ut grand#illa o#erlooking the seaside. They will also expect amenities to %e e0ually extra#agant with at least a swimming pool+gym and an entertaining area.

/t is+ therefore+ important to know what sort of rental property you are prepared to in#est in. /t is often a good idea to dosome homework as to the rental #alue of the area you wish to in#est in general and compare this with other areas in the

region. Location is o%#iously important %ut there are other factors which are e0ually significant such as the num%er of%edrooms+ access to transport or shops+ price per s0uare meter+ facilities a#aila%le+ maintenance fees on the property+&ust to name a few.

)ET#& P)$PE)TIES

1ow that all the hard work has %een done and you are the proud owner of a lucrati#e in#estment property in Thailand+there are still a few more legal matters that should %e %rought to light. Renting can either %e a straightforward process orit can %e an a%solute nightmare. )any countries around the world ha#e de#eloped laws to regulate the+ at times+strenuous relationship %etween the landlord and the tenant. /t pro#ides measures of protection and certainty for %othparties to make rental arrangements as fair as possi%le.

At the present moment+ Thailand does not ha#e a Landlord and Tenant-s regulation per se and does not really ha#e asystem which regulates this need. As such+ the laws go#erning this area are ad hoc at %est with contract laws offering the%est protection for either side in the arrangement. The general laws of Thailand regarding landlords and tenants arelargely pro'landlord. 2ery little legal protection is afforded to tenants. This is due again to the lack of laws and ministerialregulations go#erning the renting of properties. $ue to this+ contracts ha#e a tendency to %e more %iased towards thestronger party+ and in most cases+ the landlords as property owners are usually the stronger party. This may seem likegood news to landowners %ut they may still experience difficulties with tenants %ecause it is sometimes difficult toenforce legal o%ligations due to a lack of enforcement rights and lengthy procedural rules.

Therefore+ e#en as a landlord and holding some legal superiority in contract agreements+ it is often %est to make acontract as fair and reasona%le as possi%le. 1ot only will this reduce future pro%lems with the tenants %ut it also ser#esas a good start to a long term %usiness relationship with them. Renting can %ecome 0uite a gruesome process andmaking things fair right from the start goes a long way in making the process a lot more satisfying for all in#ol#ed.


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P)$PE)T( CHEC.&IST

.There are no standard contracts for rental agreements in Thailand. /t is possi%le to purchase a pro forma one pagecontract from the local stationery store %ut this is sometimes only a#aila%le in Thai and it is+ in many ways+ 0uiteinade0uate. This is especially the case if you are renting to a foreign national who are expecting something a little morecomprehensi#e+ particularly if large sums of money is in#ol#ed. Therefore+ some salient points which should %e added ina rental contract include the following3

!EP$SITSThailand+ unlike the 4 and other &urisdictions+ does not ha#e a tenant deposit protection scheme. $eposits+ howe#er+are co#ered on a general %asis %y the i#il and ommercial ode of Thailand. Therefore+ it is important to draft theconditions of the return on the contract explicitly. The normal period for the return of the deposit is one month after thetermination of the lease. Any unpaid utilities can %e taken out of this amount as well as any damages outside of normal5wear and tear-. /f damages are taken out+ a specification of the damage and its cost should %e outlined %y the landlordand re#iewed %y the tenant.

PE)I$! $F )ETEnsure that %oth parties are aware of the duration of the rent. Any rents o#er three years must %e registered as a leaseunder the i#il and ommercial ode at the Land 6ffice and su%&ect to registration fee and stamp duty.

E/TESI$ $F )ET#& #")EE*ET6nce the rental period comes to an end+ there should %e an option clause for the tenant to continue rent if they wish %ygi#ing notice. A contingency clause should also %e added to outline the landlord-s rights should there %e no notice gi#en.Rental re#iews are not common in Thailand %ut is %ecoming increasingly popular+ particularly for commercial properties.

%SE $F P)E*ISES)ake sure that the contract states what the premise can %e used for. /f it is merely for residential purpose+ then it shouldstate so. This normally means that tenants are still allowed to set up a home office %ut are not a%le to ha#e a companyregistered to the property-s address.

)I"HTS $F TE)*I#TI$List out all the conditions where either party can terminate the contract e.g. a fire+ natural disaster+ failure to pay rent orfailure to fix the air conditioner. Ensure that a reasona%le notice clause is also added along with remedies a#aila%le to theaggrie#ed party. onsider ar%itration or other forms of dispute resolutions.

*#ITE#CE #! *ISCE&E$%S FEES)ake clear which parties are responsi%le for the maintenance of the property. /t is common for landlords to %eresponsi%le for ma&or repairs %eyond reasona%le wear and tear.

IS%)#CELandlords usually take out insurance on the structure of the %uilding itself. Tenants should %e responsi%le for their ownhome and contents insurance.

FI#& 0$)!$espite ha#ing a watertight agreement with your tenants+ there is still no guarantee that any num%er of things can gowrong. As mentioned earlier+ enforcement and due process can %e like an unruly tiger in a cage. E#erything seems wellwhen the cage is locked %ut once its opened+ then it can get 0uite out of hand. 1e#ertheless+ all good in#estments

re0uire a slight degree of risk7 otherwise we would %e %etter off keeping our money in the %ank or under the mattress forthat matter. The trick is+ of course+ to make calculated risks. Thailand is rapidly de#eloping and although it is still early tosee the effects of the latest election result+ the economy is steadily progressing. This+ in turn+ affects consumerconfidence which+ in turn+ traditionally means higher rental yields.


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1 Top *ista2es3hen 4uying property

There are certain pitfalls when %uying property in Thailand. (uying Real Estate is an experience that should %e takenwith some ad#anced planning and forethought. )any foreigners come to Thailand to purchase property for #ariousreasons 3 for their retirement+ as a second home or for in#estment purposes. "urchasing a second home is gainingpopularity in many places in the world. For example+ in 899: &ust o#er a third of all homes owned %y 4 citi,ens a%roadwere located outside Europe. Thailand is fast %ecoming a destination of choice as a location for a second home. /n thisarticle+ we will look at ten pitfalls which are most common in purchasing property in Thailand.

$ TIT&E SE#)CH

A comprehensi#e examination of title deed recorded at the Land $epartment should %e done prior to placing on a depositor signing of a reser#ation agreement. ;ou need to #erify that the Seller has clear and legal title of the land %efore youenter into any contractual agreement. The title search will trace the land to its first possession+ as well as checking for

any encum%rances such as liens+ leases or mortgages on the title.This in#estigation will also #erify ,oning+ en#ironmental and planning codes in the area. )oreo#er+ any mortgage+ liens orencum%rances will %e disco#ered during this process. There ha#e %een a num%er of cases where foreign %uyers ha#epurchased property only to disco#er later that they are restricted in terms of structural height on the land and thereforerendering the land #irtually worthless. This is especially true for %each resort communities where there are heightlimitations closer to the %each. This is the num%er one pitfall since a title search can %e completed within a few days.Failure to conduct this step is a gra#e error and could %e fatal to your plans to %uild your dream house on that wonderfulpiece of property.

F#I&%)E T$ C$!%CT !%E !I&I"ECE

E#ery financial transaction re0uires some sort of due diligence on %ehalf of the purchaser to #erify that it is a sound

in#estment. !hen you purchase shares of a listed company in the stock market or a mutual fund you will generallyresearch the profile and performance of the company or fund. The same is true when you purchase a property from ade#eloper. ;ou should check with the pre#ious %uyers to see if they are satisfied with the 0uality and time frame of theconstruction. /f you don-t ha#e time to spend on checking the history of the de#eloper+ a local lawyer near thede#elopment will know or can check the pro&ect+ who their directors are and their performance history. This $ue $iligencereport will also outline all the information consisted in a title search mentioned a%o#e.

B%(I" 0ITH$%T # (E)

/t is often possi%le for indi#iduals to purchase a property in Thailand without the ser#ices of a local law firm. This may %erisky unless you are familiar with the country+ the language and its legal system. ontracts in Thailand do not alwaysadhere to the international standards that we are used to %ack home and may seem 0uite unfamiliar to us hence whyprior to purchase you should take the time to sit down and discuss the purchase process with a lawyer or a solicitor. Thatis why %efore you sign any deposit agreement or contract+ you should take some time and sit down with a lawyer orsolicitor to discuss the process. ;ou need to know the correct legal process in Thailand for a foreigner to ac0uireproperty. Remem%er that you are spending part of your life sa#ings to ac0uire this property and you must carefully planyour steps in the process. ;our lawyer %ack home can gi#e you general ad#ice a%out the contracts and agreements7howe#er they will not %e familiar with the country-s laws as they may not ha#e the experience in dealing with mattershere.

B%(I" 0ITH$%T # EST#TE #"ET

(ack home+ !e are always told that when we in#est in property+ we should always in#est in an area that we are familiarwith. This is %ecause property markets are affected %y so many #aria%les. /t is important to know the market and managethe potential risk which may %e in#ol#ed in any transactions.

/n#esting in Thailand is no different. ;ou will need a local expert who is experienced in real estate transactions in thelocal area that you intend to make your purchase. The agent knows how to communicate in Thai and they-re familiar withthe location and the general geographical area. They can show you many 0uality properties in their in#entory %ased onyour needs and desires. Typically+ a good agent will weed out the poor 0uality units. They want satisfied clients and theywill a#oid pro%lematic de#elopments. Think a%out it3 you may not really know the community and it would %e wise to find


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someone who has in'depth knowledge and experience with the property market. The most telling %enefit of a using anestate agent is that they will act as a conduit %etween you and the seller. They will o%tain a fair price for you and act onyour %ehalf to respect your %est interest throughout the entire process. Se#eral international estate agent firms ha#erecently esta%lished themsel#es in Thailand. This pro#ides you access to the same international standard of %usinesspractice as in your home country.

P%TTI" THE !EP$SIT !$0 T$$ E#)&(

Sellers and agents o%#iously want to sell properties. !hen you ha#e found the ideal property and you are satisfied that itwill meet your expectations+ the usual process in a transaction is to put down a reser#ation fee or an earnest deposit. /nreturn+ the seller or agent will reser#e the property for you and %egin the process of drafting the contracts for theac0uisition. This is normally a nominal amount of


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The document will detail your assets in Thailand+ such as property+ %ank accounts+ #ehicle+ and personal items. Typicallyupon the death of a foreigner in Thailand+ the go#ernment officer will ask the family for a copy of a !ill or they will seekthe deceased person-s lawyer or executor for this document. *a#ing a !ill drafted in your home country to co#er assetsin Thailand may %e pro%lematic and %urdensome to your family as documentations will need to %e translated+ notari,edand appro#ed %y a go#ernment %ody. !e /t is highly recommended that you ha#e a separate !ill for your assets inThailand. /t may %e interesting "lease also note that Thailand does not ha#e any inheritance tax in general7 howe#er+ the%eneficiary will ha#e to pay certain fees paya%le to the Land department upon transferring of title+ to effect their name inthe title deed.

.


8/22

Co--on Pro4le-s3hen 4uying property

THE )E#& EST#TE I!%ST)( IS %)E"%TE!

Thailand has no limited regulations go#erning the real estate industry. As a result+ ;ou ha#e limited protection concerningthe ma&ority of real estate transactions+ and you could %e charged unreasona%ly high fees and commissions whereas inthe !est other countries+ most agents pro#ide full disclosure of fees and commissions.

#V$I! THE $E ST$P SE)VICE CETE)

This sort of handy ser#ice center offers easy ser#ice to ac0uire land. There are many one stop ser#ice centers that offera #ariety of ser#ices for ac0uisition of property ranging from the %eginning steps such as choosing a property of interest+to the final steps of the transfer of ownership. These one stop ser#ices should %e a#oided as a Lawyer may act for the%enefit of the seller as well as the %uyer therefore earning them twice as much and hence creating a conflict of interest.Also+ a lawyer may act for the %enefit of the seller+ rather than yours. /n the end+ the lawyer may get paid twice+ once forperforming the legal work+ and once for %rokering the property.

($% !$6T EE! # (E), THIS IS # ST#!#)! C$T)#CT

For your safeguard+ ha#e a speciali,ed lawyer re#iew thecontract for you. /f you sign a document in Thai+ it %ecomes alegally %inding contract after you sign it. /n some cases+ it may %e stated %y the %uyer or seller that in the e#ent of a salesand purchase agreement+ that the contract is in most cases. *owe#er+ it is common that most standard contracts tend toexclude protection of ones own interest+ whether you are the seller or the %uyer. /n order to a#oid this+ it is recommendedthat you contact a lawyer or a solicitor to re#iew the rele#ant contracts for you %efore proceeding with any signing.

TH#I! ISS%ES F$%) T(PES $F ! TIT&ES

There are : types of land title deed a#aila%le in Thailand3 Freehold land title BhanoteC+ 1or Sor Sam 4or+ 1or Sor Sam+and Sor 4or 1ueng Brights of the owner decrease with each new option listedC. The %est way is to %uy land using the firstoption stated here+ known as hanote.

#V$I! *#.I" # !EP$SIT

A#oid making a depositD 1e#er make any deposit without an agreement+ or a receipt+ stating that such payment will %eused for a reduction of the price. After a deposit payment is made to reser#e the right to purchase land+ it is possi%le thatthe deposit /s not recorded and the %uyer recei#es no credit for it+ and when this does happen+ it is normally non'refunda%le.

TH#I T)#STI$S IT$ E"&ISH

The possi%ility exists when the ownerde#eloper pro#ides two contracts 7Thai and English+ and contents of the twocontracts are different3 hence it is suggested that you ha#e these contract re#iewed %eforehand %y a lawyer or a solicitor.

C$!$ !EVE&$P*ET $VE) 789 F$)EI" $0E)SHIP

The Law in Thailand allows foreigners to own :> of the total space of all units in that condominium pro&ect. /t issuggested that you #erify with the de#eloper or the condominium &uristic person that your ownership in the pro&ect will not%e o#er :> total space of all the units of the pro&ect

$T !E#&I" 0ITH THE $0E) $) T$ $0E)6S #%TH$)IE! #"ET

Always #erify the originality of land title+ as there ha#e %een cases where counterfeit title deeds ha#e %een reported.Fake land titles ha#e %een reported. Also+ there are those who try to sell land without ha#ing the legal right to do so.ases in which the true owners are not who they say they are and attempt to sell the land without %eing the legal owner.


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B%(I" # IC$*P&ETE C$!$*II%* P)$5ECT

A %uyer should %e aware that there are a num%er of pro&ects+ which ha#e ne#er %een completed for different reasons.hoose carefully a pro&ect and a de#eloper. $ue $iligence is #ery important in your %uying process.

)ESP$SIB&E P#)T&( F$) FEES # E/PESES #T )E"IST)#TI$ TI*E

2erify who is responsi%le for fees paya%le at the time of registration. All fees are negotia%le. A skill legal negotiator willhelp you greatly. This will %e outlined in the contract of sale %eforehand.


10/22

Thailand Property Fore;ast'

thailand property taxes

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