Can a foreigner buy a condo/apartment in Thailand?
Yes. Buying a condominium is perhaps the simplest and easiest option that is available to foreigners here in Thailand under the Condominium Act. You can buy a condo direct from a developer or a second hand apartment as a foreigner in your own name (Freehold ownership). The only restrictions on purchasing an apartment in foreign name, are the percentage of units sold to foreigners cannot exceed forty nine percent (49%) of the total floor area in the condominium development.
The funds to purchase a foreign owned condominium should be remitted from outside Thailand in a currency other than Thai Baht (GBP, Dollar, Euro etc.) in to a bank in Thailand (from a bank account in the name that is to be registered on the title deed). There needs to be a remark written on the transfer stating “to purchase a condominium”. This enables the relevant form (Thor Tor Sam) to be obtained from the receiving bank.
Can I own a house or land in Thailand in my own name?
Ownership of land is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior.
Although you are able to own a house or structure in your own name, Thai law currently prohibits foreigners from owning the land the building is erected on. Even thou Thai law prohibits foreigners from owning land in Thailand, there are various ways in which you can structure your purchase so that you can own land, and still comply with existing Thai laws: (Thai Company Ownership)
This is the most common way for a foreigner to purchase land and house. This involves the incorporation of a private limited company of which the foreigner holds 49% of the shares. The remaining 51% of the shares required by law to be held by Thai Nationals. An agreement would then be put in place that would result in the Thai entity handing over complete power of attorney to the foreign partner. The foreigner then becomes the only director of the company, and the only officer of the company who can commit or bind the company in any contractual dealings – effectively giving the minority shareholder (foreigner) control over the company. The company is required to submit an annual balance sheet once per year, and there will be a tax obligation, however the costs are minimal and your lawyer will have an accounting department able to assist you with the above.
Long Term lease hold agreements
Another option available is, hassle free and recommended for foreigners to own property in Thailand is a Long Term Lease, which is automatically renewable. Whilst this practice doesn’t obviously secure title ownership, long term leaseholds are incredibly common with foreigners buying property in Thailand and are also very secure. Long term leaseholds are frequently used when purchasing property in Thailand. Whilst the terms and conditions may vary between condominiums and property developers, the initial agreement usually is set at a 30 year lease hold agreement with an option to extend for another 30 years. Leasehold contracts are registered at the local land office and bind by law.
According to Section 540 of the Civil and Commercial Code, at the end of the 30 year term the lease expires automatically and both parties must register a new 30 year lease. The practice in Thailand is to offer two additional 30 year leases for a total of 90 years through a separate contract often referred to as the “Addendum” or “Memorandum” contract, whereby the Lessor agrees to extend the contract for two additional terms of 30 years each, In this extra contract, there are often other lease rights added which is not included in Section 540 of the Civil and Commercial Code.
In addition to promising to provide the renewal contracts for a total of 90 years, other clauses can include the right to transfer the lease to freehold title if the Thai law changes, and the promise to assign and transfer the lease agreement to heirs if either party dies during the term of the contract. These additional clauses are considered personal contractual promises between the two parties in addition to the normal contract laws for leases covered in Sections 540 and 569 of the Civil and Commercial Code.
What is a Tor Tor Sam (3) or foreign currency remittance form in Thailand?
A Thor Tor Sam (3) is an official bank document issued by the receiving bank upon the receipt of foreign currency into your bank account in Thailand. You must request a Thor Tor Sam from your bank when you are remitting funds to Thailand for the purpose of purchasing a condominium, and the Thor Tor Sam must specify that the remittance is solely for the purpose of purchasing a property and that the funds used to buy the condo have been sent from abroad in foreign currency and correctly recorded as such by a Thai Bank on Foreign Currency Remittance Form.
Do They Have Title Deeds in Thailand?
In Thailand, if foreigner purchases a condominium apartment in Freehold ownership, he/she is issued a Title Deeds also known as a Chanote. A Chanote is evidence that an individual owns property in his/her name. It is a certified document issued by the local land office providing documentation as to who the legal owner of record is for a given property. Once the Title Deed (Chanote) is received, the owner can benefit from full legal rights to use the apartment as he/she sees fit i.e. rent it, sell it, remodel it, include it in his/her will for family and children.
Can I have a bank account in Thailand?
Yes. Foreign nationals can open a bank account in Thailand and we can help with this process. We can arrange appointment and assist you in opening bank account with your chosen bank. Internet banking is available from most of the local banks and we can help with setting up these accounts.
Are There Property Taxes in Thailand?
Unlike most Western countries Thailand doesn`t have any taxes for the ownership of the apartment and generally for any form of property or housing. So, if you simply buy a condominium you will have to pay taxes only twice. The first time when you buy the property and the second time when you sell it. The local system of taxing property is based on an arbitrary assessed value as determined by the local Land Department, rather than true market value price. There are no set rules as to who pays for which taxes, and it is just another part of the bargaining process for purchasing property in Thailand.
Whenever a property in Thailand is bought and sold, there are four taxes that need to be taken into account:
Land registration (transfer fee) of 2.0% of assessed value of the land.
Stamp Duty/Fee of 0.5% of the assessed value or the sale price – whichever is higher.
Specific Business Tax of 3.3% of the assessed value or the sale price – whichever is higher – this will be applied to all sales by companies and to any private sales that occur within 5 years of the date of purchase.
Income Tax – this is calculated on a very complex formula based on the assessed value of the property, the length of time owned and the applicable personal income tax rate. In practice, this will work out to under 2% of the price for low to medium value properties, and up to 3% for higher value properties.
There is no Capital Gains Tax in Thailand, unlike many countries, and Income Tax (usually between 1.0 – 3.0%) on property based upon the Government evaluated price. There are no set rules on who pays the income tax (buyer or seller), and it is just another part of the bargaining process, as with all the other costs of the transfer of ownership. The basis of the tax is the government appraised value and depends on how long you own the condo. This is determined by the land office when you go to register the property in your name. The longer you own the condo, the lower the deduction from the appraised value, and therefore your withholding tax liability is higher.
What Costs and other associated fees are Applicable to Purchasing a Property in Thailand?
On all purchase/sale of property in Thailand there is a stamp Duty of 0.5%, a transfer fee of 2%, a business tax of 3.3% levied against an owner who has been in registered possession of the property less than 5 years, and Income Tax, this is determined by the land office in Thailand. We can assist you with property registration at the land office and recomment the best legal solicitors to help with the transfer. There is no Capital Gains Tax in Thailand, unlike many countries, and Income Tax (usually between 1.0 – 3.0%) on property based upon the Government evaluated price. There are no set rules on who pays the income tax, and it is just another part of the bargaining process, as with all the other costs of the transfer of ownership. The basis of the tax is the government appraised value less a deduction of between 50% and 92%, depending on how long you own the condo, this is determined by the land office when you go to register the property in your name. The longer you own the condo, the lower the deduction from the appraised value, and therefore your withholding tax liability is higher.
Does Thai law provide for warranties on condominiums and houses?
New condominium units and houses purchased from developers are protected by 5 year statutory warranties. These warranties are for structural damages to the condominium or house. Warranties to the inside of the property are stipulated in the purchase and sale agreement. Warranties for air conditioners, sanitary fittings and other fixtures vary based on the manufacturer.
What is an EIA Approval for condominium development?
Condominium buildings more than 80 units or 10,000 sq.m require an evaluation on the impact to the environment. This evaluation is called an Environmental Impact Assessment (EIA). Building developer must submit a report to the Environmental Impact Evaluation Division (EIED) in Bangkok. The EIA report may be in the form of an initial environmental examination. The EIED examines the report to determine its adequacy. If the report is acceptable, the review process begins. An Expert Review Committee, which consists of people qualified in various technical disciplines, makes the final decision. The Committee may approve or reject the report, or may request additional information or revisions. If the report is approved, the permitting agency grants the permit for the project with conditions of mitigation measures and monitoring programs. For more information about EIA process CLICK HERE
What is a Sinking Fund?
A sinking fund is a reserve fund established, usually at the time a new condominium project is constructed, to pay for any non-routine, structural damages or repairs and replacements to common areas or infrastructure after the warranty period by developer is finished. This fund can be used only if agreed to by the condo juristic committee, this is a one time charge at the time of ownership transfer.
Can I buy property in Thailand while out of the country?
Yes. A person wishing to buy property, including a foreigner, may purchase a property without being present. Booking deposit & contract down payment can be transferred directly to developer’s bank account and all original purchase documents (reservation forms & contracts) will be DHL to the buyer to sign. Registration of ownership at the Land Department can also be done by appointing, by a power of attorney, a lawyer or some other person to act on your behalf in case you can not be present at the time.
Can I Get a Mortgage Loan or finance? Borrowing money in Thailand.
Yes as a foreigner you can borrow money and have a mortgage finance on a condo. We can help you obtain financing both here in Thailand and abroad in your home country. There is no requirement for employment in Thailand or permanent residence. For those over 60 years old, only 50% of the property value can be financed. We have access to Thailand’s main bank lending. It is common for a real estate developer to arrange for his customers to have a financing package from a financial institution. In most real estate development projects, a down payment can be made in instalments from 10 to 24 months. After the down payment has been paid, the sale contract will be made and the balance amount is paid through the loan, which is financed from a financial institution. The financial institution requires you to mortgage the property with the condo as collateral against the loan.
0% Interest free Payment Plans
When purchasing new (off-plan) condo in Thailand, developer will offer an easy interest free payment plans for investors. The payment plan shown below is an example that is used by most developers. This payment plan can vary per developer. After you’ve chosen an apartment, this apartment will be reserved for you. The costs for a reservation is usually between 20,000 THB and 50,000 THB. Please note that reservation time is limited. If you, within the given time limit, decide that you want to buy the unit then a contract will be made for you immediately. 20 % of the purchase price must be paid within 10 to 14 days after the contract date. The reservation costs will be of course deducted from this amount. 60% of the purchase price must be paid (monthly, quarterly or per 6 months) during construction period. Final 20% of the purchase price has to be paid on completion. The interest you pay over the whole period is 0%
Can I own and drive a car in Thailand?
It is reasonably easy for foreigners to own a car or motorcycle in Thailand, all you need is the correct visa, and an address in Thailand certified by the local immigration police. A foreigner can drive a car or motorcycle in Thailand using an international driving permit. However for long term residents it is necessary to acquire a Thai driving license. This is automatically issued to those carrying an international driving permit , you will also require proof of address(obtained from the local immigration police), a medical certificate and your passport along with recent passport photographs. If you do not have an international driving permit then you will require all of the above and have to sit a written and practical test. We can arrange appointments for you to meet with the local transportation office and assist you in obtaining the necessary documentation.
Can a foreigner legally rent out property he owns in Thailand?
Yes. A foreigner who legally owns a property in Thailand may lease it out to another third party. You are allowed to rent your unit out, as long as it is not considered to be your business. Only when it comes to the intent to do this as a business the requirements under the Foreign Business Act and Foreign Employment Act must be complied with. For more information about renting out your condo please CONTACT US.
Remember that when you rent out your condo apartment, you are responsible for paying yearly condominium maintenance fees as an owner, and also note that rental income is subject to personal income tax under the Thailand Revenue Code.
If you need any help or advice on the legal process of buying property in Thailand, please use the CONTACT US and one of our professional staff will get back to you as soon as possible.
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