While Thailand has strong property ownership laws and a secure title system, buying property in the country still requires careful consideration. Real estate developers, sellers, and agents should always be reputable with a track record of completed projects.
A thorough title search is also essential, to verify the property’s legality, mortgages, liens, and encumbrances. In addition, foreigners must pay transfer and property taxes.
Legal Requirements
A reputable Thai property lawyer can ensure that your investment is legitimate, and that the property you’re buying is free from any legal issues. This includes examining the land title deed, also known as a Nor Sor 4 (jor). The land title is an official document administrated by the Land Department that states and proves ownership of a piece of land, its survey status, and the rights, obligations, or mortgages on it.
Purchasing a home in Thailand is an exciting process, but it’s essential to understand the country’s unique legal limitations. For example, foreigners can only own houses and up to one rai of land through the purchase of bonds, property fund shares, or BOI-privileged business shares. This stringent stipulation is in place to encourage high-value investments and prevent illegal real estate speculation1.
Furthermore, non-citizens can purchase condominiums in the country, but this is subject to strict regulations. For instance, the total foreign ownership percentage of a condominium cannot exceed 49%, and all payments must be made in baht and accompanied by a Exchange Control Form 3.
Additionally, escrow services are not common in Thailand, so it’s vital to make sure that the property contract you sign is meticulously reviewed by your attorney. In addition, buyers must be prepared to pay several taxes and fees, including transfer fees, stamp duty, and withholding tax.
Taxes
It’s important to understand the taxes associated with buying property in Thailand, as these can significantly impact your investment. For example, there is a standard transfer fee of 2% of the property’s appraised value, which is usually shared between the buyer and seller (though it can vary depending on negotiations during the sale process). There is also an annual property tax that must be paid by both homeowners and investors alike.
Another important factor to consider is the Special Business Tax, which is a 3.3% tax on the assessed value of the property or the selling price, whichever is higher. This is applicable to sellers who are individuals or corporations. This tax must be paid regardless of whether the seller is aiming for profit or not. For foreign sellers who are not tax residents of Thailand, the withholding tax will either be returned to them or used as a credit if their country has a double-tax treaty with Thailand.
One of the most popular forms of property ownership for foreigners in Thailand is condominiums, as Thai law allows for foreigners to own them outright. However, it is important to note that the total foreign ownership of condo units in a single development cannot exceed 49%. For those interested in purchasing land, there are legal alternatives that allow for foreigner ownership including long-term leaseholds, which can be obtained for up to 30 years with the option to renew.
Buying Land
The laws of Thailand restrict foreign ownership of land. However, the rules don’t prevent foreigners from purchasing landed property in other ways. For example, if a foreigner wants to own property that isn’t located on a freehold plot of land, they can do so by setting up a Thai limited company and leasing the ground for up to 30 years with an option to renew. This type of arrangement can offer the security and convenience of owning a house, without assuming ownership of the land itself.
One of the most common ways for foreigners to purchase property in Thailand is by entering into a long-term lease agreement with a local family. This method of acquiring property in Thailand is legal and allows for the purchase of buildings that can be constructed on the land. However, it doesn’t give the owner ownership of the land itself, and is not a popular option for many foreigners who want to own a home in the country.
Before buying property in Thailand, it is highly recommended that foreigners hire a lawyer specializing in property law. They can review the title deed and other legal documents for a potential property before signing any contracts. Having a lawyer can also help foreigners obtain mortgages from local banks, which can be challenging for foreign buyers due to restrictions and requirements imposed on them by the country’s laws.
Buying a Condominium
There are several ways to find a condo for sale in Thailand, but the most common is to use a real estate agent. They can show you all the condos they have available for sale, both new and existing ones. They can also help you negotiate the price with the seller. Real estate agents normally charge a fee for their services, which can vary.
When buying a condo in Thailand it is very important to pay attention to the details. For example, the Condominium Act states that foreign ownership of a condominium cannot exceed forty-nine percent (49%). If you are looking at purchasing a secondhand condo it is advisable to check in the condo association office to ensure that the building has not reached this limit. Also, when buying a condo it is necessary to pay transfer fees and taxes, which are usually negotiated between the buyer and seller.
In addition, if you are going to finance your purchase with a mortgage it is a good idea to have the money transferred directly from your bank account in your home country to the seller’s account in Thailand. This way you can avoid paying a foreign exchange transaction fee. If you bring cash to Thailand to buy a condo make sure that it is in your name and you have a receipt from customs.