How Can a Foreigner Buy Land or Purchase Property in Thailand?

by admin on July 18, 2011 in Thailand Guides

Buying a property in Thailand is an attractive investment for foreign owners. However, because of the often contradictory information available on the web, many potential foreign investors are reluctant to invest in Thai properties. With a number of attractive investments, in particular, houses to buy in Bangkok and properties in Pattaya, more non-Thai nationals are considering buying property in Thailand.

Land Leases
Company Ownership
Investment
Thai Spouse

Other property questions
Can foreigners own a building even if they don’t own the land?
Can a foreigner legally rent out property in Thailand?
Can a foreigner own a freehold condominium in Thailand?
What are the taxes and feed when purchasing a property in Thailand?
What are the taxes and fees when selling a property in Thailand?
What are the property taxes in Thailand?

What are the ways a foreigner can purchase property in Thailand?

Land lease

Despite the fact that it can be difficult for foreigners to purchase freehold land in Thailand, non-Thai citizens have the option of holding 100% interest in a Thailand land lease. Thailand lease law allows a maximum lease period of 30 years. However, foreigners have the ability to renew the lease for 2 additional 30 year periods. So, a non-Thai national can have a lease hold up to 90 years in Thailand.

Also, it is worth remembering that while acquiring additional years on a lease hold in the UK or EU member states can be problematic, it is generally far easier to acquire the additional years on a lease hold in Thailand. If you would like to discuss Thai property law then please get in contact and we can put you in touch with a real estate lawyers in Thailand.

Company ownership

Foreign nationals can also acquire an interest in land in Thailand through company ownership. Foreign nationals can acquire an interest in Thai real estate as a minority shareholder in a Thai majority company. This means that the Thai company must be at least 51% owned by Thai shareholders. The remaining 49% can be held by foreign nationals.

Investment

It is also possible for non-Thai nationals to own a limited amount of land providing that the individual makes an investment of 40 million baht (approximately £1m per year) for five consecutive years. Some foreign companies seek and obtain the approval of the Board of Investment (BOI) to purchase land for a limited period. However, this can be an expensive option because of the legal complexity involved.

Thai Spouse

One method of obtaining land in Thailand is to marry a Thai spouse. A Thai spouse is allowed to buy land or property providing that they can prove the funds used are the separate property of the Thai spouse when they sign declarations at the Land Department. However, anybody considering this method should consult with a lawyer as, in effect, this may result in the non-Thai spouse waiving their rights on the land or property. This can become very problematic in the event of the couple divorcing.

Can foreigners own a building even if they don’t own the land?

Foreigners can own a building in Thailand, however, the law generally prohibits foreigners from owning land.

Can a foreigner legally rent out property in Thailand?

A foreigner can legally rent out property to a third-party. The rental revenue is subject to a 12.5% tax on the annual income.

Can a foreigner own a freehold condominium in Thailand?

It is possible for non-Thai nationals to buy a condominium. For foreigners, buying a condominium is the easiest way to own a property. There are restrictions on foreigners purchasing condominiums in Thailand. The percentage of liveable space sold to non-Thai nationals must not exceed 49% with the remaining 51% of space being sold to Thai citizens. The foreign owner of the condominium is issued with a deed that indicates that the foreigner is the legal owner of the property.

What are the taxes and feed when purchasing a property in Thailand?

In Thailand, there is a Stamp Duty of 0.5%, a business tax of 3.3% and a transfer fee of 2% and Income Tax. Unlike in other nations, there is no Capital Gains Tax in Thailand. There is an Income Tax, however, there are no set rules on whether the buying or seller pays the Income Tax, so the tax is merely a part of the buying and selling process.

What are the taxes and fees when selling a property in Thailand?

If you sell a property in Thailand then you will be taxed as follows:

1. A with holding tax ( from 0 to 37%) the tax rate varies based on the income of the seller. 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. The longer you own the condo, the lower the deduction from the appraised value, and therefore your with holding tax liability is higher.
Income of 0 to 80,000 Baht: 0%
80,001 to 100,000: 5%
100,001 to 500,000: 10%
500,001 to 1,000,000: 20%
1,000,001 to 4,000,000: 30%
4,000,001 and above: 37%
Specific withholding rates are as follows:

92% if you have held the property for one year;
84% for two years;
77% for three years;
71% for four years;
65% for five years;
60% for six years;
55% for seven years;
50% for eight years or more.

2. Business tax of 3.3%. The sale price or purchase price is taxed 3.3% depending on which has the higher value. The tax is paid in case a buyer has a property in their possesion for less than 5 years.

3. A transfer of ownership fee of 2% of the appraised price.

4. There is also a Stamp Duty of 0.5% of the appraised price. This is only paid when a specific business tax is not applicable.

What are the property taxes in Thailand?

There are no real property taxes in Thailand that can be considered to be similar to those in the western world. There is a Land Tax and Structures Usage Tax, however, the Land Tax is a very small amount and the government organisation with the responsibility rarely bothers to collect the tax amount being so low. The Structures and Usage Tax relates to commercial buildings only. It is collected by the municipal office or district office and does not apply to residential buildings.