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How to purchase a property in Thailand ?The answer to this question depends if you are purchasing from a developer or a private owner. When purchasing from a developer, a reservation deposit is first required to officially remove the unit from the market. This is typically about 100,000-200,00 THB or 1-2% of total purchase price. You will then have 30 days after the reservation, to review the sales and purchase agreement and finalize any commercial agreement with the developer prior to entering into payment instalments. That is an example of a Payment Structure: 1. Reservation Deposit (1st payment) = 2% 2. Sign contract within 30 days (2nd payment) = 23% 3. Finish foundation post (3rd payment) = 15% 4. Finish concrete structure (4th payment) = 20% 5. Finish walls and roof tiles (5th payment) = 15% 6. Finish floor finishing and interior (6th payment) = 15% 7. Property Transfer / Land Registration (7th payment) = 10% Tip: Instalments should be based on build milestones and not fixed dates. This ensures that progress in the build is being made before more capital is laid out. When purchasing from a private seller a reservation deposit (typically 5-10% of the purchase price) is paid to a lawyer or to MP Real Estate client account. In the event that the reservation deposit is non-refundable (typical in Bangkok) this is paid directly to the seller. If the buyer is conducting a legal due diligence on the property (deposit refundable subject to completion) then all property documents will be handed to solicitors to review and draft a sale and purchase agreement. This will typically take 4-6 weeks but the process can be sped up or slowed down based on the requirements of the buyer and seller. With both parties ready to proceed the balance of the full purchase price (less the 5-10% reservation deposit) is either prepared in a cashier’s cheque (for execution at the land department) or a POA is given to a legal representative that will execute the transfer on your behalf. You are not required as the buyer or seller to be present in Thailand to execute the transfer of a property. A power of attorney can be given to your agent or solicitor to execute settlement on your behalf at the land department.
Can I get a loan to purchase a property in Thailand ?UOB BANK – 2022 International Property Loans Thailand details (updated August 2022): With the UOB Bank Thailand, the eligibility for a foreign housing loan is limited according to the applicant’s residence country: Australia, Brunei, Canada, France, Hong Kong, Macau, India, Indonesia, Japan, Malaysia Myanmar, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam, UK and USA. At UOB Bank Thailand, the loan is available either in SGD or USD currency. With a loan in SGD currency, 3 different mortgage interest rate are offered. The mortgage interest rate will vary according to the minimum loan amount. With a loan in USD currency, 1 single type of mortgage interest rate is offered. UOB BANK – 2022 International Property Loan Thailand details: Eligible Applicant: Non-resident (limited per country) Minimum income of approx. 100,000 SGD per year. Age: 21 – 65 years old Property Type: Freehold condominium Property Value: Min. 3,000,000 THB Loan to Value: Max. 70% Loan Amount: Min. 2,000,000 THB Loan Tenure: 3 – 30 years Interest Rate: Minimum. USD Prime + 2.75% / 3M Compound SORA + 3.90% — Maximum. USD Prime +3.75% / 3M Compound SORA + 6.30% Currency: SGD/USD Note: 3M Compound SORA is floating rate = 1.51% as of August 06, 2022. USD Prime is currently at 5.50% p.a
What is the taxation for a Real Estate investor in Thailand ?Personal Taxation in Thailand. • No Foreign Ownership Tax • No Yearly Ownership Tax • No Housing or Council Tax • No Asset Tax • No Multiple Properties Ownership Tax • No Increase of Stamp Duty if Owner of Multiple Properties • Low Taxation Environment Rental income tax in Thailand. The rental income tax in Thailand is calculated based on the personal income tax progressive rate chart. Property Sale – Taxation When purchasing property in Thailand there are taxes and fees involved 1. Transfer fee 2% (from the Land Department appraisal value of the property) 2. Withholding tax +/- 3% (of the property selling price) 3. Stamp Duty at 0.5% (if the owner held the property since more than 5 years) / Special Business tax 3.3% (only if the owner held the property less than 5 years). Withholding tax: If the seller is a company, the withholding tax rate will be at 1% of the appraised value or registered sales value of the property (whichever is higher). If the seller is an individual, withholding tax is calculated at a progressive rate based on the appraisal value of the property. These taxes go to the Land Department at the transfer of ownership. Usually, these taxes are shared between buyer and seller. In most cases, as a buyer you will pay only half of the transfer fee (1%). This means you will be only subject to 1% transfer fee. The other taxes are usually borne by the seller. The average cost for the transfer of property title for the buyer is 1.1% to 3.3% of the Property selling price depending the method: Leasehold, Freehold or Thai Company. In the case of you want to setup a Thai Company in order to purchase your property which can happen in different cases such as for a condominium - The foreign quota is already sold out - Or for the purchase of a land with or without development (Villa, buildings) when you will judge it is the right time to sell the transfer of ownership will be much simple as it is essentialy a transfer of shares and you won't need to pay any taxes at the Land Department.
What are the diffent Ownerships in Thailand ?Foreign nationals who purchase real estate in Thailand can hold property through a variety of ownership structures. The three most common forms of ownership used by foreigners to hold real estate are leasehold, freehold through a condo title, and freehold through acquisition by a Thai company. Freehold means that a property can be owned outright in your name forever. Individual units in a condominium building may be owned freehold by foreign nationals. Leasehold means that the building or land is held on a lease from the land or building owner. The longest registered lease permitted by Thai law is 30 years which will be registered at the Land Department. It is common to contractually agree options to renew the lease for additional extensions beyond the initial 30-year period. A Thai Company is an indirect means of foreign ownership typically for land and villas but commonly for condominiums as well. There are strict rules in setting up and/or maintaining a Thai Company when foreign nationals are involved. Which structure primarily depends on the ‘type’ of property (condominium or house/villa) you are interested in purchasing. Villa or House Ownership (Landed Property) Landed property ownership for non-Thai nationals is best explained by separating the physical building from the land itself. The building (the bricks and mortar) can be owned by a non-Thai national outright in their name in what is called the house registry which secures ownership indefinitely of the structure. In Thailand non-Thai nationals cannot own land outright in their name. Land can be controlled through either a Thai Company or a long-term registered lease. The longest registered lease term by Thai law is 30 years and most developers will offer 3 terms for a total of 90 years. These two methods are the most common vehicles for securing land interest in Thailand. Condominium Ownership Condominium ownership is best explained by looking at an example of a project that has 100 units for sale. In this example, 49 of the total units in this building (or 49% of the total saleable area) can be owned outright by non-Thai nationals in their name. The ownership titles of these 49 units are referred to as Freehold or Foreign Quota. This leaves 51 units remaining in the building (or 51% of the total saleable). The freehold rights to these units are reserved for Thai nationals in what is commonly referred to as the Thai quota. It is entirely possible for the Thai quota to exceed over 51% of the total ownership of a buildings saleable area but the condominium act states that foreign quota can never exceed 49%
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