General Property Ownership Explained 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%
What you will have to pay after being Real Estate Investor?
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
Transfer fee 2% (from the Land Department appraisal value of the property)
Withholding tax +/- 3% (of the property selling price)
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.