Read our definitive guide before buying property in Thailand
We all know about the temptations that Thailand has to offer, including exotic beaches, great healthcare and local food that cost nothing compared to home.
It’s not surprising why so many foreigners decide to purchase a property in Thailand to use as a retirement retreat, or just a place to spend a month or two every year, keeping it as a substitute to savings in their bank.
Maybe you have already decided to purchase a property or just want to learn more about real estate in Thailand. Whatever your goal might be you need to do some due diligence beforehand.
In this article we will cover all the items you need to know, before making any decisions to buy property in Thailand.
Can foreigners buy property in Thailand?
Indeed foreigners can buy property in Thailand, lets look at the types of property a foreigner can buy and their procedures.
Buying a condo or villa?
Foreigners mostly prefer to purchase a condo or an apartment in Thailand because it’s easy and straight forward to own them as freehold.
The benefits with condos are often general worldwide:
They are easy to maintain
Easy to rent out and sell
Less expensive than houses with land
Have access to facilities such as gym, pools and supermarkets.
Condo or apartment ownership in Thailand in general, and in Phuket specifically, is efficient and easy to understand. Every project will have a percentage quota for Freehold and Leasehold:
at least 51% of the project will have to be owned in Leasehold Ownership or by Thai citizens;
remaining (up to maximum of 49%) of the project can be in Freehold Ownership by Foreigners
This quota is calculated by the total area of the project (square meters).
As a foreign buyer, you can choose either Freehold or Leasehold ownership. Each property buyer will have 2 choices regarding their ownership when purchasing property in Phuket or in other provinces of Thailand.
This option is where you own your property outright forever and you are able to sell your property to the next buyer in Freehold Ownership.
Some buyers get confused, so to avoid further confusion:
If you own property in Freehold Ownership, you own all 100% of your property solely as a foreigner in Thailand.
The ownership fee will cost each buyer in the region of around 300,000 THB (less than US$10,000) paid one time with most projects. The registration fee when the unit is transferred from the Developer’s name to the buyer’s name is calculated at 3.3% from the purchase price.
For those who are not familiar what title deed is, it’s a document showing that you own the property and all the rights it brings.
Strata title is used for multi-level apartment blocks with common areas, such as pools and gyms.
If you’ve ever been to the UK, you might be aware of the Commonhold, or if you have been to the US where they have the Condominium systems.
Buying and Selling Off Plan
Many condo units are sold by the developer before or during the construction period. Buyers enjoy steep discounts by doing this, and the developer provide easier payment plans along with the ability to say that their project is “selling out”.
It usually takes two to four years for a condo building to finish construction from the time sales first begin. Because of this, there’s a market in buying units off-plan, and selling them at a profit when the building is closer to being finished.
To reserve a unit and sign the contracts, you usualy need to:
Make a reservation fee of few thousand dollars
Make a down payment of 15-40% after the first week.
Pay remaining amount in three to five installments, that are usually linked to theconstruction progress
Make the final payment of 5 – 20% with getting the key of your new condominium
Some developers in Bangkok, especially big ones, can provide a payment installments plan.
Also, in some case, you may have a the right to transfer the condo unit during construction or just before it was finished. This is an option to flip your purchase contract to another name. Please refer to “Pre-Sale & Flip”
Over a period of several years, property values can appreciate significantly. There have been cases of people buying units off-plan and selling the contracts before completion by as much as a 100% markup.
Purchasing a Villa
For foreigners who want to reside in less bustling areas, maybe closer to the ocean, a villa can be a preffered choice. We also hear from some customers, that they prefer a villa just because they used to live in villa at their home country. This is a question of habits and lifestyle.
Since owning villa means also owning a land, there is no straight way to have freehold ownership of villa by foreigners in Thailand. So, what are options?
You can own a villa in leasehold ownership, in a very secure way.
Leasehold ownership is where you own your property for at least 90 years – 3 periods of 30 years each. Each buyer will go to The Land Department every 30 years to renew their ownership. There is no ownership fee to pay with the Leasehold option and if you did decide to sell your property then the new buyer would take on your property as Leasehold Ownership. The registration fee when the unit is transferred from the Developer’s name to the buyer’s name is calculated at 1.1% from the purchase price.
Buyers that are planning to have their property for a long time will often opt to go with the Freehold option. Buyers that have the intention of selling their property within the first 10 years will often go with the Leasehold option as it is cheaper. Both options are safe and very convenient for each buyer.
Buying property with the help of a spouse
Another option is to let your Thai spouse/husband buy the land and in turn let the person lease the land to you.
This might feel safer as you have a more close person to rely on. However, beware that if you file for a divorce, your property might be treated as a separate asset of your Thai spouse.
Setting up a limited company to buy property
Other option is to set up a limited company in Thailand, like in the US. The property can thereafter be purchased by the company you opened.
The issue, also in this case, is that foreigners cannot own more than 49% of a limited company in Thailand.
This specific option is not streight forward and there may be lot of details. For example, some nationals, like USA, can own company in Thailnd fully. Another option is to have a BOI (Board of Investment) license, that also provides a right to own company by foreigners. We strongly recommend to advice with qualified property consultants and or with lawyer, who can suggest the best solution for your specific case. Sometimes it’s worth to put in that extra effort if you plan to stay in Thailand for a longer time and want to investigate different options and destination for right decision.
Buying land as a foreigner in Thailand
A foreigner cannot own land outright. Owning land is similar to owning villa, since villa comes with a land. Please refer to above sections.
How Much are Property Taxes in Thailand?
Unlike some European countries such as Spain and Cyprus, there are no general residential property taxes (capital tax on property imposed by the government) in Thailand.
As a foreigner owning property in Thailand, you pay ZERO property taxes.
However there are cases where a property tax does come into effect as described below:
Properties put to commercial use (residential houses not ‘owner occupied’ and commercial buildings) must under the Building and Land Tax Act pay a ‘rental’ tax at a rate of 12,5 % of the annual rental value or the annual assessed rental value, whichever is higher. The annual assessed rental value is based on a calculation method over the appraised value of the property (land, house, apartment). If anyone leases a property at a rent lower than a reasonable rent, the amount could be adjusted and lessor could be taxed on what the rent should have been.
It is the property owner’s responsibility to inform the local authorities (Or.Bor.Tor or local municipality) and pay building and land tax before the end of February each year
Owner-occupied residences are exempt from building and land tax (only for the first property, the second or more properties are not automatically exempt). Not regarded as owner occupied is a situation where a foreigner owns a property through a Thai juristic entity (Thai limited company) and uses the house as his holiday home or residence. If the land and buildings or any other improvements are owned by a company and used fo…