Taxation is another factor that needs to be taken into account when making your purchase. Those considering investing in property in Thailand are often unaware of the taxes that may arise when buying and selling property.
The Transfer Fee applies to purchases of freehold properties. It is equivalent to 2% of the official appraised value of the property. Whether the buyer or the seller pays the Transfer Fee depends on the terms agreed to by both parties in the Sale and Purchase Agreement. At the date of the ownership transfer, the Transfer Fee is paid to the District Land Office where the property is located.
LEASE REGISTRATION FEE
If the lease term is less than 3 years, a lease registration is not required for the lease to be legally enforceable. Leases exceeding 3 years, and up to 30 years, should be registered with the Land Office in order to ensure enforceability in court. Currently, the Lease Registration Fee is calculated at 1% of the total rental fee for the entire lease term. This cost is often borne equally by the lessor and lessee upon mutual agreement by both parties.
SPECIFIC BUSINESS TAX (SBT)
SBT is payable by companies and individuals who wish to sell a property that has been held for less than a period of 5 years. The tax rate is calculated at 3.3% (including Municipal Tax) of either the sale price or the official appraised value of the property (whichever is greater).
Stamp Duty is imposed at varying rates on certain legal instruments. Stamp Duty is only applicable in cases where SBT is not applied.
WITHHOLDING TAX (WHT)
Where the seller is a company, the WHT is calculated at 1% of either the Land Department’s official appraised value or the contracted sale price (whichever is greater). An individual who earns income from selling a property, which includes condominium units, is subject to WHT under the Revenue Code of Thailand. The WHT is calculated at a progressive rate based on the official appraised value of the property.
When transferring foreign currency funds into Thailand, it is required that the name of the beneficiary listed in the Foreign Transaction Form is the same as that of the buyer, as written in the Sale and Purchase Agreement.
The total amount of transferred funds must not be less than the net price (Thai Baht) of the condominium unit specified in the Sale and Purchase Agreement. In the transfer instructions, please clearly specify the purpose of the transaction as: “For the purchase of a condominium in Thailand”.