Property Guide

The options for foreigner buying property in Thailand

Land Leases: Thai law allows a foreigner to acquire Thailand Land through a 30 years lease, with the possibility of renewing the lease for additional 30 year periods twice, giving a total of 90 years, effective ownership.

Registered Thai Company: Thailand registered companies with majority Thai ownership are able to buy land in Thailand. You structure the company formation to ensure that, whilst your stake is no more than 39%, the voting rights are weighted so that you retain the controlling interest in the company.

Investment (BOI): Thai property law may allow foreigners to buy and own up to 1 Rai of land for residential purposes base on investment of 40 million baht for at least 5 consecutive years. This requires approval from the Board of Investment (BOI).

Thai Spouse: A Thai spouse of foreigner may be allowed to buy land or property in Thailand in his or her own name. However, the married couple is required to sign declaration at the Land Department to state that the funds used are the separate property of the Thai spouse. This may have the effect of waiving any right on the land property by the Non - Thai spouse.

Structure Ownership: A Thai company or Thai spouse of a foreigner may grant a Right of Superficies in favor of foreigner, giving him/her the right to personally own constructions on the land. A foreigner can be registered as the owner of a Thailand house without owning the land. The Right of Superficies can be conceded for 30 years and can be renewed for further 30 years if agreed.

Condo: Foreigners are legally entitles to have full ownership of Thailand apartments in registered condominium buildings or "condos" for short. The amount of foreign ownership within the development is limited to 49 %.

Thailand Property & Land Taxes

Update: For a period of 1 year beginning April 2008, property Transfer Fees will be reduced from 2% to 0.01% and Specific Business Tax reduced from 3.3% to 0.1%.
Whenever a property in Thailand is purchased or sold there are four potential taxes/fees to be paid. Which of these taxes/fees will be applicable depends on the details of the transaction, the seller and the duration of the seller's ownership. It is also significant to note that most of the fees are calculated relative to the government's "tax assessment value" of the property and this value is usually well below the market value.

Transfer Fee
This is based on the appraised value of the property and is normally shared equally between both buyer and seller, although this needs to be agreed by both parties.

Lease Registration Fee
This is based on the total rent payable over the lease term, and is normally shared equally between the lesser and lessee, although this must be agreed by both parties.

Specific Business Tax
Specific Business Tax (SBT) is payable by companies and individuals who have owned the property for less than five years. It is based on the official appraised value or the contracted price, whichever is highest.
An individual may be exempt from SBT if they have used the property as their principal residence and have had their name in the household registration certificate for at least one year.

Stamp Duty
Stamp Duty is only paid when SBT is not applicable and is based on the official appraised value or the contracted price, whichever is highest. Withholding Tax (WHT)
If the seller is a company, the WHT on the sale of the property is calculated at 1% of the official appraised value or the contracted price, whichever is higher. If the seller is an individual, the WHT is based on the individual's marginal tax rate (except that the first 100,000 baht is taxed at 5% rather than falling under the tax-free threshold) after deducting from the official appraisal price a standard deduction based on the number of years of ownership.

Property Taxes
Once you have acquired the property, there are 2 different types of tax levied on property in Thailand that you need to be aware of: Land Tax
This is an annual tax levied on land ownership equivalent to just a few Baht per rai. The amount is often so miniscule that in practice the body charged to collect it, rarely bothers to do so. When they do collect it, its usually after several years when the amount has accumulated. Structures Usage Tax
This only applies to properties used for commercial purposes. This is applicable at the rate of 12.5% on the actual or assessed gross rental value of the property. However, this notional value is well below the commercial market rental value.

Notes
If the house is purchased through a company, you need to consider that corporate tax is higher than personal tax, and the cost of setting up the company has to be considered as part of the initial investment, even if this is relatively modest.
If you wish to purchase property in Thailand using Thai Baht, ensure that your funds are transferred to Thailand in foreign currency and converted to Thai Baht here. The receiving bank will issue a Foreign Exchange Transaction Form confirming the transaction for individual inward transfers exceeding 20,000 US$, which is one of the documents you may need in the future if you wish to repatriate funds without incurring tax penalties.
Repatriation of investment funds and repayment of overseas borrowing in foreign currency can be remitted freely upon submission of supporting evidence. One of these documents would be the Foreign Exchange Transaction Form mentioned above, or in respect of a foreign currency loan and the loan contract. Remittance of funds without proper documentation could be regarded as income and become liable for tax.

Forms of Land Title

Land may be acquired by sales, hire-purchase, gift, inheritance or adverse possession. A sale of land must be made by a written document and must be registered by the Land Department Office to be effective.

There are broadly 4 types of Land Title in Thailand, they being Title Deeds (Chanote), Confirmed Certificate of Use (Nor Sor Saam Kor), Certificate of Use (Ngor Sor Saam) and Certificate of Possession (Sor Kor Nung) are common evidence of land ownership, possessory rights and other interests in land. An explaination of each follows.

Chanote (Title Deeds)
Freehold title with the owner able to leave the land unattended. Title deeds are registered at the Land Department in the province in which the land is located, and there is no wating time required to transfer title. Chanote titles are accurately surveyed, plotted in relation to a national survey grid and also marked by unique numbered marker posts set in the ground. It is the long term goal of the Land Department, that all land in Thailand will be covered under the Chanote title system.

Nor Sor Saam Kor (Confirmed Certificate of Use)
This certifies that the person named on the certificate has the confirmed right to use the land, implying all requirements for the issuance of title deed have been met, and issuance of the title deed is pending. They may be sold, leased, used as mortgage collateral etc. The holder of this certificate cannot leave the land unattended for more than 12 years.
The Chanoted and the Nor. Sor. Sam. Kor. Are the only titles over which register able right of ownership or lease can exist, and are as such the only ones that a prudent foreigner should consider.

Nor Sor Sam (Certificate of Use)
Similar to the above Confirmed Certificate of Use except that not all of the formalities to certify the right to use have been performed. Before a transfer can be made, a notice of intent must be posted and then 30 days public notice is necessary before any change of status over the land can be registered.

Sor Kor Nung (Certificate of Possession)
This recognizes that a person is in possession of land but the Certificate does not imply that there are any rights associated which the possession. It is not transferable, but a person in possession may transfer physical possession and the new possessor may apply for a new Certificate of Possession.

Land Measurements in Thailand

Land in Thailand is measured in talang wah, ngarn and rai.

1 talang wah =	4 square meters
100 talang wah =	1 ngarn or 400 square meters
1 rai =	4 ngarn or 1,600 square meters

In other words:

1 acre =	2.529 rai
1 hectare =	6 rai and 1 ngarn