The land of smiles really smiles at foreigners. Many choose Pattaya or Phuket for permanent residence, some come for 3-4 months for the winter or for 2-3 weeks on vacation.
Often a long-term romance with Thailand ends with the purchase of real estate on the coast. Your own apartment or villa by the year-round warm sea - what could be better? However, having conceived such an acquisition, it is necessary to clearly understand what additional costs are coming at the purchase stage and beyond.
What kind of taxes and in what amount you have to pay depends on whether the object is registered in a freehold or a leasehold. Recall that a freehold is a full property, a leasehold is a lease for up to 90 years (30+30+30 ). In addition, transactions in the primary and secondary markets have their own characteristics.
Taxes on secondary market transactions
The tax on registration of ownership is paid to the land department once on the day of the conclusion of the contract.
On average, the tax on the purchase of an object in a freehold from the owner: 4.5-6.5%. Usually the buyer and seller divide it in half. The conditions may be different by agreement of the parties.
The total amount consists of four items: transfer of ownership fee, stamp duty, income tax, business tax.
- The transfer fee is 2% of the cadastral value of the property. The cadastral value is calculated in the land department and differs from the amount specified in the contract in a smaller way.
- Stamp duty is 0.5% of the highest value of the property (specified in the contract or cadastral). It is paid if the object was owned by the last owner for more than 5 years.
- Business tax (specific business tax) 3.3% of the highest value of the real estate (specified in the contract or the cadastral value established by the land department). The tax is paid if the property has already been resold within the previous 5 years (in this case, stamp duty is not paid).
- Income tax (withholding tax). It is calculated using a complex formula that takes into account the cadastral value of the property, the length of time during which the seller owned it, and the individual rate of this tax.
Note that the exact amount of tax depends on many factors and is calculated by employees of the land department!
When buying a standard apartment in freehold 35–40 sq.m. m from the owner worth 3 million baht ($88,000), the total tax on registration of the right will be 190,000–210,000 baht. If the seller owned this property for more than 5 years, the amount will be less, namely 140,000150,000 baht. Which of the parties will take over which share by agreement (the terms are fixed in the contract), most often 50:50.
Important! Capital gains tax on the sale of real estate is already included in this single tax.
When registering a lease, the tax is fixed 1.1% of the transaction amount.
It consists of two positions:
- the fee for the registration of the right of lease (lease registration fee) – 1%;
- stamp duty – 0,1%.
Taxes on transactions in the primary market
When purchasing a freehold property from a developer, the buyer pays only a transfer fee (transfer fee) of 2%. Developers often share it with customers 50:50, which is exactly what the law on consumer protection says. The rest of the tax burden - approximately 6% of the cost of the object - should fall on the developer.
When buying a one-bedroom apartment on the primary market (35–40 sq.m. m) at a cost of 3 million baht, the tax on registration of the transaction will be 1%, or 30,000 baht.
If housing in a new building is registered as a leasehold, the tax is the same as in transactions on the secondary market - 1.1%. Clearly following the letter of the law, it should also be divided in half between the client and the company, but in practice this does not always happen.
When buying an object under construction, it will not be possible to immediately pay the tax to the land department, since the property has not yet been entered into the cadastre. Often, the developer collects tax from buyers at the conclusion of the transaction, and transfers them to the state account after the delivery of the house. This moment is prescribed in the contract.
Tax on property ownership in Thailand
Since 2020, the country has introduced a real estate tax. It is paid once a year and ranges from 0.03% to 0.1% of the cadastral value of an apartment or villa. The size depends on the type and cost of housing and on whether it is used for personal or commercial purposes.
The exemption from property tax is valid for owners registered in the facility. This rule applies to owners of villas worth up to 50 million baht and to owners of apartments worth up to 10 million baht. If the owner is not registered in the housing or owns several properties, the tax is calculated on the entire cadastral value of the property.
- When owning a villa (when both real estate and land are in possession), the tax rate, depending on the value of the object, may vary between 0.03 and 0.1%.
- If an apartment is owned (only real estate is owned), the tax rate is 0.020.1%.
In practice, for a typical one- or two-bedroom apartment, the tax is approximately 300 baht per year.
Tax receipts, as a rule, come to the address of the office of the condominium (management company), and then the employees of the Criminal Code notify the owners of the apartments. If we are talking about a villa, then the documents for payment are sent to the address of the house.
Blthank you for your help in preparing the material:
Denis Babushkin, the head, and Anna Baranova, the sales manager of the company LETO Real Estate
Anna Larina, Director of the Department of Foreign Real Estate NF Group
