Welcome to the Siam Propz Buyer’s Guide for acquiring property in the beautiful Kingdom of Thailand. This guide has been designed to provide you with key information to help you navigate your property-buying journey.
At Siam Propz, we recommend hiring one of our expert lawyers to help you navigate the buying process in Thailand. As it can be different from your home country, our lawyers can help advise you on important laws, procedures, and tasks that relate to buying or renting a property or land in Thailand.
One of the first things one should do when looking to purchase a property or land is to research the factors that could impact your investment.
Research and Due Diligence
It is best to start your real estate journey by doing property market research. This information will reveal property types and current market conditions.
Furthermore, Thailand has specific laws and regulations concerning foreign ownership of property. As a foreigner, generally, you cannot own land directly. However, there are alternative ownership structures like leasehold (long-term lease agreements) and purchasing property through a Thai company. It’s essential to understand these legal restrictions and explore the available options for foreign buyers.
Here are the main rules to help you navigate owning property in Thailand:
1.Leasehold Ownership
Foreigners can acquire land through a leasehold arrangement. A leasehold allows you to lease land from a Thai landowner for a specific period, typically 30 years. Some lease agreements may have options for renewal, but they should be negotiated upfront.
2.Condominium Ownership
Foreigners are allowed to own condominium units in Thailand in their names, as long as the total foreign ownership in the condominium building does not exceed 49% of the total unit area. This means you can own a unit in a condominium building, but certain buildings may have reached the foreign ownership limit, so it’s essential to check before purchasing.
3.Thai Company Ownership
Another common approach for foreigners to acquire land is by setting up a Thai company. Thai law allows foreign individuals to own up to 49% of a Thai company’s shares, while the remaining 51% must be held by Thai nationals. The company can then acquire land in its name. However, it’s crucial to note that this method involves legal and tax considerations, and setting up a Thai company solely for property ownership is subject to scrutiny to prevent circumventing the foreign ownership restrictions.
Beware of Nominee Arrangements!!!!!!!
While it’s tempting for some foreigners to use Thai nominees (individuals acting as proxies) to purchase land, this practice is illegal and strongly discouraged. Thai laws prohibit such arrangements, and they can lead to severe legal consequences.
Land Titles and Ownership Verification
Once you have selected your potential property, it is essential to verify the property’s ownership and title with the local land office. Part of the verification process includes ensuring that the seller has legal ownership of the property and that it is free from any liens or encumbrances. Engaging a competent lawyer to conduct a due diligence check on the property is recommended to ensure its legitimacy and to avoid potential legal issues.
Other factors to consider include the details of the property’s existing infrastructure and future development plans. Variables such as proximity to nightlife, schools, restaurants, and shopping should be taken into consideration when choosing your future property.
If you plan to rent out your property, researching your chosen property’s rental income potential is an important factor in making the right decision.
Understand Taxes and Fees
Be aware of the taxes and fees associated with property transactions in Thailand. These may include transfer fees, stamp duties, and withholding tax.
Transfer Fee: The transfer fee is a tax paid to the government when ownership of the property is transferred from the seller to the buyer. The transfer fee is typically based on a percentage of the property’s appraised value as assessed by the local land office. these rates may vary or change, so it’s essential to check with the local land office for the latest rates.
Stamp Duty: Stamp duty is another tax paid upon the transfer of ownership, and it is also based on the property’s appraised value. The stamp duty rate is generally lower than the transfer fee and may be subject to additional fees for document certification.
Specific Business Tax (SBT): The Specific Business Tax is applicable if the property is sold within five years of ownership. It is calculated based on the selling price or the appraised value, whichever is higher.
Withholding Tax (Income Tax): Withholding tax is applicable when the seller is a company, and it is calculated based on the appraised value or the actual selling price, whichever is higher. The withholding tax rate is usually 1% for individuals or 1% of the appraised value for companies. If the seller is an individual, the tax rate is calculated on a progressive scale based on the seller’s income.
Income Tax (For Rental Income): If you plan to rent out the property, you will be subject to income tax on the rental income generated. The tax rate is progressive and varies based on your annual rental income.
Common Area Fee (Condominiums): If you purchase a condominium unit, you may be required to pay common area fees to cover the maintenance and management of shared facilities and common areas within the condominium building or complex.
It’s important to note that tax regulations may change over time, so it’s essential to verify the current tax rates and requirements with the local tax authorities or consult with a qualified tax advisor or lawyer.
Financing Your Property
If you require financing, we recommend exploring your options with Thai banks or considering other financing options in your home country. Obtaining a loan through a Thai bank is one option for financing your property purchase.
International financing is another option for obtaining the funds needed to purchase property in Thailand. Be sure to weigh loan terms, interest rates, and currency rates.
Once you have chosen your property, a few more steps are needed to ensure that you are well on your way to achieving your tropical slice of paradise!
1.Finalise the Sale: Finalising the sale is the last crucial step in the property buying process. It involves ensuring that all necessary documents are in order, payments are made according to legal procedures, and the property ownership is officially transferred to your name.
2.Sales and Purchase Agreement: The sales and purchase agreement is a legally binding contract that outlines the terms and conditions of the property sale. It includes details such as the property’s description, purchase price, payment terms, and any other agreed-upon terms. Ensure that this document accurately reflects all the agreed-upon terms and that both parties sign it.
3.Due Diligence Clearance: Before proceeding with the final sale, ensure that all due diligence checks have been completed, and there are no outstanding issues or disputes related to the property. This includes verifying ownership, titles, and any encumbrances.
4.Earnest Money Deposit (if applicable): In some cases, the buyer may be required to provide an earnest money deposit to the seller as a show of good faith. This deposit is typically held in escrow until the sale is completed. If the sale falls through due to the seller’s fault, the earnest money is usually returned to the buyer.
5.Transfer of Funds: Work with your bank or financial institution to arrange the necessary funds for the purchase. Ensure that the funds are transferred to the seller’s account following the agreed-upon payment schedule.
6.Tax and Fee Payment: Be prepared to pay the applicable taxes and fees associated with the property purchase, such as transfer fees and stamp duties. These payments are typically made at the local land office during the transfer process.
7.Transfer of Ownership: The transfer of ownership is executed at the local land office. Both the buyer and the seller, or their legal representatives, must be present to complete the transfer. The land office will verify the documents, witness the signing of the transfer deed, and officially transfer the property ownership from the seller to the buyer.
8.Registration of Ownership: After the transfer process is complete, the land office will register the new ownership details and update the property’s official title deed (Chanote) or other relevant documents to reflect the change in ownership.
Obtain the Title Deed: Once the transfer and registration process is complete, you will receive the updated title deed or proof of ownership from the land office. This document serves as official proof that you are now the rightful owner of the property. Congratulations!!!!!
Post-Sale Obligations: After the sale is finalised, it’s essential to fulfil any post-sale obligations, such as updating utility accounts, notifying relevant authorities of the change in ownership, and managing any property-related matters.
At Siam Propz, we aim to offer you the best experience possible when choosing to purchase property in Koh Samui.
Our highly-qualified real estate agents and lawyers can play a crucial role in making your property purchase experience smoother and more successful.
Whether or not you choose us at Siam Propz, know that there are a few things that any reputable lawyer should include in their services:
-Conducting due diligence services
-Verifying property ownership and titles
-Local land office verification
-Confirm title deed and type
-Boundary and survey checks
-Securing optional title insurance
-Seller’s identity verification
-Drafting and reviews of all legal documents (including the sales and purchase agreement)
-Draft an optional lease agreement
-Provide optional escrow services
-Offer tax and financial advice
-Represent you in negotiations
-Offer guidance on ownership structures
-Carry out closing and registration procedures
-Provide post-purchase assistance.
Have questions? We are just a click or call away! Feel free to ring us at +660922499664 or email us at info@siampropz.com. We look forward to hearing from you and answering any of your questions!
