Foreigners’ Tips for Buying and Selling Property in Thailand

Thailand is a beautiful country known for its breathtaking landscapes, warm climate, and welcoming culture. This makes it an attractive destination for foreign property buyers. Many people wonder if foreigners can buy property in Thailand, and the answer is yes, but with certain restrictions. From bustling cities to serene beaches and tropical green countryside, Thailand offers a variety of settings for everyone. This appeal is also because of the potential for investment growth and the lifestyle it provides to expatriates and retired people.

For foreigners interested in buying property in Thailand, it’s important to understand the legal framework surrounding it. Thailand has specific regulations in place regarding foreign property ownership. This is primarily to protect its land. While direct land ownership is generally restricted for foreigners, there are legal ways for those looking to invest in the Thai real estate market and own property in Thailand.

In this article, we’ll walk you through the process of purchasing property in Thailand, outline the legal frameworks involved, and provide insights into selling property as a foreigner. Whether you’re looking to invest in a vacation home, retire in paradise, or diversify your property portfolio, this article will equip you with the essential knowledge to make informed decisions in the Thai real estate market.

Foreign Ownership of Property in Thailand

As we mentioned above, foreigners can buy property in Thailand, but there are specific rules about what type of property they can own.

Condos

The most up-front option for foreigners looking to buy a condo in Thailand is purchasing condominium units. According to the Condominium Act in Thailand, foreigners are allowed to own condominium units in their names directly, as long as foreign ownership within a single condominium complex does not exceed 49% of the total units. If a condominium complex has 100 condos, 51 of those must be owned by Thai nationals.

This law makes condos a popular choice for foreigners looking to invest in Thai real estate due to its simplicity. When buying a condo in Thailand for foreigners, it is essential to ensure that you are investing in a development that follows the said foreign ownership quota. For foreign quota ownership, payment for the purchase of the condo must be transferred in from outside of Thailand from a bank account in the purchaser’s name, the receiving Thai bank will then be able to provide the relevant Foreign Exchange Transaction (FET) forms, this is essential and must be followed to be able to own under the foreign quota system.

Houses

While foreigners can own condominiums outright in Thailand, the situation is different for houses due to land ownership restrictions. Foreigners cannot directly own land in Thailand, which complicates house ownership. However, there are ways for foreigners to effectively control and live in a house in Thailand. The most common method is to own the physical structure of the house while leasing the land it sits on, typically through a long-term lease agreement of 30 years with options to renew.

Other options include setting up a Thai company to purchase both the house and land (though this method has become more scrutinized recently) or utilizing legal concepts like usufruct or superficies, which grant rights to use and profit from the property for a specified period. When buying a house in Thailand as a foreigner, it’s important to work with a reputable lawyer to ensure the transaction is structured legally and your interests are protected. Remember, while you can own the house structure, the land ownership will always be subject to Thai laws and regulations.

Land and Buildings

When it comes to land ownership, the restrictions are tighter but for the actual building itself, this can be owned in the foreigner’s name. Foreigners are generally not allowed to directly buy land in Thailand but under certain conditions and with proper legal safeguards in place to protect your investment there are still options available for foreigners wishing to have a landed property here.

1. Enter into a long-term land lease contract. 

This is normally for a period of 30 years which is renewable twice giving a total of 90 years. Under Thai law, the first 30-year land lease can be registered at the government land office. Then for the extension of two further 30 years, this is in the contract between the landowner and the lessee which should always be written or approved by your independent lawyer. When structuring such an agreement to buy land in Thailand for foreigners, It’s advisable to show in the contract that payment for the second and third 30-year terms has been paid for in advance and that the land can be sold as freehold to a Thai buyer in the future.

2. Purchase land through a Thai spouse or partner and make use of a Usufruct which is registered at the government land office. 

This gives the foreigner the right to use the land until they pass away at which point the Usufruct expires and cannot be inherited. This option is becoming more widely used but it’s essential to have a Thai Will in place for both the Thai spouse and the foreigner.

3. Hold the land in a Thai Limited Company.

This must be an active trading company in which the foreigner can hold shares up to 49%. As always, we recommend consulting with a lawyer experienced in land ownership.  

4. Invest in Thailand of 40m Thai Baht.

This gives the applicant the right to own up to 1 rai (1,600 sqm) of land. There are specific investment criteria that need to be fulfilled for this option. 

Understanding these legal methods and following the regulations is important for foreigners purchasing property in Thailand. It ensures a secure and compliant investment in one of Southeast Asia’s most attractive real estate markets. For a more in-depth understanding and to navigate these legalities smoothly, it is advised to consult with a real estate lawyer or a reputable property agent in Thailand who is experienced in working with foreign clients.

How to Buy Property in Thailand: A Step-by-Step Guide

Buying property in Thailand as a foreigner involves several crucial steps. Here’s a simple step-by-step guide to help you navigate the process:

Step 1: Research and Identify the Right Property.

• Start by researching online to find properties that match your preferences in terms of location, type, and budget.
• If possible, visit Thailand to see the properties firsthand and get a feel for different areas.

Step 2: Understand the Financial Implications and Arrange Finances.

• Consider the total cost, including taxes, fees, and any renovations. Remember, there are restrictions on how foreigners can send money to Thailand for property purchases, so consulting with a lawyer is essential.
• Most foreigners will need to have funds available as getting a mortgage from a Thai bank can be difficult. Some new developers do offer financing options.

Step 3: Navigate the Legal Process, Including Due Diligence and Contracts.

• For due diligence, hire a reputable lawyer to check the property’s legal status, ensuring no outstanding mortgages, liens, or legal disputes.
• Your lawyer should also review any purchase agreements before you sign. Understand everything you’re agreeing to, including payment schedules and what happens if either party doesn’t fulfill the contract terms.

Step 4: Consult with Real Estate Agents and Lawyers in the Buying Process.

• A good agent, such as Location Real Estate, who is familiar with working with foreigners can guide you through the selection process, offering insights into the local market and helping you negotiate the best deal.
• A lawyer is indispensable for ensuring the legalities of your purchase are covered, from conducting due diligence to advising on the structure of your purchase for compliance with Thai law.

How To Sell Property in Thailand

Selling a property in Thailand as a foreigner can be complex, but it’s manageable with the right knowledge and guidance. One key step is to consult a reputable lawyer when you first buy the property. This ensures you avoid potential problems when it’s time to sell.

Selling Property in Thailand Before the Land Lease Expires

If you’re a foreigner owning a property on a land lease in Thailand and decide to sell it before the lease ends, you can sell property in Thailand to both Thai and foreign nationals if this is outlined in your original purchasing contract. For a Thai buyer, the land can be transferred to freehold. A new 30-year lease can be initiated for a foreign buyer, or they can continue the existing lease.

For example, if you’ve held the property for 5 years, the new buyer would take over the lease for the remaining 25 years. While foreigners can’t own land, they can own the building on the leased land outright. Therefore, when selling, the building is transferred to the new owner, and the land is either transferred or a new lease is given.

Consulting a good lawyer when first purchasing ensures terms like low or no fees for transferring leasehold or freehold rights are included in the agreement and means there are no surprises when it comes to selling.

Selling a house and land in Thailand

Selling a house and land in Thailand involves understanding specific requirements and gathering necessary documents, all of which are typically in Thai. This is why having a Thai lawyer is crucial, as they can help translate and identify important documents. At Location Real Estate, we can guide you on the documents needed, such as the original land title deed, the property’s blue book (tabian baan), the official sales and purchase agreement, the building permit, and the Thai ID of the landowner or lessee’s passport. Each ownership type might require different documents, and our experienced consultants can offer more personalized advice.

Selling a condo in Thailand

When selling a condo, the process is slightly different but also requires specific documents, including the original land title deed, the condo’s blue book, the sales and purchase agreement, and letters from the local juristic office confirming no outstanding debt and that foreign quota allocation is available for new ownership. More details are needed at the time of transfer, which our team can assist with, ensuring a smooth process whether you’re selling a house and land or a condo in Thailand.

Transfer Fee Details

When selling property in Thailand, there are several government fees and taxes involved, which are different for houses and land compared to condos. Here’s a simplified summary:

For Both House/Land and Condos

• A government Transfer fee of 2% on the appraised value of the property, not the sale price.
• Specific business tax is charged at 3.3% on the sale or appraised value, whichever is higher if the property is sold within five years of purchase. Exceptions include transfers to legal heirs, government, or religious institutions, and properties used as the seller’s primary residence for over a year as long as the seller’s name is registered in the house book (tabian baan).
• Stamp Duty is charged at 0.5% on the sale or appraised value, whichever is higher. This is waived if the specific business tax applies.
• Personal Income Tax from the seller’s income from the sale, with rates depending on the ownership duration.
• Withholding Tax if the seller is a company is 1% of the sale or appraised value, whichever is higher.

If you’re considering Thailand property in Hua Hin, it’s common for the seller and buyer to share all transfer costs such as the transfer fee, specific business tax, stamp duty, income tax, and withholding tax equally. This should always be agreed upon at the time an offer is made on a property.

Thailand used to have a general property tax, but it’s now called the Land and Building tax which is paid annually. Rates depend on the type and usage of the property and are calculated from the appraised price. The typical residential rate would be 0.02% but rates are of course subject to change.

Thai inheritance laws

Land ownership in Thailand for foreigners is a complex issue, particularly when it comes to inheritance. Thai inheritance laws differ from many Western countries. Under Thai law, foreign inheritance of property can be a complex process. Inheritance will be subject to Thai probate laws and court approval to appoint an executor is needed.

• For a Land lease, the right and obligation can be inherited as long its stated in the original land lease agreement which is registered at the land office. If the property is held through a Thai company, then the shares in the company will be subject to inheritance. Condos that are held directly in the foreigner’s name can also be inherited.
• For land that has been owned by a foreigner’s Thai Spouse or Partner then that land can be inherited by the foreigner, but they have a maximum of 1 year to sell the land as they are unable to own it in their name.

Remember, the costs and procedures outlined, including the transfer fee, specific business tax, and others, serve as a general guide. Actual costs and legal requirements may vary based on individual circumstances and the specific details of the property being transferred.

Consulting with a lawyer specializing in Thai property law is essential to ensure your wishes are met regarding the future of your property. They can advise you on the most appropriate way to structure your property ownership in Thailand and can help you draft a will that is compliant with Thai law. Both foreigners and their Thai spouse or Partner must have a Will.

Conclusion

Navigating the process of selling or buying property in Thailand, whether it’s a house and land or a condo, involves understanding specific legal and tax obligations. From the initial stage of having the right documents and understanding the transfer fees, specific business tax, stamp duty, and income withholding tax, to the negotiation of who bears these costs, it’s clear that thorough preparation and clear agreements are key.

When purchasing property in Thailand, especially as a foreigner, working with a trusted real estate service like Location Real Estate can make a big difference. We are known for providing excellent service and advice, crucial for both buyers and sellers in Thailand, especially in popular areas like Hua Hin. We highlight the importance of being informed about the entire process of purchasing property in Thailand, including understanding all the fees involved.

Knowing all the steps and costs upfront can make the buying or selling process smoother and more transparent. This ensures that those purchasing property in Thailand are well-prepared and can navigate the complexities of the Thai real estate market effectively. Whether you’re looking to buy a condo, lease land for a villa, or explore other property options, we help our clients own property in the best of terms and as per their needs at the best possible rates. Our expertise in purchasing property in Thailand ensures that you’re not only getting a great property but also a secure investment. Contact us now or fill out our online inquiry form to schedule a consultation with one of our experienced agents.