Can a foreigner own: a condo, land, building, house?

What is a Foreign Exchange Transaction Form? What is a Chanote?

What is Sinking Fund? How to open a Thai bank account?

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Can a foreigner own a freehold condominium in Thailand?

Buying a Condominium in Thailand is perhaps the simplest and easiest option available to foreigners who want to own the property. The only restriction on purchasing a Condominium in Thailand is that the percentage of livable apace sold to foreigners cannot exceed 49% of the total space available of the complex and that the funds used to buy the Condominium have been limited from abroad and recoded as such by a Thai Bank on a foreign Exchange Transaction From ( Tor Tor 3 ). The owner of each Condominium unit is issued with a title deed ( Chanote) clearly showing the foreigner as the legal owner of the unit.

Are foreigners allowed to own land in Thailand?

Under strict application of the exciting law it is officially prohibited for foreigners, including both individuals and juristic entities (e.g., companies or partnerships) to own land in Thailand. However, there are exceptions to the prohibition found the law itself. There are also other methods of arranging for the purchase of land in Thailand. The land Code has been amended to allow foreigners to own land if the following requirements are met:
1. The land is for residential purposes;
2. The land does not exceed one rai ( in area; see conversion to western unit below);
3. No less then 40 million baht is limited into Thailand for investment;
4. Foreigners abide by Ministerial Regulations governing the nature of the business that the foreigners will engage in, the period of time for maintenance of the investment, and location of the land owned;
5. Permission is granted by the Board of Investment (BOI);
According to section 97 of the Thai Land Law, the definition of a foreigner includes a Thai registered company or partnership in which more than 49% of the capital is owned by foreigners or of which more than half the shareholders or partners are foreign citizens.

Can a foreigner acquire land or property in Thailand through a Limited Company?

One method foreigner can employ to acquire land or property is by forming joint venture companies with majority Thai ownership but with adequate safeguards to protect the foreigners' minority interest. If a foreigner plans to run a business in Thailand then he may purchase the land freehold though his Thai majority limited company. The land will be owned by the Thai Company, not by the individual. It is important that the non Thai minority shareholder should not own more than 38%, as any foreign shareholding structure greater than this is normally investigated by the Land department.

Can foreigners own building even if they don't own the land?

YES. Although Thai law prohibits foreigners from owning land in Thailand, foreigners have the right to own buildings. A common structure is for the foreigner to enter into a long- term lease for the land from a Thai company or individual, and to build the home which the foreigner owns.

Can a foreigner enter into a long-term lease for land?

Because of the barriers in place to the purchase of land by foreigners, one of the most effective ways to acquire land that a building resides on is to "purchase" the land on a 30-year leasehold with an option to extend the lease for subsequent 30- year periods. Leases are limited to 30 years, except on land for industrial purposes, which may be established for 50 years. Similarly, lease extensions are capped at 30 and 50 years respectively. Possession of the land leased for an already owned building is protected by the fact that the building rest on the land; ownership of the building is separate from the land and cannot be seized by the lesser once the lease expires. Leases exceeding three years are enforceable for only three years unless they are registered with the Land Department. Therefore, a 30- year lease must be registered with the Land Department. In addition, a lease continues to be valid even in the event the property on the land is sold.

Can a foreigner legally rent out property in Thailand?

Yes. A foreign- owned property may be leased out to another third party. Rental revenue is subject to a 12.5% tax on the annual income.

How is a Condominium defined by Thai law?

The Condominium Act ( The Company- Owned Housing Act of 2522) defines a condominium as a building featuring privately-owned property and common property , and a building that can have its separate portions sold individuals or groups for personal property ownership. The owners of condominium unit own the land though a juristic person of condominium.

What is a Foreign Exchange Transaction Form?- Is it the same as a Tor Tor 3?

This is an official bank document issued by the receiving bank upon the receipt of foreign currency into your bank account in Thailand. You must request a Foreign Exchange Transaction Form ( yes a Tor Tor 3is the same thing ) from your bank when you are remitting funds to Thailand for the purposes of purchasing a Condominium in Thailand. And the foreign Exchange Transaction Form must specify that the remittance is solely for the purpose of purchase a property in Thailand. This form is only necessary if you transfer the equivalent of over $ 20,000USD into Thailand in any foreign currency to buy a property and at a later date you wish to sell the property and transfer the money bank out of the country. The following lists the scenarios for obtaining a Tor Tor 3 (TT3):
1. If you transfer a foreign currency amount greater than $ 20,000 USD to Thailand straight into the developer's bank account, then the developer can get the TT3 form from the bank for you.
2. If you transfer a foreign currency amount greater than $ 20,000 USD to Thailand into your real estate agent's bank account, then the real estate agent can get the TT3 form from the bank for you.
3. If you transfer a foreign currency amount greater than $ 20,000 USD into a bank account you hold in Thailand and subsequently transfer the money to the developer's bank account in Thailand then you are responsible for getting the TT3 form from your bank.
Please note that if you have transferred money into Thailand over 10 years ago and you lose or did not get a TT3 banks don't hold records that long and there is no way the bank can provide you with a TT3. Keep any and all TT3 in a safe and secure place.

What is a Chanote?

A Chanote or Land Title Deed is the purest from of evidence that and individual owns property. Chanote are given only for areas of Thailand which are surveyed. You can see example of chanote here.

What are the requirements for a foreign individual or organization to purchase a condominium in Thailand?

In order to purchase a condominium certain requirements must be met, as follows:
1. A foreigner or foreign legal entities who brings foreign currency into Thailand or uses foreign currency from their deposit account. This requirement is normally documented by the presentation of a Tor Tor 3 from which is provided by the bank receiving and incoming remittance from abroad,
2. A foreigner has permanent residence in Thailand in accordance with Thai immigration law,
3. A foreigner is allowed into or resides in Thailand in accordance with Thai investment Promotion law, or
4. A foreigner regal entity is in accordance with the Announcement of the Foreigner Business Act BE 2542 ( AD1999), and has been grated an Investment Promotion Certificate in accordance with the Investment Promotion law.

What taxes, Fees and Costs are applicable to purchasing a property in Thailand?

The following taxes apply for purchases of property in Thailand:

  1. Transfer Fee of 2 % ( 0.01 % until April 2009) of assessed value.
  2. Business Tax of 3.3 % (0.11 % until April 2009) of the sales price or the assessed value, whichever is higher, must be paid in cases that a seller has a property in his possession for less than 5 years.
  3. Stamp Duty of 0.5 % of the appraised price must be paid only when a specific business tax is not applicable.

NOTE: the matter of who pays for these taxes is negotiated at time of offer. It is very common that these taxes are shared equally between buyer and seller.

There is no capital Gains Tax in Thailand, unlike many countries, and Income Tax (between 1.0% and 3.0%) on property is the comparable replacement. There are no set rules on who pays the Income Tax, and it is just another part of the bargaining process, as with all the other costs of the transfer of ownership.

What Taxes, Fees and Costs are applicable when I sell a property in Thailand?

A person earning money from selling property in Thailand is taxed as followed:

  • A with holding tax ( from 0 to 37%) the tax rate varies based on the income of the seller. The basis of the tax is the government appraised value less a deduction of between 50% and 92%, depending on how long you own the condo. The longer you own the condo, the lower the deduction from the appraised value, and therefore your with holding tax liability is higher.
  • A specific business tax of 3.3% of the sale price or the purchase price, whichever is higher, must be paid in case that a buyer has a property in his possession for less than 5 years. Note that this tax has been temporarily reduced to 0.11% though April 2009.
  • A fee of transfer of ownership of 2% of the appraised price. Note that this tax has been temporarily deduced 0.01% though April 2009.
  • A government stamp duty of 0.5% of the appraised price must be paid only when a specific business tax is not applicable.

A with holding tax rate varies based on the income of the seller as follows:

  1. Income of 0 to 80,000 Baht: 0%
  2. 80,001 to 100,000: 5%
  3. 100,001 to 500,000: 10%
  4. 500,001 to 1,000,000: 20%
  5. 1,000,001 to 4,000,000: 30%
  6. 4,000,001 and above: 37%

Specific withholding rates are as follows:

  1. 92% if you have held the property for one year;
  2. 84% for two years;
  3. 77% for three years;
  4. 71% for four years;
  5. 65% for five years;
  6. 60% for six years;
  7. 55% for seven years;
  8. 50% for eight years or more.

What is Sinking Fund?

A sinking fund is a reserve fund established, usually at the time a new condominium project is constructed , to pay for any non- routine, structural damages or repairs and replacement to commons areas or infrastructure. This fund can be used only if agreed to buy the condo association.

I am considering purchasing a newly lunched project to be completed in the future? Do you any advice for me ?

Buying a condo or house 'off plan' will normally provide favorable pricing and can be a very good investment. Make sure you conduct adequate due diligence before signing a contract and depositing money. Inquire about permits and EIA approvals. Know who the developer is and check out the projects they have done in the past. Understand the payment structure and make sure you have the required funds to complete payments on time. Obtain a copy of the contract and review with your property agent or lawyer to make sure you understand everything clearly.

How do I open a Thai bank account as a foreign citizen?

Many Thai banks require that a foreign citizen have either a work permit or a retirement visa to open a bank account in Thailand. Certain banks will permit a foreign citizen to open a bank account with a copy of singed lease or purchase and sale agreement while other banks require nothing more than your passport. Bank policies vary and you should have no trouble opening a local bank account.

Are there property taxes in Thailand?

There are no property taxes as such in Thailand that are exactly equivalent to the property taxes in the west. The most comparable taxes on properties in Thailand are the Land Tax and the Structures Usage Tax. The Land Tax levied on land is so miniscule, that in practice the body charged to collect it, rarely bothers to do so, and if they do, they usually wait several years until the amount accumulates. The second tax, the Structures Usage Tax, relates to buildings, is collected by the municipal office or district office, and is only applied to properties used for commercial purpose.

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