Doctor Property considers itself a responsible and reputable real estate agency. We do not wish to withhold information from you nor will we embellish things just to make a quick sale. We are bound by our quality standards, and we want to maintain and build our reputation. Therefore, we like to point out not only the many benefits, but also some of the risks when purchasing a property in Thailand. Risk is present when purchasing anything, anywhere – and the cure is having the right knowledge, from people you can trust! We wish to welcome you as a neighbour to this somewhat close community and as such, your interests become our interests.
In Thailand, real estate purchasing works somewhat differently than in Europe when it comes to foreigners wanting to buy. We would like to give you some information in advance so that you have the best possible start for your new dream home, land or apartment. However, this information should not be considered to contain legally binding statements. For this, we recommend that you enlist the services of a good local lawyer. If you wish, we can recommend lawyers who specialise in this subject.
First of all, any foreign national wishing to purchase property in Thailand should be aware that Thai local and national laws are not designed to provide many benefits to foreign nationals in terms of land ownership. The effect of this has unfortunately been seen on numerous occasions in the past where foreigners without the right knowledge entered into agreements they did not fully understand with a Thai partner or girlfriend they thought they could trust, only to be relieved of their investment further down the line. This is not something to be concerned about when dealing with a professional service such as the one we hope to provide to you. For every horror story, there are hundreds more tales of success, otherwise who would ever want to invest here? You should always seek assistance from a lawyer in order to provide you with the greatest possible legal certainty and fact check everything you read online, including here!
Many interested parties will firstly find themselves asking these questions:
Can a Foreign National Ever Own Land in Thailand?
Short answer; this question has to be responded to with a “no”. Exceptions do exist, however, but there are various and more practical ways the right to use of land can be secured for building a house.
Option 1: Leasing.
The land must be legally owned by a Thai entity, such as a Thai citizen or company. The foreigner will then lease the use of the land for a maximum of 30 years per single agreement. This agreement may be renewed further if both parties agree, with some projects offering the 30+30+30 year leases, giving a total lease term of 90 years . This is an attractive option for the foreign investor as it provides the most protective legal framework with a long enough term to realise a return well in excess of the initial investment. If buying a completed villa or house and you wish to lease, you will enter into an agreement with the land owner. Buildings, and the land upon which they sit are 2 separate assets distinct from one another, and there is also a “mixed” structure of property ownership whereby the foreigner leases the land but will own the building outright. The mixed structure may be employed when buying a unit, such as a villa, from a villa project or when you lease a vacant plot and then proceed to construct your own desired property. Leases are registered in the land office and are a rock solid form of (temporary) ownership in the foreigners own personal name.
Option 2: Establish a Thai company.
Establish a Thai limited company in order to purchase your real estate. You may own up to 49% of the company’s shares. The remaining 51% must be held by a minimum of 3 Thai nominee shareholders (which have an interest in the shareholding in the form of small annual or monthly dividends agreed upon during establishment of the company) with the foreigner as director and the largest shareholder. This is a safe, tried and trusted method and the foreigner maintains sole executive rights in the company and the Thai nominee shareholders are anonymous to one another. Our trusted legal professional contacts offer packages which take care of everything from company registration and company bank account setup to land transfer and company books. It should be noted that we only recommend this method as a way to invest in property and run it as a business, such as a holiday rental business. We do not recommend this as a way to live full-time in a property with no income/outgoings shown on the company books. Almost 99% of foreign investment in property uses this structure – Contact us for more information and quotes on start-up packages.
Option 3: Usufruct.
Similar to leasing described above, a Thai citizen owns the land and another party wishes to make lifelong use of that land. Once a price is agreed, instead of a leasehold, a usufructuary is recorded in the registry in the land office . This includes the lifelong right to live in a house or apartment and use the land for this purpose. The main difference to leasing here is that a usufruct expires upon death of the usufructuary and cannot be passed down to his or her heirs.
Option 4: Invest (Big!).
You invest over 40 million baht in Thailand, and the government (Board of Investment) will allow you to buy land up to a size of 1 rai (1,600 m2) for residential purposes. This comes with a few other conditions and requirements as well as the outlay which makes it impractical for the vast majority, but if successful it does indeed give you the right to own land in Thailand and have more or less the same rights to it as would a Thai citizen.
Option 5: Become Thai!
Not to be considered part of most people’s investment strategy but it is possible to obtain Thai citizenship by naturalisation. Start by applying for permanent residency of Thailand after 3 years of continuous residency on a non-immigrant visa. Once obtained, after a few years you may then apply for Thai citizenship depending on meeting other criteria, such as Thai language proficiency and knowledge of Thai culture and heritage.
Can a Foreign National Purchase Condominiums?
This is the most straightforward available option to foreigners. In this case, the purchase falls within the jurisdiction of the Condominium Act B.E. 2535. Here the rule is also that foreign nationals may own up to 49% of the total floor area of the condominium. For example, in a condominium with 100 units of equal floor size, 49 units may be offered to foreign owners, the rest must be owned by Thai nationals. Usually, once this foreign ownership quota is met, many of the Thai owned units can be offered to foreigners as 30 year leases or can be bought using the Thai company route.
What Taxes are Incurred When Purchasing Real Estate?
- Land registration: Also called transfer fees. This is 2% of the appraised value.
- Stamp duty: 0.5% of the sale price must be paid.
- VAT: 3.3% of the sale price must be paid.
- Income Tax: This tax is very individually based. Personal income structure must also be taken into account here. As an estimate, you can expect an amount of 2% for low to medium priced properties, and 3% for high-priced real estate.
- Property taxes are not charged