Whether for investment purposes or as your dream retirement home, purchasing property in Thailand is an exciting prospect. However, it’s important to consider your long-term plans and conduct thorough due diligence before making any investments.
While foreigners can purchase condominiums, there are restrictions on land ownership. It’s also crucial to understand the legal and financial considerations involved in buying property in Thailand.
Property Types
The real estate market in Thailand offers a wide variety of options, from apartments and villas to townhouses and detached homes. Each type of property has its own advantages and disadvantages. Choosing the right one depends on your lifestyle and the reason for moving to Thailand.
Apartments, also known as condominium units, are popular among foreign investors due to their easy ownership and high rental returns. These properties can be found in urban and rural areas and range from compact studios to spacious luxury units with ocean views. They are often built within gated communities with shared amenities such as pools and gyms, making them more attractive to millennial buyers.
As foreigners can only own up to 49 percent of the total space in a condo building, it is important to consult with a professional to ensure that you are purchasing a unit that meets your requirements. This process is made easier when using a trusted property agent.
Foreigners who are interested in purchasing a villa or apartment can choose between Freehold and Leasehold ownership. With Freehold, you will be the full owner of your property, while with Leasehold, you will have a long-term lease agreement (emphyteutic) to use your property. Typically, villas and apartments with Freehold are found in the mainland or islands, while those with Leasehold can be bought on Koh Samui and Phuket.
Legal Requirements
As with any major investment, it’s important to ensure that you meet all of the legal requirements before you purchase property in Thailand. This includes the necessary paperwork, securing financing, and complying with local laws.
Foreigners can own condominiums in the country, provided that they abide by the Condominium Act and that 51% of the development is owned by Thai citizens. This is a requirement that’s meant to encourage foreign investment without allowing them to own land entirely.
Purchasing land through a company is another option that allows for more complete property rights, but this is typically reserved for high-net-worth individuals and companies that have a significant presence in the nation. This process is complex and requires substantial knowledge of Thai law and a trusted lawyer.
Foreigners can also acquire usufructs and superficies, which are agreements that allow them to use land for a certain period of time. However, these are not popular investments in Thailand as they don’t offer the full benefits of ownership and come with a variety of regulations that must be followed. As such, it’s recommended to work with a real estate agent who can help you navigate these processes and find the right property for your needs. This will save you a lot of time and money down the road. A good agent will provide a range of properties that align with your price and location requirements and can streamline the entire process.
Property Taxes
There are a number of taxes and fees associated with purchasing property in Thailand, from the initial purchase to selling it at a later date. Understanding these charges can help you better manage your investment strategy and ensure that you’re maximizing your returns while also complying with local regulations.
Different properties will require different taxes and fees, depending on their type and location. For example, a property in the outskirts of Bangkok will have different requirements than a city center property. Therefore, it’s important to work with a reputable lawyer who understands the specific local requirements and can help you avoid any potential issues down the road.
Various taxes are assessed upon the sale of a property in Thailand, with progressive tax rates based on the appraised value of the property. Additionally, there is a 1% withholding tax on the selling price, which is payable by the seller if they are an individual or by their company if they’re a corporation.
For foreign investors, there are several advantages to buying property in Thailand. The country has strong legal protections for ownership rights and a secure title system. This can reduce the risk of title defects and disputes that often arise when buying property abroad, allowing investors to enjoy their investments with peace of mind. Additionally, there are no annual property taxes in Thailand and capital gains taxes are minimal for individuals.
Purchasing a Property
Purchasing your dream home or investment property in Thailand is an exciting prospect. However, it’s essential to familiarise yourself with the legal framework before you move forward with any transactions.
As a foreigner, you can’t own land in Thailand but are permitted to purchase structures on the land and secure a lease on the land for up to 30 years (with two subsequent renewals). Alternatively, you could also choose to buy a share of a Thai company that owns the land or property. This is a popular option for expats looking to purchase a villa or a house in a rural area.
In either case, the most important part of a property transaction is ensuring that you have a valid and legal title deed known as a ‘chanote’. This is the official document administered by the Land Department which states and proves a person’s legal right to own or possess land.
It’s also worth considering a building insurance policy for your new property. Although not a legal requirement in Thailand, it can protect you against natural damage such as fires or burst water pipes. When negotiating your contract, be sure to ask the seller to include this in your agreement. You should be able to find an insurance broker online or your agent can point you in the direction of one.