Property purchase is not an ordinary investment. It is not something in which you can simply set aside, give to others nor simply forget in case a thing or two that are far from what you are expecting happens. Considering the foreign ownership scene in Thailand, you cannot live on it forever but your years of hard work to realize it makes it a lifetime investment.
Therefore, choosing a unit is a great responsibility as you may not only be purchasing a unit for your satisfaction. If you have a family, you are choosing for the comfort and overall welfare of your whole family. If it’s for investment, you have to make sure that it meets all your financial criteria.
Probably, you are already thinking of buying a suitable property in the Kingdom. This is the primary reason why this article is written, by giving you a layman’s guide and insights on Thai property purchase.
Types of Title Deeds
There are three main types of title deeds in Thailand and these are the Chanote or freehold, Nor Sor Sam Gor and the Nor Sor Sam. These are the superior title deeds in the Kingdom but the Chanote is the most reliable.
However, there are three other documents that merely provide evidence of land ownership. These are the Sor Kor 1 (claim certificate), Bai Jong (preemption certificate) and the Por Tor Bor 5.
Foreign Ownership Restriction
The only type of title deed that an expatriate can own outright is the Condominium Freehold. Foreigners like you are not allowed to purchase and register under your name lands with or without freehold titles.
If you prefer land over a condominium, you can secure a lease and right of superficies with the owner of the land giving you a maximum of 30 years of right to possess the land, build and own structures on it.
Another venue to possess a land is through a limited company in which you own some shares. The company will act as a juristic person therefore the company owns the land and not you. However, this option may be a bit complicated and that makes it impractical to ordinary buyers like you.
Transfer Fee – it is usually the buyer who pays the transfer fee at 2% of the registered value of the property.
Stamp Duty – is payable if the seller is exempted from business tax. The rate is 0.5% based on either the property’s appraised value or the actual purchasing price.
Withholding Tax – the rate is 1% of the appraised value or the actual selling price whichever is higher if the seller is a company. If the seller is a person, the rate is determined by the Revenue Code of Thailand as it is subject to government assessment and deductions.
Business Tax – applies to both individual and companies. The rate is 3.3% of the appraised value and it already includes the municipal tax. If such tax is already charged, the stamp duty tax is not payable anymore.
They can be very helpful to you in so many ways but remember your interests may not be their primary concern as they are working to sell the property and this may lead to efforts in non-disclosure of negative feedbacks about the property to you because of fear that you may not go through with the sale if you will find out about them.
Reviewing the items above, you will probably think that they are doable in your part. You may be right but not really entirely.
You need to conduct a title search on the title deed of the property you are hoping to buy. You also need to conduct due diligence for a more thorough search of the background of the property, the owner, the agents and developer. This will require you to access court records, documents that are restricted from ordinary people like you.
So, the most practical thing to do is to hire the services of a reputable Thai-registered property lawyer. He can do virtually everything that needs to be done in order to have a safe and pitfall free property purchase in the Kingdom.
Aside from the matters concerning title deeds and taxation, your property lawyer can also review and revise the contracts that you are going to sign in order to serve your best interest.
Contrary to some claims on property forum sites, your property lawyer is your best asset when you are looking for a property to purchase in Thailand.