Considering Buying a Thailand Property? Explore Common Challenges Faced by Buyers! Investing in Thai Property is a popular choice for many investors due to its numerous advantages. Many individuals opt for purchasing a house in Thailand after gaining a deeper understanding of the market.
Q1 : What is the difference between a condo and an apartment in Thailand?
When purchasing Thailand Property, you’ll notice that Condos and Apartments are commonly labeled as ‘apartments,’ which can be somewhat misleading. In Bangkok, Thailand, a Condo is essentially a privately-owned apartment that comes with amenities like a swimming pool, gym, and other public facilities. Owing to the limited availability of urban land, Condo developments often have high-density and a high floor area ratio.
In contrast, Apartments are typically company-owned properties that usually lack public amenities, and their overall quality may not be as high as that of Condos.
Q2 : Is it possible for foreigners to have ownership of real estate or commercial storefronts in Thailand?
Foreigners need to be mindful of certain rules when acquiring property in Thailand. Typically, foreigners cannot own land in Thailand, except under specific conditions. Foreigners can buy up to 49% of the total space within any condominium without the need for permanent residency. For foreigners or companies without permanent residence permits seeking to purchase a condominium, they must bring 100% of the purchase amount from abroad.
Taiwan’s Existing Real Estate Landscape: Taiwan’s real estate regulations are founded on the principles of equality and reciprocity. In cases where the United States permits Taiwanese citizens to own property within its borders, Taiwan reciprocates by allowing Americans to own property in Taiwan. It’s important to note, however, that specific land categories in Taiwan, such as riverfront and military land, remain restricted and are not accessible for foreign ownership.
Q3 : Are there any restrictions on the duration of land ownership in Thailand?
There are two types of land ownership rights in Thailand: “Freehold” and “Leasehold”.
Freehold refers to properties with independent ownership certificates that can be freely transferred.
Leasehold has time limits on land use, akin to Taiwan’s land lease. It grants land use rights for a specified period but no ownership. The 30+30+30 is a 30-year lease, renewable twice, totaling 90 years, with extension options.
Most land in Taiwan can be owned permanently after purchase, with only a few plots subject to land leases for development.
Q4 : What documents in Thailand signify property ownership?
In Thailand, a “title deed” is obtained for land purchases, and a “sale and purchase agreement” is used for houses, serving as evidence of property ownership.
In Thailand, there are no restrictions on purchasing property, and anyone over the age of 21 can be listed as a co-owner. However, based on our past experience, having more than three owners tends to lead to more disputes, and transferring ownership can become more complicated.
Q6 : Are there potential issues associated with purchasing a leasehold property?
In Thailand, with leasehold land, there’s a possibility of the local government expropriating it when the lease term ends, providing compensation to the owner. However, this is not done without reason. If the government doesn’t need the land, heirs can seek lease renewal.
Q7 : Can leasehold be converted to freehold?
In Thailand, it’s possible to attempt an application to the local land office for converting leasehold property to freehold, but the approval likelihood is uncertain.
Q8 : How many square meter are there in one square wah?
1 square wah = 4 square meter.
Q9 : Legal explanation for foreign investors purchasing land and villas in Thailand.
Property laws in Thailand typically restrict individual foreign ownership of land. However, foreign investors can buy property under the Investment Promotion Act if involved in BOI-endorsed industries. Foreign individuals can also acquire land and properties with land through joint venture companies in Thailand.
The Thai Land Code allows foreign investors to own up to 1 rai of land (approximately 2.4 acres or 1600 square meters) for residential use if they invest at least 40 million Thai Baht from abroad, follow proper procedures, and gain approval from Thai authorities. This land should be within specified urban areas in Bangkok, Pattaya, or areas defined by the Urban Planning Act. The invested capital must benefit Thailand and remain in the country for at least 3 years.
Further, the Thai Condominium Act allows foreigners to purchase Condominium units, typically not exceeding 49% of the total Condominium area.
In certain cases, foreigners can own over 49% of a condo unit area: For applications before April 27, 2004, in condos within Bangkok city or specified districts by the Interior Ministry, with a total land area under 5 rai.
Q10 : How long is a typical rental contract?
Thailand Property purchases and rentals, the standard contract is typically 12 months, with short-term holiday apartments or villas for rent also available for 1-3 months.
Q11 : Does the monthly rent include property fees?
Renting or subletting property in Thailand is unique in that the general rent includes property management fees, such as services like a gym, swimming pool, and security. However, it does not cover electricity, water, internet, cable TV, or telephone usage costs.
Q12 : In Thailand, after buying a property for rental purposes, how long does it typically take to recover the investment?
In Thailand, foreigners can have permanent ownership of houses, which can be passed down to descendants. Using Bangkok as an example, annual rental yields for apartments are typically around 6-8% of the property’s total price, potentially allowing for investment recovery in 8 to 10 years. These rental rates are in high demand and seen as reasonable, though increasing rent may require patience for finding the right tenants.
Because of the global appeal to tourists and the weekend getaway demand from locals, these properties are in high demand, resulting in higher rental rates.
Furthermore, according to current Thai law, Thailand does not have property tax or inheritance tax.
Q13 : Do foreigners need to pay tax on their rental income in Thailand?
Whether buying property in Thailand or investing globally, taxes are a top consideration. In Thailand, taxes apply but only for amounts exceeding approximately 300,000 Baht. Payments are converted to USD, incurring exchange rate differences.
Important note: Thailand enforces currency controls, and the “Taiwan-Thailand Double Taxation Avoidance Agreement” has been effective since January 1, 2013. If income is already taxed in Thailand, Taiwan will not impose additional taxes.
“Current Taiwan Status” Foreigners renting property in Taiwan must pay income tax. Rental income undergoes proportional deductions by the National Taxation Bureau, and additional income is subject to income tax.
Q14 : Which taxes are applicable when property owners sell their homes?
When selling a property in Thailand, there are four types of taxes to be paid:
- Transfer fee: The 2% transfer fee is determined by the appraised value and can be paid by either the buyer, the seller, or shared equally as agreed.
- Specific Business Tax: is calculated at 3.3% of the sale price or the appraised value, whichever is higher. However, you may be exempt from paying the Specific Business Tax in the following cases:
– Owning a house or condo for more than 5 years.
– Having your name in the house registration for more than 1 year.
– Inherited a house or condo that is being sold.
– Property being repossessed.
- Stamp Duty: If exempt from Specific Business Tax, you pay a 0.5% Stamp Duty on the higher of the sale price or appraised value when selling a house. You won’t pay both Specific Business Tax and Stamp Duty simultaneously.
- Personal Income Tax: Depending on the property and the owner’s circumstances.
Q15 : If property profit tax is waived, is income tax still applicable to the income difference?
Q16 : Do you still need to pay property profit tax if you incur a loss when selling the property?
Q17 : Is there a gift tax or inheritance tax for real estate owned by foreigners in Thailand?
In Thailand, property buyers often focus on gift and inheritance taxes. Transfers among family members enjoy exemptions, but if the recipient later sells the property, property profit tax applies. Gift and inheritance taxes are not imposed on gifted properties in Thailand. However, Taiwanese individuals may still face such taxes on properties held outside Taiwan.
“In Taiwan’s current situation,” when gifting real estate in Taiwan, gift tax and inheritance tax must be paid.
Violators of the above statement, the company reserves the right to pursue their relevant legal responsibilities.
SUNRAY ASSOCIATES CO., LTD