Buying real estate in Thailand
Thailand condominium acquisition and conveyance costs, tax and fees
When ownership of a condominium apartment in Thailand is transferred taxes and fees are collected at the time of transfer by the land offices where the transfer of ownership takes place. Transfer of ownership of a condominium unit in Thailand is subject to the following government fees and taxes:
- transfer fee at the rate of 2% on the government assessed value
- stamp duty at 0.5% over the appraised or actual sale price whichever is higher, except in cases where the seller is subject to a specific business tax
- specific business tax at a rate of 3,3 % over the government appraised value of the condominium or actual sale price, whichever is higher
- income withholding tax with a different calculation depending if the seller is a company or natural person
Basically 3 different situations exist for the buyer of a condo in Thailand:
- the purchase of a newly built condo in a condominium development project registered and licensed under the Thailand Condominium Act, or
- the purchase of a resale apartment unit from another individual or
- the purchase resale condominium owned by a juristic person.
When buying from a developer the amount of transfer fees and taxes is limited for the buyer as the developer is by consumer protection laws responsible for all transfer fees and taxes, except he may ask the customer and purchaser of a condo unit to pay up to half of the 2% transfer fee only. Say the appraised value of the condo is 3 million baht the developer may not charge the buyer more than 30,000 baht as part of the transfer fees (read the sale contract). All other government transfer fees and taxes for the transfer of ownership registration are for the developer.
When buying a resale condo from another individual the situation is more complex as there is no fixed rule in the law on how the transfer fees and taxes are to be divided between the buyer and the seller. Basically in a private resale of a condo in Thailand this can vary from buyer pays all to seller pays all. How to divide the transfer fees, taxes and costs is simply part of the overall price negotiation between the buyer and seller and it is recommended to clearly include this in the sale and purchase agreement between the buyer and the seller of the condo unit.
The sample is based on a resale condo with a value of 3,000,000 baht with an ownership of 2 years and 6 months. Note, in the sample calculation we assume an equal sale price and government appraised value. In practice the sale price and assessed government value is not the same and the appraised value of the condo unit is often pretty much lower than the sale value and therefore this calculation must only be seen as a sample.
For the calculation of personal income withholding tax there is a deduction based on the years of ownership as follows: 1 years = 92% of the appraised value, 2 years = 84%, 3 years = 77%, 4 years = 71%, 5 years = 65 %, 6 years = 60%, 7 years = 55%, 8 years or more = 50%. In this sample calculation the deduction is based on 3 years (2 years and 6 months is 3 tax years) of ownership which comes to a deduction of = 77% x 3,000,000 baht = 2,310,000 baht.
In the sample calculation personal income withholding tax will be based on 230,000 baht in each year of ownership (3,000,000 baht less the deduction divided by 3, i.e. the number of years of ownership).
Personal income tax rates in Thailand are set for income less than 100,000 baht at 5%, between 100,000 and 500,000 baht the rate is 10%, between 500,000 and 1,000,000 baht the rate is 20%, between 1,000,000 and 4,000,000 baht the rate is 30%, and over more than 4,000,000 it is 37%.
In this cases there is a yearly income tax of 18,000 baht (5% over 100,000 baht and 10% over 130,000 baht). The income withholding tax in the sample situation, to be paid for the transfer of ownership at the time of transfer, is 54,000 baht (based on the 3 (tax-) years ownership).
As the condo is owned by the current owner for less than 5 years specific business tax is charged at a rate of 3% plus a municipal tax of 10% over the amount of the specific business tax making this a total tax of 99,000 baht (3.3% x 3,000,000). Note that specific business tax is applied over the selling price or gov appraised value whichever is higher if the property is held less than 5 years. The government transfer fee is 2% over 3,000,000 baht making it another 60,000 baht.
The total amount to be paid at the land office upon transfer of of ownership of a condo with a value of 3 million and between 2 and 3 years of ownership could be in the area of 213,000 baht, among others depending on the appraised value.
When buying a resale condominium owned by a juristic person the corporate income withholding tax is fixed at 1% over the appraised or registered value, whichever is higher, as opposed to personal income tax which is calculated at a progressive rate with a deduction depending on the number of years of possession and is based on the appraised value of the unit.
Note the above calculation only applies to the transfer of freehold ownership of a condominium registered under the Condominium Act, not a leasehold condo or unit in an unlicensed apartment building.
Related: condominium transfer tax