Differences between Lease-hold and Free-hold property?
Leasehold means that the buyer is only leasing the property from the land owner for a pre-determined period of time normally valid up to 30 years. Renewal for a further 30 years only is at the discretion of the lease holder (land owner). At the end of each term, both parties must register the renewal with the Land Department and pay government fees, including stamp duty. This gives the lessee "ownership" of the land. The downside is that the lessor may not wish to renew or the law may change to your detriment in the future. Any capital you invest into leased property is therefore liable to be lost. Property owned by the Crown Property Bureau is always Leasehold. Some private property owners may also sell their property with a leasehold title deed. These are the conditions in operation today (2005), but they may change at any time in the future.
Freehold foreigners can buy and own freehold condominiums, giving you full ownership rights purchasers, including the right to sell or lease the property and to develop the property within the guidelines under Thai law.
How can a foreigner own a Condominium in Thailand?
A foreigner can own freehold a condominium in Thailand because a condominium's title deed (Chanode) does not have any land registered to or associated with the condominium. The land is owned by a Juristic Persons Group (Association) registered with the Thai Government and made up of a majority of Thai citizens. Buying a condominium is perhaps the simplest and easiest option available to foreigners. The only restrictions on purchasing a condominium are that the percentage of units sold to foreigners cannot exceed forty nine percent (49%) of the total number of units in the condominium block. If you really want to buy a unit in a building that already reaches the 49% ratio, you can still buy if you open a Thai company (ownership 49% foreign + 51% Thai).
A foreigner may also own a condominium with a leasehold agreement. In this case, the property remains in the Thai owner's name, but you sign a 30, 60, or 90 year leasehold agreement, with all the legal obligations and benefits that this offers, including the right to buy, sell, trade and will the lease to heirs. Lawyers can help set up all the correct legal procedures and paperwork needed for this type of purchase. Purchases of condominiums by foreign individuals come under the jurisdiction of the CONDOMINIUM ACT (No. 3) B.E. 2542 (1999).
How can a foreigner own a House and Land in Thailand?
Technically (and in most cases) a foreigner cannot own a house in Thailand as the Thai Government does not allow a foreigner to own land (which a house is obviously built on). In Thailand , a house would come with a title deed (Chanode) that will also show a certain amount of land with the house, which will be registered to the owner of the property as well. As stated above, legally and technically a foreigner cannot own land in Thailand. Their are a few small cases and a few new laws (over a certain age...with so much money.......in certain areas of Thailand..married to a Thai National and have so much money...etc.) that might accept foreign ownership of land in their name, but the above is the normal scenario. Most often, foreigners here form a company of dominantly Thai National share holders (usually about $250 to $500 U.S. Dollars to form and register the company properly). When a registered company's shareholders sign 'share release forms'' one individual may 'become' the managing director and only signatory for the company. The managing director may then sign for property purchases and the company (managing director) owns the property (house and/or land). A Thai national must own 51% of the firm, but the firm will be organized so that you have all the economic and juridical rights. In addition, by using this system, it will be easier for you to buy a car or to get residence permit. You have to pay at least 30% as a deposit, and then the original owner of the house is committed to you. The company (managing director) is also able to transfer ownership by selling the position in the company which owns the property and/or sell the property outright at anytime in the future. Ownership of land is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior.
For a foreigner who is married to a Thai citizen, the Thai spouse can buy property using his or her name only.
A foreigner who invests 40 million baht or more in a Thai Company is eligible to purchase land and a house at the size of maximum 400 square wah maximum total land area.(1 square wah = 4 square meters).
A foreigner who invests with a Thai registered company at 49-51% ownership (unlimited amount), foreigner share holder at 49% of ownership can purchase land and house with unlimited size and amount of investment through company registered name.
My wife is Thai, can she own House/Land?
Prior to 1998, any Thai woman who married a foreigner would lose her right to purchase land in Thailand . She could, however, still retain land that she owned prior to marrying the foreigner. However, the recent (1999) Ministerial regulation now allows Thai national's married to foreigners the right to purchase land, but the Thai spouse must prove that the money used in the purchase of freehold land is legally solely theirs with no foreign claim to it. This is usually achieved by the foreign spouse signing a declaration stating that the funds used for the purchase of property belonged to the Thai spouse prior to the marriage and are beyond his claim.
How does a limited liability company allow foreigners to buy property?
Foreigners can not get a mortgage loan from local banks in Thailand to buy property, unless they have a Thai partner willing to act as guarantor. There are numerous other conditions too, so if you wish to go this route, make sure you have a totally reliable Thai partner, and you have plenty of demonstrated income (either here in Thailand, or from overseas). The purchase money must be transferred from banks outside Thailand , in foreign currency form. The buyer must state that the purpose for the money transferred is to purchase a condominium unit in Thailand on the funds transfer document. The Bank is then able to issue the form of TT3 (Thor Tor 3) or Authority to Purchase for the relevant land office in Thailand , giving the foreign buyer authority to purchase .
Can a foreigner get a Mortgage Loan?
Foreigners can not get a mortgage loan from local banks in Thailand to buy property, unless they have a Thai partner willing to act as guarantor. There are numerous other conditions too, so if you wish to go this route, make sure you have a totally reliable Thai partner, and you have plenty of demonstrated income (either here in Thailand, or from overseas). The purchase money must be transferred from banks outside Thailand , in foreign currency form. The buyer must state that the purpose for the money transferred is to purchase a condominium unit in Thailand on the funds transfer document. The Bank is then able to issue the form of TT3 (Thor Tor 3) or Authority to Purchase for the relevant land office in Thailand , giving the foreign buyer authority to purchase.
What fees, taxes and costs are applicable to purchase a property?
Whenever a property in Thailand is bought and sold, these are taxes that need to be taken into account.
Tax on purchasing of properties:
Ownership Transfer fee is paid to Land Department Office, the transfer fee normal rate is 2% of government appraised value or selling price depends on different cases.
Duty stamps fee is paid to Land Department at 0.5% of the government appraised value or the selling price, depends on whichever is higher.
* In case of duty stamps fee are following:
- The seller has owned the property for at least 5 years.
- The seller has used the property as his primary residence for at least 1 year prior to the sale.
- The seller received the property as an inheritance.
Specific Business Tax of 3.3% of the government appraised value or the selling price, depends on whichever is higher, this will be applied to all sales by company and to any private sales that occur within 5 years after the date of purchase and the seller has not used the property as his primary residence less than 1 year prior to the sale.
Withholding income tax
1. For Private sales, is calculated on a very complex formula based on the assessed value of the property, the length of time owned and the applicable personal income tax rate.
2. Corporate income tax is calculated at 1% of government appraised value or the selling price, depends on whichever is higher
Appraisals price and valuations?
There are generally three different appraisal values; the government value, the appraisal company's value and the market value of the property. The government value is calculated every 5 year, the last updated is in 2004. Over the last few years all of these rates have begun to come closer together.
The cost of maintenance for each condominium unit depends on the size. The cost varies from building to building and is charged per square meter per month and paid annually in advance. The normal rate is varied between 25-50 baht/sq.m./month.
How to prepare your property for sale?
The condition and appearance of your property can have a dramatic effect on its sale price. Obviously, a residence that is clean and free from unpleasant odors makes a better impression on a potential buyer. It is reasonable to assume that better impressions lead to better offers. In addition, new carpeting, a fresh coat of paint, and minor repairs may be worth much more than their respective costs. The other "preparation" you need to do is to set your asking price, a sometimes difficult task. You want to ask enough that you don't lose money on the deal, but you don't want to ask so much that you scare off potential buyers. Your agent can help you set your asking price by comparing your property to similar properties that have sold recently, then using the selling prices of those properties as a guideline.
Should I renovate?
Renovating can be a great way to add value to your property. But it is important to keep in mind that the cost of renovations may not always be covered by the corresponding increase in sale price. Don't 'overcapitalize', or spend a lot of money on expensive renovations - like building on a new bedroom or re-tiling the roof - which you won't get back when the house is sold. Make a master list of all the repairs, touch-ups and improvements which need to be done.
Renovations which suit the period of your home may well increase its value, but renovations which look too modern (or cheap!) may look 'tacked on' and turn off prospective buyers. Remember also that prospective buyers often pay a premium for the potential they can see in a 'renovator's delight'
What kind of Visa can I get to stay in Thailand ?
There are four basic types of visas available for visitors and residents to Thailand .
Transit visa - valid for 14 days will be issued to those people arriving in Thailand without a visa. Technically you must have an onward flight ticket, but in practice this visa will be issued almost without question. Note : There are a few countries (not many) that do not require visas and will get a three month entry stamp on arrival - in general these countries are the ones that grant the same rights to Thai nationals visiting their countries.
Tourist visa - issued by Thai embassy abroad - these visas will be valid for 60 or 90 days (varies from country to country). Of note is that you may apply for more than one Tourist visa at a time and these multiple visas may be used up consecutively. Many quasi resident visitors to Phuket (who do not work - or want to avoid the red tape of a Non Immigrant visa) live for years on a tourist visa (and go shopping in Singapore or Penang every three months). So long as you are solvent and not engaging in any local business activity, there is nothing wrong with this approach.
Non Immigrant visa - issued at an embassy outside Thailand and valid for a 90 day stay, this visa may be extended within Thailand for periods up to one year at a time. There are three basic grounds to obtain and renew a Non Immigrant visa. 1) That you are employed (and have a work permit) in Thailand . 2) That you have Thai family. 3) That you are retired and can prove adequate pension or other financial means to support yourself. Ownership (or long lease) of property has no bearing on the extension of a Non Immigrant visa. Lengthy form filling and copying of personal documents (in duplicate) are required both when you first apply and for every subsequent renewal of this visa. If you hold a non Immigrant visa, you should obtain a Re-Entry permit if leaving the country if you do not wish your visa to lapse.
Resident visa - rarely issued and hard to obtain. These visas are issued on a very selective quota basis. Qualification requirements include reading and writing Thai, a fairly strong local financial status and some good (influential) Thai references.
How do I get a Work Permit?
First, you must have a Non-Immigrant visa to apply for a work permit.
Thailand Work Permit Processing :
We assist in securing Thailand work permits for qualified individuals employed by qualifying employers and the process is as follows:
Confirm & Identify Your Correct Non-Immigrant Visa
Preparation of Your Work Permit Application
Preparation of Letter of Employment
Assembly of All Required Documents
Our Licensed Lawyer will Represent You for Filing the Petition
Factors to be aware of :
You must be present in Thailand on a non-immigrant status entry permit, on both the day your work permit application is submitted, and the day it is picked up.
Your work permit will expire on the same date as the Visa entry permit you use to pick up your work permit. This generally means that your first work permit if issued against a 90 day entry Visa permit, will have only 10 weeks validity, once issued. Most clients will need to use work permit to apply for extended entry permit and once that entry permit extension is issued, apply for a renewed work permit whose expiration date matches the new entry permit.
In most cases, for each work permit issued to a foreigner, the sponsoring company must have 2 million baht capitalization, and at least four Thai employees. If a company has four Thai employees, plus 2 million baht paid-in capital for each work permit requested, it is normally very easy to obtain a work permit.
A job description is often the determining factor in the approval or denial of a work permit. Unless the written job description requires skills that a Thai does not or is unlikely to possess, the application will not be approved. Our licensed Thai lawyers are skilled in writing professional and accurate job descriptions in order for you to gain quick approval.
The work permit once approved allows you to work at the noted company and location. If you change employers or place of work, you must make a new application. Also if you resign or are terminated or laid off, according to the law, within 10 days of this, you must return your work permit to the Labor Department. Don't count on your company doing it. It is your responsibility and you are liable to return it to the Labor Department.
During the processing you must not let your visa expire . The Labor Department's system links the non-immigrant visa (extension of stay) you listed on your application to the work permit paperwork. A typical time frame for approval of the work permit for a company of 2 million baht registered capital is up to 2 months in Phuket but the government is trying to reduce this.
To satisfy new government tax rules, monthly salary of work permit holders generally needs to be at least 50,000 Baht (you must be paying monthly personal income tax on at least this amount).
Your Work Permit is connected to the duration of your visa, so when your Extension of Stay expires, you will need to renew your work permit. If you have an unexpired multiple-entry visa, all you have to do is go over the border and then return. If required to go outside Thailand to obtain a new visa, you will need to provide the Embassy or Consulate with copies of your work permit and new recommendation letter from your company, company registration documents, and financial and tax reports. This must be done prior to your work permit expiration.
Ensure Visa is renewed at least 3 days prior to expiry to avoid any delays to renewal of work permit.
What taxes am I subject to pay to rent and rent out my property?
Once you have acquired the property, you must pay property taxes on it. If you rent out the property, the tax is 12.5% per year on the annual rental revenue (Tax on operation). This explains why so many local owners want their lessee to pay tax for them, as they don't want to lose 12.5% of their revenue.
What documents do you need when renting apartment?
The foreign renter shall provide documents as follows:
- A certified copy of the passport
- A contract rent agreement: the relevant paperwork as contract between the landlord and the tenant. ( At the end of the contract, the landlord will conduct a final property evaluation, any expenses will be deducted and the deposit returned to the tenant)
- A copy of work permit (if any)