Property Transfer Taxes & Fees
Do not pay more transfer fees, stamp duty and taxes than necessary
Property Transfer Taxes and Fees in Thailand
When purchasing property in Thailand, understanding the associated transfer taxes and fees is crucial. Unlike in some countries where the seller typically bears the cost, in Thailand, these expenses can be negotiated between the buyer and the seller. However, it is common practice for the buyer to cover the transfer fee, while the seller handles the capital gains tax (or specific business tax if applicable).
Negotiations between parties can lead to various arrangements, with some developers offering promotions where they absorb certain fees to attract buyers. For foreigners, it’s especially important to verify all costs and ensure compliance with local regulations.
The rest of this page provides detailed information on how these fees are calculated, who is responsible for payment, and what to expect when transferring property in Thailand.
Transfer fees and taxes of immovable property
Land Office transfer tax of immovable property (land, house & condominium)
Stamp duty and Specific Business Tax (SBT):
The Land office transfer fees and taxes are collected when the real property transfer is registered and the Land Office will issue a receipt for these payments. The appraised value or government assessed value (land valuation) is set by the Land Department and Treasury Department and will be adjusted every 4 years.
Which party usually pays which fees and taxes when transferring real estate
In addition to purchasing a property from a licensed real estate developer within a designated housing or condominium development, there is no predetermined rule regarding which party is obligated to bear which portion of the land office transfer fees and taxes. This matter is typically resolved during the overall price negotiation process to establish an equitable formula for sharing these costs. The arrangement can range from the purchaser assuming all costs to the seller bearing all expenses. It is crucial to have this provision clearly outlined in the sale and purchase agreement to prevent the seller from attempting to enforce it at the last minute, or to negotiate the details upon arriving at the land office. It is essential to exclude the seller’s personal withholding tax, as there have been instances where the buyer has been unexpectedly required to pay the seller’s personal income withholding tax, which is considered an official conveyancing cost to be paid at the land office during the property transfer.
In a private sale of real estate property (land, house, land and house, condo apartment unit) the following division of taxes and fees is recommended:
| Specific Business Tax | : the seller’s duty |
| Stamp duty | : the seller’s duty |
| Transfer fees | : the buyer’s duty or shared |
| Withholding tax | : always the seller’s duty |
Costs associated with purchasing a newly constructed condominium directly from the developer
When purchasing an off-plan villa, house or condominium within an officially licensed housing or condominium development, the developer is permitted to pass on only up to 50% of the transfer fee (2%) to the buyer. According to consumer protection laws, the developer is fully responsible for specific business taxes, income withholding taxes, and at least half of the 2% transfer fee imposed by the land office for registering ownership.
The process of registering a land, house, condominium transfer, or lease at the land office can take up to six hours, depending on the workload of the officers and whether unofficial payments have been made to expedite the process.
Typically, such payments, often referred to as “tea money,” range from 1,000 Baht to 3,000 Baht.
Foreign Ownership Restrictions: Thai law generally restricts direct ownership of real estate properties by foreigners. However, there are certain exceptions, such as the ability of foreigners to own condominium units, provided that their ownership does not exceed 49% of the total area of all units in the condominium.
If you, as the foreign purchaser, cannot attend the land office, Closer Law can be appointed as your proxy.
In this case, the official Thai script land office power of attorney form is required. These forms will be made by our lawyer because other types or forms of the “power of attorney” are NOT accepted by the Land Department.
Lease Registration Fee
A real estate lease registration fee is charged at the rate of 1% of the total rental throughout the whole lease term and collected by the land office at the time of registration. Also a stamp duty is collected at a rate of 0.1% of the total rental throughout the lease term.
The seller wants the declared price to be lower than the actual amount I will pay
The government-appraised value of a property, as determined by the Treasury Department and Land Department, is typically significantly lower than the property’s actual sale price or market value. These appraised values are updated every four years. In practice, Thai sellers often prefer to declare and register the sale price closer to the government-appraised value to reduce their personal income tax and transfer fees.
However, undervaluing the sale price is illegal in Thailand, and the parties are legally required to disclose the true sale price when registering the transaction at the Land Department.
If the purchaser is a company, it is crucial for accounting purposes that the company’s records reflect the actual purchase price as stated in the sale and purchase agreement, separate from the land office documentation.
These accounts are subject to auditing and form the basis of the company’s tax filings. Declaring a lower sale price poses a risk of discrepancies being identified in the future, particularly by the Revenue Department when cross-checking official land office records against company accounts. If such discrepancies are discovered, the situation must be rectified, and the company may face substantial fines.
The owner is a company so you need to transfer shares
Transferring property ownership in Thailand through the sale of shares in a Thai-incorporated holding company is a method some consider to bypass the standard property transfer process, thereby avoiding associated taxes and fees. In this arrangement, the buyer acquires the company’s shares, which holds the property, rather than the property itself. This approach circumvents the need to re-register the property at the Land Office, potentially sidestepping transfer fees and taxes.
However, such practices are legally questionable and may be deemed tax evasion. Thai law mandates that property transfers be accurately declared, and any attempt to disguise a property sale as a share transfer to avoid taxes can lead to legal repercussions. Engaging in these schemes exposes both parties to significant risks, including fines and legal action.
When a company sells property directly, the proceeds are subject to corporate income tax. Additionally, standard property transfer taxes and fees apply, which may include:
- Transfer Fee: Typically 2% of the property’s appraised value.
- Specific Business Tax (SBT): 3.3% of the appraised value or actual selling price, whichever is higher.
- Withholding Tax: For companies, this is generally 1% of the appraised value or actual selling price, whichever is higher.
It’s crucial to adhere to legal procedures and accurately declare all transactions to avoid potential legal issues. Consulting with a legal professional experienced in Thai property law is advisable to ensure compliance and to understand the full scope of tax obligations.
So what can Closer Law do for you regarding Real Estate?
Key benefits of working with Closer Law
At Closer Law Co., Ltd., we make dealing with real estate in Thailand easy and safe for you. Our legal experts come with a lot of know-how and offer all the services you need to make sure your property dealings are not only successful but also follow the law and match your goals perfectly.
Choosing Closer Law for your property purchases or leases in Thailand comes with many important perks, guaranteeing transactions that are safe and adhere to legal standards.
Below are the top benefits:
Our focus is on defending your interests, guaranteeing that each element of any real estate transaction benefits you. Working with us gives you access to a dedicated team of legal negotiators, all striving to obtain the most beneficial outcomes for your real estate undertakings.
We provide comprehensive advice to both Thai and international clients on all facets of real estate transactions in Thailand, covering areas such as:
Our approach is business-oriented, extending beyond mere legal advice. As specialists in Thai real estate law, our team aids in deal structuring and the search for strategic partnerships. Additionally, we leverage our extensive network of third-party auditors, accountants, financial advisors, property valuation specialists, HR consultants, and government agencies to support transaction execution.