Real Estate in Phuket Frequent Answers and Questions
We are often approached with questions about the rules of ownership and purchase of real estate in Thailand, the related taxes and operating costs for maintenance, order payment of the cost of apartments, extended stay options in the country, etc.
We have tried to collect the most frequently asked questions on this page and give them clear and understandable answers. If after reading these responses you still have questions, please write them in the special form on this page. We will quickly and fully respond to them.
- Why it is profitable to buy real estate in Thailand?
- How can one buy an apartment in a condominium?
- Can a foreigner buy land in Thailand?
- What acquisition taxes are paid when buying or selling real estate in Thailand?
- What is the usual process of payment for a real estate item?
- How much does the maintenance of an apartment cost?
- What is visa regime in Thailand? Does buying of real estate give right on privilege when staying in the country?
- What are custom regulations of imports and exports of goods in Thailand?
Why it is profitable to buy real estate in Thailand?
At the incredibly multiform real estate market of Thailand, where almost all new objects are created by experienced specialists in accordance with designs of internationally recognized architects, buying real estate is the simplest and safest way to reside in this abundant country and at the same time have profitable investments.
Till recently, the main buyers of real estate were citizens of Great Britain, Germany, Swiss and Norway. Several years ago, Russians joined them, since then number of our compatriots, wishing to buy real estate in Thailand, proliferates annually, and breaks records of other countries, growing at an exponential rate.
It is worth to note that all high-rise buildings, villas and mansions accurately wed with the landscape and are in perfect harmony with the environment. During construction, a great attention was paid to comfort and ecology so that people could feel themselves in safety.
One moth rent of a two-storied furnished mansion with air-conditioners, three bedrooms, three bathrooms and a Euro-kitchen can cost from $1,500 to $8,000. Rent of a European-style furnished flat with a bedroom and large kitchen, a modern bathroom and a large balcony with sea view is from $500 per month.
As a comparison, accommodation in a 3 or 4 stars hotel will cost from $500 to $1,000 per person weekly.
At an average, housing rises in price up to 15-40% every year (several other sources shows the dynamics to be even higher). This argument is usually determinative in taking a decision concerning buying real estate as an investment project.
How can one buy an apartment in a condominium?
A foreigner can buy a house (a villa) in condominium in his own favor or in the name of his company. Concerning apartments, there is a rule that proportion between Thai and foreigner proprietors has to be 51/46 for all apartments in a block of the condominium.
In Thailand, there are some requirements according to which a buyer has to acknowledge legitimacy of money for buying a real estate item. The money should be transferred on an operating account of the buyer in Thailand. There should be noted a purpose of payment as “Buying a house (an apartment)”, and the bank in return should fill in the form “Thor Tor Sam”.
“Thor Tor Sam” is an official document of a Thai bank, where the buyer opened an account. The document should confirm that the only purpose of the money is buying real estate.
After preparation, all the needed documents are filed to the appropriate department. After finishing the procedure, the buyer gets a certificate acknowledging his proprietorship. Besides this, the document contains a section where the percentage of rights to communal property is noted.
Can a foreigner buy land in Thailand?
The Thai Land Code forbids buying land by foreigners if there is no special agreement between Thailand and his native country, which would allow the foreign citizen to own land in Thailand. However, Thailand has not reached such agreement with any country. Nevertheless, steady growing of land values and number of people, wishing buy or build a house in the paradisiacal land, has allowed the lawyers to find out ways of registration property for foreigners. In addition, authorities can overlook such contradictions.
There are two most popular ways for foreigners to own land in Thailand. The first way long-term rent (90 years). The second way is to buy land on behalf of a resident (Thai) company.
In the first case, a foreigner takes land on lease for a term of 30 years and gets a prerogative right on renegotiating the contract twice for a term of 30 years. Terms and conditions are exactly stipulated in the contract. It is mentioned that the rent was prepaid for the term of 30 years. It should be articulated that you has the right to buy the land Thailand legislation ever permits
foreigners to buy out land. One can transfer one’s right to rent the land to anyone in the same order that in the case of registration of the owner.
The second version stipulates registration of a legal person in the purpose of buying land on its behalf. Therein the foreigner can own not more that 49% share in the company. Owing to juridical subterfuges, it is possible to a foreigner to avoid all restrictions concerning sole corporate governance and take the upper hand on the company – owner of the land. It means that to own the company means to own the land. In this way, the rigour of Thai law is offset by its poor enforcement.
What acquisition taxes are paid when buying or selling real estate in Thailand?
The Thai taxation system differs by its low tax rates on real estate and land. Tax rates when buying real estate on behalf of a legal person are higher than the tax rate for a physical person. It is also worth being considered that the tax rates can be cut down if the property was used for at least a year before selling or if the seller has owned the property for more than five years or it was inherited.
When buying or selling real estate in Thailand there should be paid the following taxes:
1. Commission Fee for registration of the land, which makes 2% from the appraise value of the land property.
2. A Stamp Duty which makes 0,5% from the appraise value or sales price. As a rule, the highest price is taking into account.
3. Value Added Tax is 3,3% from the appraise value or sales price of the item. The highest price is taking into account. The tax is paid by the seller if the transaction is taking place less than 5 years after buying the item.
The Thai taxation system is based on value of real estate, randomly established by a local department of land and not on real commercial price. As a matter of principle, there are not any strict rules of payment taxes and registration of the real estate is only a part of the buying process.
What is the usual process of payment for a real estate item?
1. When buying a ready-built house or flat a buyer usually pays 50% from the item’s price at the moment of making the contract of sale. The second part of payment is conducted after registration of ownership.
2. Payment for real estate items, which are under construction, is usually divided on stages. First of all the buyer pays a deposit (about 1-3% from the real estate item’s value) to reserve the item. Within the specified time-limits (it’s usually not more than 1 month after the deposit payment) it is necessary to sign a sale contract and pay 15-20% from the total price of the item.
3. The remaining amount is divided on parts and paid in proportion to separate stages of construction.
4. The final payment is conducted after registration of ownership.
How much does the maintenance of an apartment cost?
After buying an apartment the maintenance consists of a lumpsum payment for crating a management-office and deposit in case of submergence (from $1,000, it is paid only in case of buying a new house), monthly fee for maintenance (from $100 per month) and unity bills (from $150). Exact amount of the payment depends on many factors such as location of a house, dwelling size, range of service provided by condominium etc.
What is visa regime in Thailand? Does buying of real estate give right on privilege when staying in the country?
Unfortunately, for the time being, buying real estate in Thailand does not give right on getting citizenship, residence permit or a long-term visa.
Citizens of Russian Federation can stay in Thailand for 30 days without visa. After arrival into the country in the airport of Bangkok a sign of inward and outward is made in one’s passport.
If duration of stay exceeds 30 days it is possible to go out of the territory of Thailand and then go in again. In this case, a new time limit of 30 days is established. One can also get a two months visa in Thailand embassy in Russia.
Those who want to work in Thailand can get a three-month visa or a one-year visa with right to labor activity (after getting work permit)
If you plan to stay in the country for longer term. You can become a member of an elite club ThaiElite (joining fee is about $60,000). This membership provides many rights and privileges such as right to stay on the territory of Thailand without time limits.
What are custom regulations of imports and exports of goods in Thailand?
It is strictly prohibited to export any picture of Buddha, antiques and objects of art without permit of the appropriate authority in Thailand. If you bought jewelry in a shop, you have to get a permit to export the item from the country.
Tourists are allowed to import and export gold ware from Thailand. It is permitted to import or export non-jewelry gold only upon availability of a license of Ministry of Finance of Thailand.
It is strongly prohibited to import the following things:
• Dirty books
• Arms (without permission of police)
• Some species of animals and plants.