Post
by FrazeeDK » May 20, 2017, 12:58 pm
Usufructs are for 30 years. they are not renewable.. A legal lease though can go for 30 years and renew for a 2nd 30 year period. I found these Thai land law rules a while back and I think they're pretty solid. It also explains a lot of land rules and gives definitions.
Thai Property Rules
Every person residing in Thailand, regardless his/her nationality shall be responsible to pay taxes and fees when buying or selling property. These taxes and fees are as follows:
1.TRANSFERRING FEE
The Transferring fee is 2% of the registered value of the property. Whether, the buyer or the seller is paying for this fee, is depending on the Sale and Purchase Agreement. Normally the buyer partly pays for this fee. This fee will be paid to the officer at the land office, upon the day of the transfer of ownership.
2.STAMP DUTY
Buyer or seller is subject to a 0.5% Duty Stamp from either the appraised value of the property or actual purchasing price, whichever is higher. The parties reliable for this additional 0.5% of Stamp Duty can be agreed in Sale and Purchase Agreement. Stamp Duty is to be imposed unless the Specific Business Tax (SBT) is paid.
3.SPECIFIC BUSINESS TAX (SBT)
SBT will only be imposed if you are selling your property, which you have own less than a period of five years. The tax rate is 3.3% of the selling or assessed price of an asset (whichever is higher).
4.WITHHOLDING TAX
Individuals selling their property :
the withholding is determined under to Revenue code of Thailand. The seller shall withhold such tax and pay to the Revenue Department, when he/she earn an income from the sale of immovable property (including condominium unit). Withholding tax rate are calculated based from government assessed price with a deduction of possession year, which are varied depending on the year of your possession (the more years of possession, the more the deduction) and calculate that amount based on the income form the progressive tax rate (range from 0 – 37%).
Companyselling their property:
the withholding tax of 1% from appraised value of property or actual selling price, whichever is higher, must be paid by the Seller. However, there are no property taxes as such in Thailand that are exactly equivalent to the property taxes in the West. Commercial properties incur a small tax which is collected infrequent. In term of registering a lease agreement, a registration of a lease for duration of more than 3 year required to pay a registration fee rate of 1% plus a 0.1% rate of stamp duty. Rates are calculated from the total amount of the rental fee or the key money or both.
Business tax 3.3% of the appraised value of the property if selling within 5 years. This applies to both individuals and companies.
THAILAND PROPERTY TAXES
Transfer fee 2% of the registered value of the property
Stamp Duty 0.5% of registered value. Only payable if exempt from business tax
Withholding tax 1% of the appraised value of the property
Business tax 3.3% of the appraised value of the property if selling within 5 years. This applies to both individuals and companies.
TAX WHICH PARTY NORMALLY PAYS AMOUNT
Transfer fee Buyer 2% of registered value
Stamp Duty Seller 0.5% of registered value
Withholding Tax Seller 1% of appraised value
Business Tax Seller 3.3% of appraised value
Tax and Cost Calculation for Transferring Property
Example of how to calculate the taxes and cost
• Suppose that the government assessed price is Baht 50,000 per Sq.m.
• All areas are 100 Sq.m.
• The total assessed price is Baht 5,000,000
• Actual selling price is 6,000,000
• The Seller possessed this property for 3 years
1.WITHHOLDING TAX
The government assessed price = 5,000,000 Baht
Deduction with the expense of possession for 3 years for 77% = 3,850,000
Balance = 1,150,000 (5,000,000 – 3,850,000)
Divided by the 3 year of possession
Balance = 383,333.33 (1,150,000/3)
Taxation on progression rate
1 to 80,000 = exempt
80,001 - 100,000 = 5% (1,000)
100,001 383,333.33 = 10% (28,333.23)
Total = 29,333.23 (1,000 + 28,333.23)
Multiply by the year of possession = 87,999.69 (29,333.23 x 3)
In this case withholding tax is Baht 87,999.69 (A)
2. THE GOVERNMENT FEE OF TRANSFER OF OWNERSHIP
Is 2% based on the government assessed price so 5,000,000 x 2% Balance = 100,000
Transfer fee is 100,000 (B)
3.STAMP DUTY
in this case is exempt. This is because transaction is subject to the specific Business Tax (possession of less than 5 year before sale).
4.SPECIFIC BUSINESS TAX
3.3% for Specific Business Tax based on the government assessed price or sale whichever is higher. In this case sale price is higher than government so 6,000,000 x 3.3% = 198,000. Specific Business Tax is Baht 198,000 (C)
Total expenses are Baht 385,999.69 (A+B+C)
B. Categories of land title deed
Land title deeds in Thailand may be mainly divided into 4 categories as follows:
1. FREEHOLD TITLE DEED (CHANOTE OR NOR SOR 4)
This type of title grants the holder of this document the full rights over the land. Thus, if you are planning to buy land in Thailand, this type of title deed is the best option.
2.NOR SOR 3 GOR
A land awaiting a full title deed is granted the document Nor Sor 3 Kor. The land is measured by the Land Department; therefore, it has its exact boundaries. The owner knows exactly what he owns. This type of land may be sold, transferred, or mortgaged, as a land with freehold title deed (Chanote). The owner of the land may file a petition to the Land Department demanding to change it to a full title deed (Chanote), and the Land Department may do so if there is no opposition made against the petition.
3. NOR SOR 3
A difference between this type of land title deed and the previous one is that a land with Nor Sor 3 has never yet been measured by the Land Department; hence the land has no exact boundaries. However, Nor Sor 3 may later be switched to a Nor Sor 3 Gor, then a freehold title deed (Chanote) in the future.
4. POSSESSORY RIGHT
This type of title deed is least recommended. A land with a possessory right has never been substantiated by Department, but is only recognized by tax payments at the Local Administrative Office.
Although Thai Law stipulates that a foreigner may not own land in Thailand, there is an alternative step of owning a land in Thailand. This involves registering a Thai Limited Company. A Thai Limited Company means that 51% or more of the company must be owned by Thai Shareholders (the remaining shares maybe held my non-Thais. This Thai company may then legally purchase land in Thailand.
We recommend that foreign investors to form a Thai Company Limited as the Articles of Association of this form of Company can be varied to allow greater protection for foreign minority shareholders where majority Thai Ownership is required under the applicable Law. The Article of Association can be changes to authorize the foreigner to be the sole director of the company, and the only person of the company who can commit or bind the company in any contractual dealing (buying or selling land), effectively giving the minority shareholders control over the company.
By following the above procedures the foreigner would control the company and the company owns the land, for this there is no need of recorded funds from overseas.
* CAN A FOREIGNER LEGALLY OWN A LAND IN THAILAND?
Answer: Normally, a foreigner cannot own a land in Thailand; however, other alternatives exist for a foreigner is allowed to acquire land. For more information, please see How a foreigner can Acquire Land in Thailand section.
* THOUGH A FOREIGNER CANNOT HAVE AN OWNERSHIP OF LAND, IS HE/SHE ALLOWED TO OWN ANY STRUCTURE ON SUCH LAND?
Answer: Legally, any building is considered as being a part of land over which such building is constructed. However, a building may be considered as a separation part when it is a tenant of land who builds a building under a leasing agreement. Therefore, a foreigner may own any building on his rented land.
If your spouse is Thai, and you are planning to build a house on his/her land, you are recommended to sign a lease agreement with your spouse indicating that you are a tenant. This way, you shall have a joint ownership over such construction, not a land, together with your spouse.
* HOW DO I OBTAIN CONSTRUCTION PERMISSION?
Answer: Construction permissionmay be obtained at the Local Administration organization (Aor Bor Tor), or the Municipal Office, where your land is located. Structure Plans submitted shall be certified by an architect or an engineer. A building must have the specifications indicating in the permission.
* MY LAND WAS SECRETLY TRANSFERRED TO A THIRD PERSON WITHOUT MY KNOWLEDGE; HOWEVER, IT WAS NOT REGISTERED AT THE LAND DEPARTMENT. WHAT ARE MY RIGHTS AND OBLIGATIONS?
Answer: Any unregistered action, with the Land Department, regarding a land is not recognized under Thai Property Law. You are a sole owner of the land.
* WHAT ARE THAI LAWS REGARDING A LAND LEASE?
Answer: A land lease for duration of 3 years and more must be registered with the Land Department, and some fees must be paid. The maximum duration is 30 years, which may be renewable for another 30 years.
In case the parties agree for a lease of 60 years (30 years with an option to renew for another 30 years), a deposit payment against the rent payable during the 2 nd part of contract shall be made at the same time a payment of 1 st half’s deposit. The land title deed should be in possession of tenant to ensure his rights under an agreement. This sort of leasing agreement may become problematic in case a land passed on to a tenant’s heirs.
* WHAT IS A CONDOMINIUM UNDER THAI LAW?
Answer: The Condominium Act (The Commonly-Owned Housing Act of 2522) defines a condominium as a building featuring privately-owned property and common property. The owners of condominium unit own the land through a juristic person of condominium.
* CAN A FOREIGNER LEGALLY OWN A CONDOMINIUM UNIT IN THAILAND?
Answer: Any non-Thai who has legally entered into Thailand may have a freehold ownership over a condominium unit, constructed on a land of less than 5 rai, of certain projects in municipal jurisdictions of the Kingdom, such as Bangkok, Pattaya, and Phuket. However, condominium units owned by a foreigner shall not exceed 49% of the total space of the condominium project. Other restrictions are applicable. A non-Thai owner of a freehold condominium unit may transfer a property to other foreigners. If you wish to buy a condominium in Thailand, there are certain points of which you should be aware before choosing your new property:
• How much will monthly maintenance fees and charges be?
• How much are sinking funds? (For a use of common parts of condominium)
• Some condominium projects have never been finished for various reasons, so consider carefully before buying
• If you are interested in a used condominium, verify that your ownership of this property would not rise above a total of foreign-owned total space of all units to more than 49% of total owners.
* CAN I BUY A PROPERTY IN THAILAND AT MY ABSENCE?
Answer: Yes. A person wishing to buy a land, including a foreigner, may purchase a land without being present at the time of registration of ownership at the Land Department. This shall be done by appointing, by a power of attorney, a lawyer to act on your behalf.
Nevertheless, if you are married to a Thai, you, a foreign spouse of a Thai, is required to declare in a written agreement that a fund, of a purchase of land, is purely of your Thai spouse as her personal affair before marriage. This procedure may be done by signing such declaration abroad, and demand for a certification at the Consulate of Thailand in your country.
* WHAT ARE MEASUREMENTS USING FOR LAND IN THAILAND?
Answer: In Thailand, Land is measured in Rai, Ngan and Wah.
• 1 Rai = 4 Ngan (or 1600 Sq.m.)
• 1 Ngan = 100 Wah (or 400 Sq.m.)
• 1 Wah = 4 Sq.m.
• 1 Acer = 2.5 Rai
• 1 Hectare = 6.25 Rai
Land prices are usually expressed in Baht per Rai or Baht per Wah. Condominium prices are usually expressed in Baht per Sq.m.
* CAN I LEGALLY RENT OUT A PROPERTY IN THAILAND?
Answer: Yes. A foreign-owned property may be rented out. Some banks may allow you to open an account to collect the rents. You, as a non-resident, must be aware that personal income tax shall be deducted from your income earning in Thailand.
* IF I NO LONGER WANT TO KEEP A PROPERTY IN THAILAND, WHAT ARE TAXES AND FEES ON A SALE OF PROPERTY IN THAILAND? BY WHAT MEAN SHOULD I TRANSFER MY MONIES OUT OF THAILAND?
Answer: A person, earning money from selling property in Thailand, is taxed a withholding tax (from 0 to 37%) A specific business tax of 3.3%, of the appraised price or the purchase price whichever is higher, must be paid in case that a buyer has a property in his possession for less than 5 years. A fee of transfer of ownership is 2% of the appraised price. A government stamp must be paid only when a specific business tax is not applicable.
As regards to transferring monies out of Thailand, you must bring your bank account documents and a passport to a bank to arrange a transfer. A transfer of more than $20,000 USD must be informed to the Bank of Thailand. A transfer of more than 2,000,000 baht must be informed to the Anti-Money-Laundering Office.
* IF I NO LONGER WANT TO KEEP A PROPERTY IN THAILAND, WHAT ARE TAXES AND FEES ON A SALE OF PROPERTY IN THAILAND? BY WHAT MEAN SHOULD I TRANSFER MY MONIES OUT OF THAILAND?
Answer: A person, earning money from selling property in Thailand, is taxed a withholding tax (from 0 to 37%) A specific business tax of 3.3%, of the appraised price or the purchase price whichever is higher, must be paid in case that a buyer has a property in his possession for less than 5 years. A fee of transfer of ownership is 2% of the appraised price. A government stamp must be paid only when a specific business tax is not applicable.
As regards to transferring monies out of Thailand, you must bring your bank account documents and a passport to a bank to arrange a transfer. A transfer of more than $20,000 USD must be informed to the Bank of Thailand. A transfer of more than 2,000,000 baht must be informed to the Anti-Money-Laundering Office.
Dave
