Thailand is one of the most travelled destinations in South East Asia and for good reasons. Comfortable stay, beaches, shopping, dining, nightlife and work; Thailand offers something for everyone who visits this mystical land. An increasing number of Expats and foreigners are choosing to stay in Thailand for more than just a few days a year. Foreigners are actively investing in Thailand’s real estate market and purchasing condos for extended stays.
While a large percentage of the foreigners investing in Thailand’s property market for staying there and working purposes, there are many investors who wish to rent out or sell the condos at a later point in time.
Most lawyers will alert you that Thailand’s real estate laws are not foreigner-friendly, however, these laws do offer some concessions to foreigners who want to purchase, rent out and sell condos. However, the concessions are valid for qualified foreigners who are eligible for these perks. Continue reading to find out more about the laws and taxes for foreigners who plan to purchase, rent out and sell condos in Thailand.
Purchasing Condos As A Foreigner In Thailand – Laws and Taxes
What is the FET/Thor Tor 3 Form?
Also known as the Foreign Exchange and Transaction Form, the FET Thor Tor 3 Form has to be prepared by a Thai bank when a foreigner is purchasing a condo. This form is mandatory for foreigners who are bringing USD$50,000 or more into Thailand to purchase a condo unit. The original copy of the FET form with the foreigner’s name as well as if they are the receiver or sender of the money is needed by the Land Department for the title deed. This falls under section 19 of the Thailand Condominium Act and is a must to legally own a condo in Thailand.
If a foreign national married to a Thai citizen chooses to opt for joint ownership of the condo, then the property will be registered under the maximum 49% foreigners share of the complex. The only exception to this rule is if the Thai citizen provides a legally binding letter of confirmation that states that the entire money paid for the condo belongs to the Thai national. This letter has to be backed up with financial documents and proof to be considered eligible. Once considered genuine by the Land Department, the condo will be registered under the minimum 51% shares of the Thai quota. Read more about Gifting Your Newly Wedding Spouse A Condo In Thailand.
Renting Condos Owned By Foreigners In Thailand – Private and Commercial Laws
Each and every condo complex has its own by-laws. If foreigners have purchased only 1 condo unit in the complex and if the bylaws of the complex are a bit relaxed then a condo can be rented out periodically. Keep in mind that renting out condos as a regular practice can lead to issues as this would imply that the purchased condo registered to a foreigner is being used for commercial purposes. This is forbidden by the Thailand Condominium Act and can lead to penalties for violations.
In case the freehold condo is being let out for commercial purposes such as but not limited to Air B&B then chances are that the by-laws of the complex might not permit this for more than a few months every year. Some condo complexes have stringent by-laws for such rentals and it is a smart move to check these bylaws before purchasing the condo unit.
If a foreigner who owns a single condo unit in Thailand is renting out the condo for a maximum duration of 30 days at a time, yet repeatedly then he will have to do so following the Hotel Act. Exemptions may be given to single-unit owners renting out the condo for up to 30 days once or twice a year at the maximum.
In case the rental pattern and rental trends are considered as commercial activities especially if he is a foreign investor then this may invoke the laws of either the Foreign Business Act or the Foreign Employment Act.
If foreigners are renting out condos for short durations up to 30 days periodically and not very often, they still are liable to pay rental income tax that will be calculated based on their personal income slabs. If the condo is being rented out by foreigners in Thailand for commercial purposes and business activities then the condo owner will also be liable to pay additional Housing and Land Tax.
Selling Condos In Thailand As A Foreigner – Transfer Fees and Government Taxes
If the condo you have purchased has a value of lower than USD $50,000 then while purchasing the condo you would not have received a FET Form. Instead, the bank would have given you a Confirmation Letter with the same information as a FET Form. This letter would be registered with the Land Department for the Title Deed registration.
While selling the condo to a Thai National you would need either the FET form or the Confirmation Letter given by the bank at the time of purchase. Condos cannot be sold freely from one foreigner to another, legal assistance may be required to sell your condo shares to a foreigner. More importantly, you would need the help of a real estate agent to find buyers for your condo. Choosing reliable and trustworthy real estate experts like Silk Estate can make your life a lot easier.
Condominium Transfer Fees have to be paid while buying or selling a condo in Thailand. These fees are imposed by the Kingdom of Thailand through the government. They are payable at the local Land Office to the concerned authorized personnel. The types of fees that have to be paid include transfer fees, withholding tax, stamp duty and other taxes such as but not limited to specific business tax. It is important to note that if a specific business tax is charged to the buyer, then stamp duty does not have to be paid.
The taxes that have to be paid for the transfer depend on the income tax bracket of the seller and this can range from 2% to a lot higher such as 10% of the condo’s total cost. In case of a resale of a developed and existing condo, the buyer and seller can agree to share these taxes.
In the case of a newly developed off-the-plan condominium project which falls under contract-controlled projects, the developer can charge the buyer a maximum of 2% transfer fees. All other taxes, transfer fees and registration fees have to be paid by the developer, and not the buyer.
Transfer Documents for Foreigners Buying and Selling Individual Condo Units In Thailand
1. Passport of The Foreigner Buying or Selling The Condo
2. FET Thor Tor 3 Form
3. Evidence through bank account statements supporting the information provided in Thor Tor 3 FET Form
4. In the case of Joint Ownership either marriage or divorce certificates
5. If the property is being represented by anyone other than the foreigner then a Power Of Attorney preferably in Thai language and written script as well as with the notarization of a Public Notary in Thailand. Alternatively if overseas then the notary has to be done by The Thai Consulate.
6. Identification proof and documents of all the authorized personnel involved in the purchase and sale.
7. Certified and if needed notarized copies of the condo registration of the buyer and seller.
Important note – All the documents provided for the purchase, transfer, and sale of the individual condo units in Thailand should be valid on the date of registration and should preferably be less than 30 days old.
Sale and Purchase Agreements of Thai Condos Owned by Foreigners
To be eligible to purchase, rent out or sell a condo as a foreigner in Thailand, it is crucial to have a sale and purchase agreement.
In case you wish to keep the condo as an investment for succession and inheritance for your children, then the it is recommended to get intouch with a profession lawyer who has experience with this for foreign inheritances laws in Thailand.
If you are in doubt and need further guidance then contact us at Silk Estate, we have helped numerous Thai developers sell condos to Foreign buyers and we have also helped many foreign sellers get maximum value for their condos through quick and easy sales with our listed and unlisted property memberships. Contact Silk Estate today to know more.
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