Thailand has long attracted foreign investors interested in buying flats, villas and other properties. The reasons are obvious: affordable prices, a growing market and the possibility of passive income. However, taxes on property purchases in Thailand may come as a surprise to many buyers. Unlike Europe and the US, the tax system here has a number of nuances, and the rates vary depending on the type of property and the terms of the transaction. Our article will help you understand the tax structure to avoid unexpected costs and calculate your budget.
Main tax obligations when buying a property in Thailand
A number of taxes and fees must be paid when the transaction is finalised. The amount varies depending on the type of property, the value of the home and the status of the seller.
In addition to taxes, a property buyer faces additional costs that are important to be aware of in advance. Fees during the purchase of property in Thailand include:
- Legal Services. The average cost of legal services ranges from 20,000 to 50,000 baht. The specialist checks the cleanliness of the transaction, prepares the contract and accompanies the registration of the property.
- Agent’s Commission. In Thailand, the standard agency fee rate is 3-5% of the property value.
- Translation and notarisation of documents. All transactions are in Thai, so official translations are required.
Considering these costs, the investor will be able to budget wisely and avoid unexpected costs.
Which taxes are higher: freehold or lickhold
When buying property in Thailand, overseas investors are faced with a choice of ownership: freehold and lishold. Both options have their own peculiarities and tax implications that are important to consider before committing to a transaction.
Freehold: full ownership and tax burden
The preferred option for investors is freehold because it gives full ownership of the property and the ability to dispose of it without restrictions. The tax burden of buying freehold property includes criteria:
- Transfer Fee – 2% of the cadastral value of the property. It is paid by the buyer, but in practice the parties may agree to share the costs.
- Stamp Duty – 0.5% of the amount specified in the property sale agreement.
- Specific Business Tax (SBT) – 3.3%, if the property is sold within five years of its purchase.
Income tax is calculated individually based on the difference between the purchase and sale price. The ownership format is convenient because it eliminates the need to renew the contract and additional annual fees. But when reselling, taxes on resale income must be taken into account.
Leasehold: 30+ year lease and tax nuances
Long-term lease of land or immovable property for a term of 30 years with the prospect of extension up to 90 years. The format is most common for foreign buyers as land cannot be owned by foreign nationals in Thailand.
The tax burden is different when acquiring a property on a lisholding:
- Rental tax – payable annually and calculated individually based on the terms of the contract and rental value.
- Lease Transfer Tax – 1.1% based on the rent for the entire term (30 years).
- Sales Income Tax – applies on the resale of leasehold rights, but is generally lower than freehold.
The main advantage of a lishold is the lower initial tax burden on purchase, but the need for annual tax payments and the difficulty in renewing leases can be a serious disadvantage for long-term property investments.
Which is more favourable: freehold or lickhold
The choice depends on the investor’s goals:
- Freehold is suitable for those who view the property as a long-term asset and plan to live in or pass on the property by inheritance;
- lishold is more often chosen by investors interested in renting a property, as the initial costs are lower, but in the future there may be difficulties in extending the contract.
Although freehold involves higher taxes at the purchase stage, it exempts the owner from annual rental payments. Leasehold – requires less investment at the start, but entails an ongoing tax liability.
When choosing a property ownership format, it is important to consider not only the current taxes on buying a property in Thailand, but also the future maintenance costs of the property.
What taxes a property owner pays in Thailand
Once the property is purchased, the owner must pay annual taxes on secondary housing in Thailand and cover utility maintenance costs. The main costs include:
- Annual Tax. For residential properties, the rate is 0.3-0.7% of the cadastral value.
- Utility bills. Average cost of electricity – 4-6 baht per kW, water – 20-30 baht per cubic metre.
- Housing Maintenance. If the property is in a condominium, the owner has to pay for the management company, cleaning, security and infrastructure repairs. The average cost of condominium maintenance is 40-80 baht per square metre per month.
Conclusion
Buying property in Thailand can be a worthwhile investment, but it is important to consider purchase taxes and additional costs. Proper budgeting can help you avoid financial surprises.
It’s worth it before you buy:
- scrutinise the tax burden depending on the type of property.
- calculate the annual cost of housing maintenance.
- consult a lawyer and check all the terms of the deal.
Thailand remains an attractive market for investors and knowing the ins and outs of taxation will allow you to make an informed decision.
Buying property in Bangkok can take many forms. Thai law gives foreigners the right to own housing only in a freehold format. And only within the quota of 49% in each residential complex. Therefore, the main choice is condominium.
Buying property in Bangkok has long gone beyond an exotic idea. It is a tool for active income generation, currency diversification and sustainable capital growth. The city continues to transform, expand, build metros and attract investment. Each new neighbourhood becomes a point of attraction where it is more profitable to enter today than to catch up tomorrow.
Each of these objectives requires a different approach to site selection, which is important for investors to consider.
Property in Thailand represents a unique opportunity for investors ready to take advantage of the developing market and warm climate. With low taxes, rising property values and steady interest from tourists, the country is becoming an ideal investment opportunity. If you are an investor, consider this way of investing your money. It may be your chance to own a piece of paradise on Earth and earn a stable income at the same time.