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Rules for buying property in Thailand

Real estate sale procedure

When purchasing real estate in Thailand, as a rule, the most simple option is Free Hold, which provides perpetual ownership of the property with all the ensuing rights, including gift and inheritance. It is important to know that both the buyer and the seller will be subject to tax liability. Private property requires the payment of a registration tax (Transfer Fee), which is 2% of the final value of the property.

The buyer and seller can agree between themselves on the joint payment of the transfer fee before signing the contract; if not, the responsibility for it lies entirely with the buyer. Thus, when buying real estate in free hold for the buyer, the fees will be 1–2%, while in lease hold transactions they will amount to only 1%, which will be divided between the buyer and the seller.

Taxes in Thailand when selling real estate

  1. Stamp duty (Samp duty) is a fee of 0.5% of the value of housing or the amount of the contract, and the highest price is taken into account. It only applies if the property in Thailand has been owned by the seller for more than 5 years.
  2. Special tax (Special Bussines Tax) is levied on property sellers who own it for less than 5 years, and is 3.3% of the contract value. The payment of this tax cancels the payment of stamp duty.
  3. Profit tax (Withholding Tax) is calculated based on the difference between the purchase and sale price, and the interest rate depends on whether the owner is an individual or a legal entity—from 5 to 35% for individuals and 1% for legal entities.

Personal income tax

When registering a sale with the Land Department, Income Tax must be paid. This tax is calculated on a progressive scale:

 

Income Limit (Baht) Interest rate
1 150 000 Is not a subject to a tax
150 001 300 000 5%
500 001 750 000 15%
1 000 001 2 000 000 25%
2 000 001 4 000 000 30%
4 000 001 and more 35%
  • from 1 to 100 thousand baht, the tax is 5%;
  • from 100 to 500 thousand baht, the tax will be 10%;
  • from 500 thousand to 1 million baht, the tax will be 20%;
  • from 1 to 4 million baht, the tax will be 30%;
  • more than 4 million baht, the tax rate will be 37%.

The amount of the deduction depending on the period of ownership:

  • 92% if the property has been owned for 1 year;
  • 84% if the property has been owned for 2 years;
  • 77% when owning an object for 3 years;
  • 71% if the property has been owned for 4 years;
  • 65% when owning real estate for 5 years%
  • 60% if the property has been owned for 6 years;
  • 55% if the holding period is 7 years;
  • 50% when owning property for 8 years or more.

An example of calculating income tax on the sale of housing (Income Tax)

For example, the owner is selling his apartment for 4,000,000 baht, which he bought 2 years ago for 3,000,000 baht. The owner owns real estate, which he owns for less than 2 years. The official appraised value of the condominium is 3 million baht. The profit will be 1,000,000 Baht.

 

Income tax is calculated (based on a progressive scale) as follows:

  • 1,000,000 = 300,000 (5%) + 200,000 (10%) + 250,000 (15%) + 250,000 (20%)
  • That is, for the first 300 thousand baht, the tax will be 5% and this is 15,000 baht,
  • the next 200 thousand baht are taxed at 10% - 20,000 baht comes out,
  • further tax from 250,000 baht will be 15% - 37,500 baht,
  • and the last 250,000 are taxed at 20%, which will be 50,000 Baht.

A total income tax of 1,000,000 Baht will be equal to 122,500 Baht, which is 12.25% in absolute terms.

 

It is important to know that the amount does not exceed 20% of the total transaction value.