Property Transfer Taxes

May 15th, 2010

Transfer Tax and fees when transferring real estate in Thailand from 1st June 2010

For the sale of: 1) a house; 2) land up to one rai (1,600m2) including a house; 3) raw land subdivided under a land allocation license (the license a developer gets to subdivide a larger tract); 4) land including house subdivided pursuant to a land allocation license; 5) a condominium; 6) an office building under the construction control law; or 7) land including an office building under the construction control law.”

The temporary reduction on specific business tax from 3.3% to 0.11% on commercial or profitable sale of immovable property, issued March 28 2008, will end May 31st 2010. Also the reduced transfer fee for specified real estate properties in the same period from 2% to 0.01% will end the same date.

There is a stamp duty at 0.5% when the real property is transferred, except in cases where the seller is subject to a specific business tax. Specific business tax will again be charged at the previous rate of 3%, plus a municipal tax of 10% bringing this tax to 3.3%. The transfer of real property is (among others) not be subject to the specific business tax if the seller is an individual and has possessed the property more than five years before the transfer. The transfer is also exempt from specific business tax if the real estate is transferred by inheritance.

In addition the transfer fee, specific business tax and stamp duty withholding tax is charged when transferring real estate property over the registered sale price or appraised value whichever is higher.

Withholding tax for companies remains at 1% over the actual sale price or government appraised value. For individuals withholding tax is charged at a progressive rate with some specific deductions and exemptions and depending on the number of years of possession. Reduction of withholding tax was not part of the governments program to stimulate the economy and will not change after June 2010.

The situation is as follows in case of the transfer of a Condominium by a private owner with 3 years ownership and a value of 5 million baht (this is an example and the actual calculation by the land department could be different).

Transfer of a condominium (value of 5 million) under the rates from 1st June 2010:

  • Transfer fee 2% over 5,000,000 THB = 100,000 THB
  • Specific Business Tax & Local Tax 3.3% = 165,000 THB
  • Individual Withholding Tax approx 100,000 THB
  • Application fee and others approx. 300 THB

Total: 365,300 THB

Before buying real estate in Thailand and before buying property it is recommended to obtain legal advice from legal professionals on the transfer taxes and fees calculation and how these costs should be divided. Too often foreign buyers end up paying more than they should or the end up paying taxes and fees that the seller should pay.

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