Property Purchase & Transfer
When you purchase real property, you pay because you want to possess the property you are buying. While there are several preliminary steps, the main event is the transfer of property from the owner or developer to you. Often the contract for the purchase of the property will list the property transfer data. The property transfer will take place at the land office where the ownership of the property will be registered. If you buy property from a developer before development is completed, the transfer of property takes place once after your property is complete. If the property had already been built, the transfer of property takes place once the contract has been signed and the installment payments have been completed. The remaining balance of the purchase price is usually paid on the day of transfer at the land office.
Taxes & Transfer Fees
In addition to the balance of the purchase price, you will also need to pay certain taxes and transfer fees. These taxes are the stamp duty or special business tax, transfer taxes, and a withholding tax. The special business tax is a 3.3% tax assessed on the sale price of the property. This tax only applies if the property is sold within the first five years of ownership. If the property is sold after five years of ownership, a stamp duty will be assessed instead . The stamp duty is 0.5% of the sale price. The land department also imposes a transfer duty when a property’s ownership is transferred. This tax is calculated as 2% of the property’s official assessed value.
Income Tax from the Sale
Income from the sale of property is subject to Thai income taxation. The land department will withhold a prepayment of the property seller’s income tax at the time the transfer of property is registered. When the property seller is a company, the withholding tax is 1% of the sales price or 1% of the assessed value, whichever is higher. When the property seller is an individual, the withholding tax is calculated on a progressive income tax scale. How much of these taxes will be paid by the seller and how much will be paid by you, the buyer, should be negotiated before going to the land department and written into the sales contract.
Legal Services & Conveyancing
Siam Legal provides a number of services that can help make the transfer of property easier for you. If it is not possible for you to go to the land office, we can prepare a Power of Attorney that will allow you to appoint our firm or a third party to conduct the transfer at the land office on your behalf. If you prefer to go to the land office yourself, one of our staff can company you to make sure your rights are protected. Before the official transfer of property at the land department, we will inform you of the documents needed and the approximate amount of money you will need for the taxes and administrative fees that must be paid.
Reproduced Courtesy of SIAM LEGAL www.siam-legal.com