Useful Information for Foreigner
Can I Own a House and Land in Thailand?
Ownership of land is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior. Although Thai law prohibits foreigners from owning land in Thailand, there are various ways in which you can structure your affairs so that you can own land, and still comply with existing Thai laws:
Nominee with Lease and Option to Buy - you can use a Thai Nominee to purchase the house/land and have a 30-year lease with a 30 by 30 year option from the nominee. In order to be enforceable, any lease for a period of longer than three years must be registered, which involves payment of a registration fee and stamp duty based on a percentage of the rental fee for the whole lease term. The original registered lease remains in force and effect even if the property is sold. The drawbacks to a lease include the fact that the parties can contractually agree to renewals, but this right cannot be registered and is not effective against a purchaser of the property, and that the lessee cannot (without the lessor's consent) sublease, sell or transfer his or her interest.
Nominee with Mortgage - you can use a Nominee to purchase the house/land and have a mortgage (registered with the appropriate land department office) on the property in your favors. However, in some circumstances the Thai courts have ruled that this was not a bona fide mortgage, but rather it was a mortgage contrived to circumvent the existing laws of Thailand prohibiting foreign ownership of land. It is important to note that only the owner of the land is entitled to mortgage the land; the lessee of land does not have the same privilege.
Usufruct Interest (Sidhi-kep-kin) - gives you temporary ownership rights to things on or arising from the land. In practice, a usufruct is limited to a 30-year maximum period; like leases, the agreement can be successively renewed. In contrast to a lease, a usufructury interest can be sold or transferred, although it expires upon the death of the holder of the usufruct and therefore cannot be inherited.
Limited Liability Company - this form of purchasing property is the most popular with foreign investors as the Articles of Association can be varied to allow greater protection for foreign minority shareholders where majority Thai ownership is required under the Alien Business Law. Thai law requires that 51% of the shares be held by Thai juristic persons, however, any company with more than 40% foreign interest that purchases land will be investigated by the Central Land Office in Bangkok (under Section 74 of the Land Code) to ensure that the company has not been organized in an attempt to circumvent the prohibition against foreign ownership of land.
This results in the foreign ownership of the company being limited at 39%, but with the recommended changes to the Articles of Association, the foreigner can be the only director of the company, and the only officer of the company who can commit or bind the company in any contractual dealings - effectively giving the minority shareholder control over the company.
Do They Have Title Deeds in Thailand?
A Title Deed is the purest form of evidence that an individual owns a piece of land. Title Deeds are given only for areas of Thailand, which are surveyed. For areas, which are not surveyed, there are other documents for land possession such as evidence of the possession of the right to utilize the land or other interests in the land. These documents are called "Nor Sor Sam (3) and Nor Sor Sam (3) Kor". Unlike the Title Deeds, these Nor Sor documents are issued to show the possessors' exploitation of the land. Though these documents do not provide ownership rights, as do Title deeds, they can still be registered for transfer of the lands for which they are issued.
Can I Get a Mortgage Loan?
Foreigners generally cannot mortgage properties in Thailand, however, most of the financial institutions in Thailand provide loans for real estate purchasing to Thais and Thai companies. It is common for a real estate developer to arrange for his customers to have a financing package from a financial institution. In most real estate development projects, a down payment can be made in installments from 10 to 24 months. After the down payment has been paid, the sale contract will be made and the balance amount is paid through the loan, which is financed from a financial institution. The financial institution requires you to mortgage the property with it as collateral against the loan.
Land Appraisals and Valuations!
Finding the exact appraisal price for land is difficult, since there are generally three different appraisal rates; the government rate, the appraisal company's rate and the rate, which is considered to be fair market value of the land. Over the last few years all of these rates have begun to come closer together. With the East Coast team's wealth of experience in Thailand, they are well placed to assist you in valuing various properties proposals.
My Wife is a Thai National, Can She Own Land?
Prior to 1998, any Thai woman who married a foreigner would lose her right to purchase land in Thailand. She could, however, still retain land that she owned prior to marrying the foreigner. However, the recent (1999) Ministerial regulation now allows Thai national's married to foreigners the right to purchase land, but the Thai spouse must prove that the money used in the purchase of freehold attractive new designs in furniture land is legally solely theirs with no foreign claim to it. This is usually achieved by the foreign spouse signing a declaration stating that the funds used for the purchase of property belonged to the Thai spouse prior to the marriage and is beyond his claim.
Are There Property Taxes in Thailand?
There are no property taxes as such in Thailand that are exactly equivalent to the property taxes in the west, however, the most comparable taxes on properties in Thailand are the Land Tax and the Structures Usage Tax. The Land Tax levied on land is so miniscule, that in practice the body charged to collect it, rarely bothers to do so, and if they do, they usually wait several years until the amount accumulates. The second tax, the Structures Usage Tax, relates to buildings, is collected by the municipal office or district office, and is only applied to properties used for commercial purpose.
What Taxes and Costs are Applicable to Purchasing a Property?
On all purchase/sale of property in Thailand there is a stamp Duty of 0.5%, a transfer fee of 0.01%, a business tax of 0.11% levied against an owner who has been in registered possession of the property less than 5 years, and Income Tax. There is no Capital Gains Tax in Thailand, unlike many countries, and Income Tax (usually between 2.0 - 3.0%) on property is the comparable replacement. There are no set rules on who pays the income tax, and it is just another part of the bargaining process, as with all the other costs of the transfer of ownership.
Which Thai laws govern foreign ownership and purchase of land in Thailand?
Ownership of land in Thailand is governed by the Land Code of BE 2497 (1954), the Civil and Commercial Code, the Land Reform for Agriculture Act BE 2518 (1975), and the regulations set forth by the Ministry of the Interior.
Aren't foreigners prohibited from owning land in Thailand?
Under strict application of the existing law it is officially prohibited for foreigners, including both individuals and juristic entities (e.g., companies or partnerships), to own land in Thailand . However, there are exceptions to the prohibition found in the law itself. There are also other methods of arranging for the purchase of land in Thailand .
According to Section 97 of the Thai Land Law, the definition of a foreigner includes a Thai registered company or partnership in which more than 49% of the capital is owned by foreigners or of which more than half the shareholders or partners are foreign citizens.
Can foreigners own buildings even if they don't own the land?
Although Thai law prohibits foreigners from owning land in Thailand , foreigners have the right to own buildings. If foreigners wish to purchase land in Thailand in order to build property, they have two options; first, forming a joint venture with majority Thai ownership, and second, procuring a long term lease with a right of renewal.
How can a joint venture be created to acquire land or property in Thailand?
One method foreigners can employ to acquire land or property is by forming joint venture companies with majority Thai ownership but with adequate safeguards to protect the foreigners' minority interest. If a foreigner plans to run a business in Thailand then he may purchase the freehold of the land through his Thai majority limited company. The land will be owned by the Thai Company, not by the individual.
How does a limited liability company allow foreigners to own property?
Purchasing property with a limited liability company is the most popular method for foreign investors as the Articles of Association can be varied to allow greater protection for foreign minority shareholders. The regulations vary throughout Thailand , but the Land Office generally requires that Thai nationals own a majority interest in a company if they wish to purchase land legally.
What about long term leases with rights to renewal?
Because of the barriers in place to the purchase of land by foreigners, the most effective way to acquire land that a building resides on is to purchase the land on a 30-year leasehold with an option to extend the lease for subsequent 30-year periods. Leases are limited to 30 years, except on land for industrial purposes, which may be established for 50 years. Similarly, lease extensions are capped at 30 and 50 years respectively. Possession of the land leased for an already owned building is protected by the fact that the building rests on the land; ownership of the building is separate from the land and cannot be seized by the lessor once the lease expires. Leases exceeding three years are enforceable for only three years unless they are registered with the Land Department. Therefore, a 30-year lease must be registered with the Land department. In addition, a lease continues to be valid even in the event the property on the land is sold.
What are the different types of rights to private land?
Land can be controlled through the right of possession or through title deeds and other documentation. Individuals who actually possess and use land may have the right to possess such land under the Civil and Commercial Code. The primary form of evidence for ownership of land is a title deed (Chanot or Nor.Sor 4). These title deeds must be registered at the Land Department in the province in which the land is located. It should also be noted that a parcel of land may be commonly held by several individuals. A person whose name appears on a Chanot, or Land Title Deed, has all the legal rights to that land, can produce the deed as evidence of ownership to Government officials, can prove the land has clearly defined boundaries, and can engage in legal acts upon that land as allowed by law.
Can the spouse of a foreigner still own land in Thailand?
Until recently, Thai nationals who married foreigners became ineligible to own land in Thailand . The understanding was that once the foreigner and the Thai national were married the land became community property; officials believed this was perhaps a too convenient way for foreigners to circumvent existing land law. At present, however, policy has changed; a Thai spouse is now legally allowed to own land in Thailand . The foreign spouse may be required to sign a letter declaring the property to be the separate property of the Thai spouse, consequently waiving any claim on the land.
Foreigners may acquire land in Thailand in three cases:
Can I Own a Condominium in Thailand?
Buying a condominium is perhaps the simplest and easiest option available to foreigners. The only restrictions on purchasing a condominium, are that the percentage of units sold to foreigners cannot exceed forty nine percent (49%) of the total number of units in the condominium block; and that the funds used to buy the condominium have been remitted from abroad and correctly recorded as such by a Thai Bank. Purchases of condominiums by foreign individuals come under the jurisdiction of the Condominium Act B.E. 2535 (1992). The owner of each condominium is issued with a certificate of unit ownership. The certificate also has a statement saying exactly what percentage of rights over the common areas of the building each owner has.
How is a Condominium defined by Thai law?
According to the Condominium Act B.E. 2522 (A.D. 1979), a condominium is defined as a building that can have its separate portions sold to individuals or groups for personal property ownership.
What classes of foreigners may purchase condominiums in Thailand?
Foreign investors as well as other foreigners may own condominiums in the Kingdom of Thailand under certain circumstances.
What types of Condominiums are available for foreigners to purchase?
Certain condominium buildings allow for foreigners to purchase condos in free hold (fee simple). The condominium buildings are located in specified metropolitan areas and may have limits on the amount of units available for sale to foreigners.
What are the requirements for a foreign individual or organization to purchase a condominium in Thailand?
In order to purchase a condominium certain requirements must be met, for example: 1: A foreigner has permanent residence in Thailand in accordance with Thai Immigration Law, or 2: A foreigner is allowed into or resides in Thailand in accordance with Thai Investment Promotion Law, or 3: A foreigner or foreign legal entity who brings foreign currency into Thailand, or brings in Baht currency from the account of a person residing abroad, or uses foreign currency from their deposit account. This requirement is normally met by the presentation of a Tor Tor 3 form which is provided by the bank receiving an incoming remittance from abroad.
What is a Tor Tor Sam (3)?
A Tor Tor Sam (3) is an official bank document issued by the receiving bank upon the receipt of foreign currency into your bank account in Thailand. You must request a Tor Tor Sam from your bank when you are remitting funds to Thailand for the purpose of purchasing a condominium, and the Tor Tor Sam must specify that the remittance be solely for the purpose of purchasing a property - Code 5.22
Are there any restrictions to this ownership?
In many areas of Thailand a foreigner or foreign legal entity can acquire up to, but not exceeding, 49% of the total floor area of the combined condominium units. However, more that 49% of ownership may be allowable in certain condominium buildings in Greater Bangkok and various other municipalities and districts according to Ministerial Regulations.
What is the most typical way for a foreigner to purchase a condominium in Thailand?
Most Foreigners purchase a condominium by showing evidence of an incoming remittance of foreign currency into their bank account from abroad as demonstrated by a valid Tor Tor 3 form from a Thai Bank.
Can ownership of a condominium be inherited by a foreigner?
Property ownership of a condominium can be inherited if the heir to ownership meets one of the original criteria for foreign ownership. Otherwise the condominium must be sold within one year of inheritance.
Are condominium long-term leases available?
Yes. Condominiums may be leased to foreigners for periods of up to 30 years and may have options to renew. Leases of greater than 3 years are required to be registered with the Land Department.
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