Sale and rent deeds
Land office property transfer
This service will involve a lawyer representing you at the relevant land office when the time comes to transfer your purchased property into your name, or nominated Thai individual or Thai company. Your lawyer will ensure that the correct monies have been paid to the seller and calculate the land office transfer fees and taxes that have to be paid on the day of the transfer. If you are not able to be present at the time of transfer, a lawyer will arrange that you have signed a Power of Attorney (POA) for the lawyer to act on your behalf in transferring the property.
Taxes and Transfer Fees payable at the land office are generally broken down as follows:
With off-plan condominium purchases the buyer is only responsible for paying 50% (half) of the land office transfer fees which are 2% of the land office appraised valuation of the property. The valuation is generally less than that amount which is actually paid and is based on the valuation of the property when it was last transferred at the land office. However, with new condos, the valuation is that as disclosed by the Developer.
Other transfer taxes are the responsibility of the Seller and include ‘withholding (income) tax at 1% and ‘specific business tax’ (SBT), which is payable if the property is sold within 5 years of the last transfer and levied at 3.3% of the land office appraised value. If not applicable then a 0.5% stamp duty tax is payable.
The withholding or income tax is levied depending on whether the seller is an individual or a company. If the seller is a company the tax is 1% of the sales price or assessed value, whichever is higher. If the seller is an individual then the income tax is calculated on a progressive income tax scale.
Setting Thai Company
As many buyers will know, foreigners cannot own property in their own name in Thailand, except with the exception of condominiums, if it is part of the foreign quota, which forms 49% of the Development. If this does not apply, such as in the purchase of a house or within the 51% Thai quota of a condominium development, then a foreigner must either transfer the property into a Thai individual name or set up a Thai Limited Company to own the property.
Setting up a Thai limited company for the purposes of owning a property is fairly straight-forward and requires a visit to the Department of Business Development (DBD) which the buyer’s lawyer will carry out as part of the service. A Thai limited company must have a minimum of 3 shareholders, of which 51% of them must be a Thai citizen or another Thai company. A foreigner is allowed to own 49% of the shares of the company.
The usual structure for buyers setting up a company for the purposes of owning land is that the foreigner takes 49% of the shares and then divides the 51% of the shares between their 2 nominated Thai shareholders in whatever proportion they wish. For example 26% and 25% or 48% and 3%. The foreigner can then also ultimately be the sole Director of the company. In practice, on the initial transfer of the property into a Thai limited company at the land office, the company structure must show a Thai shareholding of 100%. The 49% of the foreigners’ ultimate shareholding is often held by one of the lawyer’s staff temporarily until the land is transferred into the company and then changed immediately afterwards to the foreigner at the DBD.
The company valuation and the value of the shareholding depends of the value of the property. Such that, if a property is valued by the land office at 2 million Thai baht then a company with a share valuation of 2 million Thai baht must be registered.
The normal cost for setting up a Thai limited company with a share capital of 1 million Thai baht is THB 25,000 and the costs increase by THB 10,000 for every 1 million Thai baht of share capital.