- Criteria one needs to meet
- Taxes and management fees
With its advantageous geographical location and competitive returns on investments together with an extremely welcoming culture, Thailand’s property market has been experiencing year-on-year growth in recent times. We explore the different aspects of the industry that one should be aware of before entering the Thai real estate market:
Foreign ownership policies
It is common practice for every country to have restrictions on foreign ownership of properties to protect the interest of its citizens. When comparing to other countries in the region, Thailand property laws are rather relaxed – especially after the 1997 Asian financial crisis.
In terms of investment sizes, the country permits foreign ownership of land if one were to invest at least 30 million Thai Baht which equates to about USD 850,000*.
The laws are considerably disparate (in comparison to acquiring land or landed property) when purchasing a condominium. There are no particular or limiting ownership restrictions based on nationality or visa categories - all foreigners who enter Thailand legally can buy and own a condo, as long as they meet the following three criteria:
- Funds for the purchase of a condo must be transferred from a foreign country in its original currency, failing which the owner will be prohibited from registering the condominium under his or her name.
- Only 49% of the rooms in the particular development can be owned by foreigners.
- The development has to be governed under the nation’s condominium act.
Taxes and management fees
One major draw of ownership in Thailand is the fact that the country does not impose any annual property tax on condominiums.
That said, all investors who purchase properties to lease them out will have to pay a House and Land Tax, which is 12.5% of the annual rental income. Rental income is also taxable, and owners will have to pay Thai income taxes on the amount received.
When it comes to the sale of properties, a stamp duty of 0.5% (usually paid by the seller) is administered upon purchase of property. If an investor sells a property within 5 years of being acquired then a tax of 3.3% is instead payable.
The usual costs associated with condominium ownership also exist. Owners are required to pay monthly/annual fees based on the size of the development – paid to the condo management to cover staff fees, communal areas and other shared costs with all other condo owners.
Couple the rather favourable conditions for overall foreign ownership with the extremely competitive prices, as well as equally impressive annual ROIs (rental yields), and what one is left with is an enticing opportunity to get a slice of the action in an eclectic, growing and vibrant property market.