Property Transfer Fees and Taxes in Thailand – Closing Costs Breakdown
Transfer fees and taxes for freehold property in Thailand are roughly 6.8% of the Land Department’s estimated value of the property. We will provide a detailed breakdown of the various fees and taxes below. Also note that when buying/selling a leasehold property, these costs are much lower, a total of around 1.1% of the estimated value of the property. If you are unsure of which ownership would be most suitable for you, check out our article on can foreigners own property in Thailand?
According to Thai Law, taxes and stamp duty costs are the seller’s responsibility, but in Phuket, all transfer fees and taxes are typically shared equally by the buyer and the seller.
Note that this article only covers the topic if transfer fees & taxes for property transactions. We have a separate article on property taxes.
Transfer Fees & Taxes Breakdown
- Transfer Fee 2%
- Business Tax 3.3
- Withholding Tax 1%
- Stamp Duty 0.5%
Transfer fees and taxes in Thailand are paid on the date the property is transferred to the land office. The land office department will need to see the receipts for the transfer fees and taxes after they are settled before they change the ownership of the property.
Note that stamp duty is not collected when Business Tax is paid. The business tax is only collected from individual property owners or Thai companies if they have owned the property for less than five years. If you own a property for over five years, you won’t pay the 3.3% business tax, but the stamp duty (0.5%) will be applied instead.
One thing to keep in mind is that the land department calculates taxes based on the appraisal value of the property. If the selling price is higher than the appraisal value, the Land Department collects the taxes from the sales price. Basically, whichever is higher will be the base price for these calculations.
In the past, there have been cases where the seller and the buyer tried to game game the system and agreed to show the selling price of the property as lower than the actual agreed price to try and pay less taxes. As a countermeasure, the Land Department came up with this system.
However, due to the dynamic trends of the Phuket real estate market, in most cases, the estimated value of a property is lower than the actual selling price.
Off-plan vs. Completed Property Purchases
When buying real estate in Thailand, the timing of the transfer of the property depends on the stage of development and the terms of your agreement. Let’s take a look at two common scenarios:
Off-plan purchases: When you invest in a property that is in the planning stage or under construction, known as an “off-plan” purchase, the transfer of the ownership takes place upon the project’s completion. This process typically involves:
- Making stage payments as construction progresses (Buyers can make the payments with installments until completion)
- Conducting a final inspection to ensure the property meets agreed-upon specifications (Buyers can assign a survey company to check the defects)
- Settling any outstanding balances
- Completing the transfer at the local Land Department office
Completed property purchases: For completed properties, the transfer timeline is often linked to your payment schedule. Generally, you will need to:
- Pay an initial deposit to secure the property
- Make installment payments or the final payment as outlined in your purchase agreement
- Fulfill all contractual obligations before the transfer can be completed
In both cases, the final step involves registering the transfer at the Land Department. This usually coincides with paying any remaining balance on the purchase price.
It’s important to note that Thai law allows for flexibility in the transfer process. If neither the buyer or seller cannot personally attend the Land Department for the ownership transfer, they may appoint a representative through a Power of Attorney (POA). This legal document must:
- Be drafted using the official form provided by the Land Department
- Clearly state the specific powers granted to the representative
- Be properly notarized and, if executed outside Thailand, legalized by the appropriate authorities
Using a POA can be particularly helpful for foreign buyers who may not be in Thailand during the transfer process. However, it’s crucial to work with a reputable lawyer to ensure the POA is correctly prepared and executed to avoid any complications during the transfer.
Remember, while these guidelines apply generally, specific terms can vary based on your purchase agreement and the developer or seller’s policies. Always consult with a qualified legal professional familiar with Thai property law to guide you through the process and protect your interests.
Leasehold Ownership Fees
When it comes to Leasehold ownership, no transfer fees or taxes apply, so only the leasehold registration (1%) and stamp duty (0.1%) need to be paid at the Land Department on the date of the registration or the transfer of the lease agreement.
This 1.1% is calculated from the price for a 30-year lease or the total lease term. When the lessor and the lessee agree to extend the lease term, they must pay the 1.1% registration fee again to activate the second term.
If the leasehold property is sold to a third party during the lease term, the transfer fees and taxes will be 1.1% again, but this time, they will be calculated from the remaining term of the lease. For instance, if you buy a leasehold property for 30m THB with a 30-year lease, after 10 years, the value of the lease will be 20m THB, and a transfer fee of 1.1% will be calculated based on this number.
All registration or transfer fees for a leasehold property must be paid at the land office on the date of registration or transfer.
The land department will then register the lease details as well as the lessee’s details on the back of the land title (Chanote). Lease agreements are 100% legal and protected by the Thai laws. The lessor can not break or change the agreed clauses of the lease agreement without legally backed reasons.
In Thailand, it is not uncommon that the lessor and the lessee agrees to pre-extended lease terms such as 30 years + 30 years + 30 years. This type of pre-extended lease agreement will not be registered on the back of the land title (Chanote), but can be stated in the sales and purchase agreement. Nevertheless, the lease registration fee of 1.1% will be paid on each renewal every 30 years, regardless of whether it’s pre-extended or not.
In any case, as Thailand is most likely not your home country, and the laws can be confusing and may change year by year, we highly recommend that you hire a lawyer to review the details, contract, and laws on your behalf. This small lawyer fee might save you a lot of money down the line.
You can find more details about foreign property ownership in our Can Foreigners Buy Property in Thailand post, or check out our Buying Property in Phuket, Thailand as a Foreigner FAQ.
Meet the Author
Nuno Aydin Isitemiz, born in 1981 in Istanbul, Turkey, has been a resident of Phuket since 2006 and has been involved in the real estate industry since 2013. Nuno co-founded one of the largest real estate agencies on the island, before launching his own company, focusing on select projects and properties that meet his high standards. At Storm Real Estate, You’ll interact directly with Nuno, who’s more than happy to share his wealth of knowledge, experience, and resources. Unlike larger corporate agencies where turnover can affect client-agent relationships, Nuno ensures personalized attention from initial consultation through property purchase and beyond.
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Do not hesitate to contact us if you have any further questions on the subject, or if you would like to know more about property in Phuket in general.
