Property Transfer Fees and Taxes in Thailand

Transfer fees and taxes in Thailand

Transfer fees and taxes in Thailand are roughly 6.8% of the estimated price of the property by the Land Department for Freehold properties. We will have a detailed breakdown below. When it comes to purchasing a Leasehold property these costs are a lot lower which is around 1.1% of the estimated value of the property.

In Phuket, usually transfer fees and taxes are shared equally by the buyer and the seller. But according to the Thai Laws, taxes and the stamp duty cost are both under the responsibility of the seller. The transfer fee is to be shared equally by both parties. Since it is a common practice in Phuket to equally share the transfer fees and taxes, even though you might feel like not paying those when you purchase a property, but it will eventually even out when you sell the property at one point. But then again, everything is a subject of a negotiation process.

Here’s the breakdown of the Taxes and the Fees when you buy a property in Thailand;

• Transfer Fee 2%
• Business Tax 3.3
• Withholding Tax 1%
• Stamp Duty 0.5%

The transfer fees and taxes are normally paid on the date of the transfer of the property at the land office. Land office department will need to see the receipts of the transfer fees and taxes after they are settled before they change the ownership of the property.

Stamp duty is not collected when Business Tax is paid. The business tax is only collected from the individual property owners or Thai companies if they own a property for less than 5 years. If you own a property more than 5 years, you won’t pay the 3.3% business tax, but Stamp Duty (0.5%) will be applied.

One thing that needs to be bear in mind is taxes are calculated on the appraisal value of the property by the Land Department. In the case of selling price is higher than the appraisal value of the property, then they will collect the taxes from the sales price. Basically whichever is higher, that’ll be the base price for these calculations. 

There were many cases in the past that the seller and the buyer both agreed to show the selling price of the property lower than the actual agreed price to end up paying low taxes, therefore the Land Department has came up with this new system.

That being said, transfer fees of the property is calculated based on the estimated value of the property by the land department. Most cases, estimated value of a property is lower than the actual selling price due to dynamic trends of Phuket real estate market.

Leasehold Ownership Fees

When it comes to Leasehold ownership, there is no transfer fees or taxes applied. There is only 1.1% needs to be paid at the Land Department on the date of the registration or the change of the Lease Agreement which 1% of it is the Leasehold Registration Fee and 0.1% of it is the Stamp Duty.

This 1.1% is calculated from the price for 30 years lease or the total term of the lease. When the lessor and the lessee agree to extend the lease term, they will need to pay the 1.1% registration fee once again to activate the second term.

In the case of selling the leasehold property to a third party during the lease term, the transfer fees and taxes will be again 1.1% but this time it will be calculated from the remaining term of the lease.

For instance, if you end up buying a leasehold property for 30m THB with 30 year lease on it, after 10 years the value of the lease will be 20m THB and transfer fee of 1.1% will be calculated based on this number.

All registration fees or transfer fees need to be paid at the land office on the date of the registration or the transfer.

Once all the fees are paid, the lessor received the money of the lease, the land department adds the lease details as well as the lessee’s details on the back of the land title (Chanote). Lease agreement is 100% legal and protected by the Thai laws. The lessor can’t break or change the agreed clauses of the lease agreement without any legit and legally backed reasons.

Time to time lessor and the lessee agree a pre-extended lease terms such as 30 years + 30 years + 30 years. This type of pre-extended lease agreements won’t be entered on the back of the land title (Chanote). But it can be stated on the sales and purchase agreement. Nevertheless, the lease registration fee of 1.1% will be paid after each 30 year regardless it’s pre-extended or not.

In any case, Thailand is not your home country, and the laws can be confusing and may change year by year. We highly recommend you to hire a lawyer to go through the details, contract and the laws on behalf of you. This small lawyer fee might save you losing a lot more money along the line. You can find the detailed article on foreign property ownership through Can Foreigners Buy Property in Thailand article.

If you have any questions or anything that you would like to ask on transfer fees and taxes in Thailand, please contact us. We’ve been in Phuket’s real estate market operating since 2012 and would be happy to share all our experience and knowledge with you.