Things to always consider when purchasing property in Thailand. Part 1.

Things to always consider when purchasing property in Thailand. Part 1.

Purchasing in a foreign country can often be confusing and daunting, not to mention incredibly time consuming, especially if you don’t have all the correct information. Whatever your reason for wanting to own a property abroad, it is always a good idea to do your homework.

This article we have put together will hopefully help you feel more at ease about the buying process in Thailand  and highlight the most important things one needs to consider when making this big decision, as purchasing a property in “The Land Of The Smiles“ is one of the best decisions you could ever make. 

1. Reputable agents and lawyers.

With the growing demand to purchase in the kingdom more popular than ever before, we have seen the real estate industry grow each year. Real estate offices can now be found just about everywhere as well as agents of nearly every language. So the question poses, how do we know who are reputable and trustworthy? With so many to choose from, how does one make a decision on who to use to represent them? Well having seen so many agencies come and go over the past decade this can prove to be a real hassle if you don’t have a good agent to assist you through the buying process. One has to remember that when selecting an agency, you will need to rely on their support more than if say using an agent in your home country, as many who purchase out here are not based in Thailand. 
You will need to search for an agency that has a proven track record and been around for a while, ideally more than 3yrs. This is important as they will have a good reputation within the market and know how to deal with any hurdles that may occur during the buying process as well as keep you in the loop. It is been known to happen that some agents are available for the first part of the process, however once they have received their commission on the sale, the relationship ends and they are hardly in contact with the client again. The after sale process is  as equally important as the initial sale process, specifically when purchasing property off plan, because you will need regular updates from the companies to which you purchased the property. A good agent will educate you on the process from start to finish and specifically on the ownership options available to you in Thailand. You will also need your agent to assist you through the registration process of the property which is done right at the end, as well as educate you on the process of how this works. It is very seldom that clients will choose to purchase property without the help of an agent. Having that bridge between the buyer and the seller is vital to the process, also to make sure you are receiving a fair deal. When it comes to choosing legal representation a good agent will also help do a lot of the ground work with regards to the assisting clients with the sale and purchase contract. However it is still advisable to seek legal representation, specifically when it comes to the registration process at the end. Just as many real estate agencies are available, Thailand has an abundance of law firms around. It is very important to find a law firm that has international experience and used to dealing with foreigners. They also must be experienced in property law and speak English. Regular communication is vital as you need to know what is happening and why. As lawyers are costly, perhaps not as costly as in your home country, however still it is an additional cost, therefore one deserves to have professional legal representation and justify their cost as to what services you are paying for, so you are receiving the result you expect. Usually your agent can refer you to a good legal firm and they are then able to also follow the process closely for you, again you will need that bridge. Doing the proper due diligence is crucial and the most important part of the process. 

2. Location

Apart from Bangkok where one tends to purchase for investment purposes and this is less of a lifestyle choice. Most will have a few objectives in mind, as well as their preferences and like the beach locations. While this is all very nice, it is important to make sure that you are not too isolated. Many will sell you the “dream”, however one also needs to be realistic and practical about certain things such as;

  1. If you decide to sell within a period of time, will you be able to sell the property and will you make a profit?
  2. Are there hospitals and GP surgeries close by? 
  3. How close are you to amenities such as quality retail outlets for food and leisure? 4. If you are planning to move out here at some stage and have children that are needing schooling, how close are you to schools?

3. Taxation 

Each country has its own set of rules and regulations when it comes to taxation legislation and Thailand is no exception to the rest of the world, whereby you are expected to pay certain taxes on your property. Fortunately this is not as dear as in other parts of the world, hence this has become a favorable country to invest in for the time being, with the taxation being fairly low right now. 

It is advisable to check in your home country if you will have to bare any additional taxes once owning a property abroad and what these taxes are. No one wants double taxation to occur as a result of not having looked into this. 

Currently the taxes applied are as follows:

  1. Registration Tax Depending on what ownership option you have chosen, registration will be as follows:Foreign Freehold – 6.6% of the declared amount.Leasehold – 3.3 % of the declared amount. These registration taxes consist of Stamp Duty tax, administration tax and transfer fees. There is no enforced rule as to who pays what. At times the seller may agree to pay these or expect the buyer to bare this cost. Other times the buyer and seller may agree to share 50/50. This is all negotiated at the time of purchase. 
  2. Income Tax As many property owners do purchase with the intention to rent the premises, you are required to pay income tax related to the rental income received. Currently the income tax on rental is taxed at 15% per annum. 
  3. Capital Gains TaxUnfortunately as much as one would like, there is no getting around this one and in Thailand you are also expected to pay Capital Gains tax on property. Capital gains derived from the sale of immovable property are taxed at the standard income tax rates. The capital gains can either be included in the aggregate income or taxed separately.If the gains are taxed separately, the tax liability is subject to a special computation and the maximum tax rate applicable is 20%.The taxable gains earned from selling a Thai property are computed as the selling price or the market value of the property less some deductions. The deductions are percentages of the gross amount, and these percentages depend on how long the property was held before the sale or the transfer. 

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