Foreign Property Ownership in Thailand
If you purchase an apartment, a villa or land in Thailand, there are 2 ways you can register it – under the freehold and under the leasehold.
Freehold – free possession. It is the way of condo unit registration under the total ownership of a foreigner. By the law only up to 49% of condominium living space can be registered under the freehold. Freehold involves only built-up areas, not land. When buying a villa the land can be registered under Thai company ownership where a customer can be an executive director, also a customer will receive a share of voting stocks and a letter of indemnity from the Thai partner.
Leasehold – long-term possession. It is the way of property registration under long-term ownership (rent) when an owner (developer) rents property to a customer (tenant) for 30 years. Usually the term can be extended up to 90 years. This agreement also considers the annulment of the ownership if a property is sold to third parties.
Leasehold or long-term possession is very popular among investors.
- For Russian customer the leasehold is considered to be a rent. No need to declare this kind of property.
- Rent extension requires 1% tax payment for the period (1 period = ⅓ of apartment cost).
- The price of the property registered under the leasehold is usually 8-10% lower.
- When reselling an apartment need to contact the owner.
People who want to use an apartment by themselves usually prefer freehold.
- Full control of the property. You can sell, present, devise it.
- No rent extensions.
- The price of the property registered under the freehold is 8-10% higher.
- If reselling within 5 years after purchasing – registration tax is 5%, if reselling after 5 years of possession – registration tax is 3%.
Note that now property in Thailand is subject to tax only at the stage of registration. But there is a possibility that possession tax will be imposed and it will include the property registered under the freehold.
Registration under the ownership
Both registration under the freehold and registration under the leasehold are made in the municipal authorities and a customer is registered in the land department as an owner (permanent or temporary). In both cases the owner gets the same documentation package: cadastral document Chanote Title and House Book.