Various Costs Associated with Condominium Acquisition in Thailand
Like anywhere else, acquiring a condominium unit in Thailand entails various taxes and fees. These costs apply whether you are purchasing a newly-built condo from a developer, where it is registered and licensed based on the Condominium Act or a resale apartment or condo unit from another individual or a juristic person. These have to be paid during the transfer of ownership which takes place at the Land Office.
Taxes and Fees
The buyer has to pay a transfer fee that amounts to 2 percent of the government-assessed value. In addition, there is a stamp tax of 0.5 percent on the actual sale price or assessed value, whichever is higher. A stamp duty exemption is applicable when the seller has already paid a business tax. The specific business tax rate is 3.3 percent of the appraised value or actual sale price of the condominium, whichever is higher. In addition, there is also an income withholding tax with a varying calculation if the seller is an individual or a company. In Thailand, the rate for personal income tax is 5 percent for those whose income are 100,000 baht; 10 percent for 100,000 to 500,000 baht; 20 percent for 1 million baht; 30 percent for 1 million to 4 million baht; and 37 percent for over 4 million baht. In purchasing a resale condo from a juristic person, the corporate income withholding duty is at a fixed rate of 1 percent of the registered or assessed value, whichever is higher.
1. Buying a Condo Unit from a Developer
A buyer of a condo built by a developer is entitled to lowered government taxes and fees. The developer is mandated by consumer protection laws to shoulder all transfer taxes and fees. An exemption applies when the developer asks the buyer to pay up a portion, usually half, of the 2 percent transfer fee. All remaining government taxes and fees associated for the transfer must be paid by the developer. In order to be sure, buyers have to read very carefully the sale contract when purchasing a newly-built condominium unit.
2. Buying a Resale Condo
In the case of a resale condominium, the responsibility depends on the overall price negotiation because there is no fixed policy set in the law. Sometimes, the buyer pays all the duties, but there can also be instances wherein the seller has to shoulder all of the expenses. The contract between the seller and the buyer has to clearly lay out the division of responsibilities, if they decide so to divide. The normal practise is for buyer and seller share the taxes equally.
When Buying a Resale Condominium Unit
In buying a resale unit from an individual, the calculation of the personal income withholding tax is different. It is based on the number of years of ownership, since there is a certain deductible amount. If the unit has already been owned for a year, the deduction is up to 92 percent of the assessed value. The deduction for two years is 84; three years 77; four years 71; five years 65; six years 60; seven years 55; and eight years or longer 50 percent. Take note that a unit that has already been owned for two and a half years is already considered as three tax years. Also, for a resale condo owned for less than five years, the specific business tax of 3.3 percent and transfer rate of 2 percent are applicable.
Sample Calculation for a Resale Condominium Unit
The calculation for a resale unit is much more complex than that for a newly-built condo unit. Here is a sample calculation for a unit with three years prior ownership and valued at 3 million baht: For a 3-year ownership, the deduction is 2.310 million baht or 77 percent of 3 million. The personal income withholding duty is based on 230,000 baht per year of unit ownership, which is equal to the appraised value minus the deduction spread in the number of years of ownership. Applying the prescribed tax rates, the yearly income tax is 18,000 baht for a total of 54,000 for three years. Applying the specific business tax rate and transfer rate, the total amount in government duties that should be paid at the land office for a condo valued at 3 million baht that is owned for three years prior to selling is around 213,000 baht.
This article summarizes the taxes and fees for buying a property in Thailand. But you have to take note that such apply only to the transfer of freehold ownership of a registered and licensed unit. They are neither applicable to that of an unlicensed apartment complex nor that under a leasehold arrangement.