Updated: Jun 19, 2020
Many people ask me what are the additional costs that they need to pay in addition to the purchase price.
I have set out below a simple explanation of what these additional costs are and how they are applied in practice. I hope you find it useful and it gives you a better understanding of these additional costs.
It is relatively straightforward for a foreigner to own property in Thailand compared to many other Asian countries. Find out more about foreign ownership (link).
Let’s start with an explanation of the additional costs for a sale transaction;
Tax and Expenses at the Land Department
1. Transferring fee: 2% of the assessed value*
2. Specific Tax or Stamp Duty: Specific Business Tax of 3.3% or Stamp Duty of 0.5% is charged on the sale price or assessed value whichever is higher.
2.1. Specific Business Tax is calculated/ charged when the sale occurs during the period that you own the property for less than 5 years.
2.2. Stamp Duty is calculated/ charged if the sale occurs after you have owned the property for more than 5 years. Otherwise Stamp duty is charged if the property is considered to be your principle place of residence for at least 1 year.
3. Withholding Tax: is calculated separately into 2 different cases; (i) an individual transaction; and (ii) a company transaction.
3.1. The withholding tax for an individual transaction is more complicated as it is applied on a progressive rate. The calculation is based on how long the property has been in your possession. It will be approximately 2-8%. The longer the period you have owned the property (number of years), the higher the tax you will need to pay. (Please note that it is quite difficult to accurately estimate the percentage of applicable withholding tax and a more accurate calculation should be undertaken based on the information on your title deed).
3.2. The withholding tax for a company transaction is 1% of the sale price or assessed value whichever is higher.
Once you have a better understanding of the applicable land department taxes/expenses, here is summary of which party is responsible for payment of these taxes/expenses. (Please bare in mind that this is the usual or common practice, however responsibility for these taxes/expenses will depend on the terms of the specific agreements between the seller and the buyer.)
As a buyer, you are responsible for half of the amount of No. 1
As a Seller, you are responsible for 1% of the amount of No.1 + No. 2 + No. 3.1
Where the seller is a company, then the seller must pay : half of the amount of No. 1 + No. 2.1 + No. 3.2
Remark: *assessed value is the property price indicated by the Land Department. Assessed value is generally 35-45% lower than actual sale price.
Besides the above taxes, there are ‘Additional Expenses’ such as:
Electricity Meter Deposit: depending on the capacity of your meter it is generally between 2,000 - 24,000 Baht
Sinking Fund (or a reserved fund) in the account of the Juristic Person of the condominium project.
Common Area Fee
The Electricity Meter Deposit and Sinking Fund will remain with the unit.
I trust my explanation is useful for you. For more information, or if you would like us to help with your property search or sale, please do not hesitate to contact us.