Real estate in Thailand

Land Ownership in Thailand

Generally, foreign individuals and legal entities cannot own land in Thailand. Companies registered in Thailand where foreigners hold more than 49% of the capital, or if the majority of shareholders are foreigners, are also considered foreign companies.

However, there are exceptions. Specifically, exceptions are provided for:

  • Foreigners who have received permission from the Minister of the Interior to own up to one rai (1,600 sqm) of land for personal residence, with an investment of at least 40 million baht in specific instruments, among other conditions, as per Section 96 bis of the Land Code of Thailand. In practice, however, such cases are rare.

  • Foreign heirs, in case of statutory inheritance in accordance with Section 93 of the Land Code of Thailand.
  • Companies whose projects have received privileges from the Thailand Board of Investment (BOI) under the Investment Promotion Act B.E. 2520 (1977).
  • Manufacturing and export companies in industrial zones managed by the Industrial Estate Authority of Thailand (IEAT), according to the IEAT Act B.E. 2522 (1979).
  • Concessionaires as provided for under the Petroleum Act B.E. 2514 (1971).
  • Banks and financial institutions with approval from the Bank of Thailand, under the Financial Institution Business Act B.E. 2551 (2008).

Companies where foreigners hold no more than 49% of the shares and the majority of shareholders are Thai individuals or legal entities are considered Thai companies and can own land. However, creating a company solely to circumvent the foreign land ownership ban is not permitted and risks the land acquisition being declared invalid.

What’s Available to Foreigners in Thailand

Foreign individuals and legal entities can:

  • Acquire ownership of buildings and structures built on someone else’s land, and own land based on the right of superficies, as per Section 1410 of the Thai Civil and Commercial Code (CCC).
  • Own apartments in condominiums within the so-called foreign quota (the area of apartments owned by foreigners must not exceed 49% of the total area of all apartments in the building).
  • Use land based on usufruct, as per Section 1417 of the CCC.
  • Lease land for up to 30 years, and commercial or industrial land for up to 50 years, with the possibility of renewing the lease for a new term.

Registration of Real Estate Transactions in Thailand

As a general rule, real estate transactions, including buying, selling, long-term leasing, mortgaging, and establishing other encumbrances, must be officially registered with the Land Department.

Documents Confirming Land Rights in Thailand

Due to the peculiarities of land legislation in Thailand, there are many documents confirming land rights. Foreign investors typically encounter only a few of them.

Any transactions or operations with land, whether it is purchase, lease, usufruct, superficies, or obtaining a construction permit, are possible with the following documents:

  • Chanote (Nor Sor 4 Jor – น.ส.4 จ): Certificate of Land Ownership. It is the only document that confirms land ownership rights in Thailand. Issued by the local Land Department office, a Chanote marks the land’s exact boundaries established through precise surveys and marked with unique numbered signs as per the national grid of geodetic measurements. It confirms the exact location and area of the plot. Chanote also validates condominium unit ownership (Or Chor 2).
  • Nor Sor 3 Gor (น.ส.3ก): Certificate of Confirmed Land Possession. This document confirms land possession rights and allows for land lease registration. Unlike Nor Sor 3 (see below), it is based on more precise measurements: each plot is reconciled with the district master plan and verified against corresponding aerial photos. Nor Sor 3 Gor is often issued pending a Chanote, indicating a strong basis for eventually obtaining full ownership certification. When dealing with such plots, it’s recommended to additionally confirm the plot boundaries to avoid potential disputes with neighbors.
  • Nor Sor 3 (น.ส.3): Land Possession Certificate. Unlike Nor Sor 3 Gor, the surveying is less precise (no aerial photos of the land, boundaries marked only in relation to neighboring plots). Such plots can be sold, leased, or mortgaged. However, transactions require prior public notification, submitted no later than 30 days before registration. This document can be “upgraded” to Nor Sor 3 Gor.
  • Sor Kor 1 (ส.ค.1): This document certifies actual land possession, most common in rural areas. As surveying isn’t conducted, boundary data may be approximate. Transfer of rights under this certificate is possible only through inheritance. However, it’s possible to exchange Sor Kor 1 for Nor Sor 3 or Nor Sor 3 Gor, allowing for land disposal.

Purchasing an Condo Unit in Thailand

Condominiums in Thailand

Foreigners can own condominium units in multi-apartment buildings (condominiums) recognized as registered, licensed by the Land Department, and governed by the Condominium Act B.E. 2522 (1979). There are also other types of multi-apartment buildings in Thailand that do not confer individual apartment ownership.

The Condominium Act defines a “condominium” as a building where individuals can own separate units (apartments), each comprising personal property of part of the real estate and joint ownership of common property (parts of the condominium not included in the apartment, the land on which the condominium is located, and land plots or other objects intended for joint use).

Apartment owners in a condominium have rights and responsibilities for joint management and use of the building’s common property. The ownership certificate for a condominium unit validates ownership of the specific apartment.

Foreign Buyers

The law identifies the following categories of foreign buyers:

  • Foreign citizens with permanent residence status in Thailand.
  • Individuals residing in Thailand under the Investment Promotion legislation.
  • Legal entities receiving investment incentives under the law.
  • Companies registered under Thai law where more than 49% of the capital is owned by foreigners or more than half of the shareholders are foreigners.
  • Individuals transferring currency to Thailand or withdrawing money from a non-resident account or a foreign currency account.

Foreign Quota

Foreigners can purchase condominium units within the so-called foreign quota: the area of apartments owned by foreigners must not exceed 49% of the total area of all apartments in the building.

To register the transfer of apartment ownership to a foreigner at the Land Department, a letter from the condominium’s management company confirming compliance with the foreign quota is required.

Payment Specifics

Foreigners who are not permanent residents of Thailand or individuals entering Thailand under the Investment Promotion legislation must prove that the money for the apartment purchase came from abroad. Supporting documents will be required when registering ownership rights at the Land Department.

The most common method is a bank transfer from abroad, with the Thai bank issuing a corresponding certificate. For transfers exceeding $50,000, the bank issues a Foreign Exchange Transaction (FET) form.

When transferring foreign currency to Thailand, it’s necessary for the beneficiary’s name in the FET to match the buyer’s name as stated in the sales contract. The total amount transferred must not be less than the apartment’s price specified in the sales contract.

Investment Visa

In some cases, purchasing an apartment may allow for obtaining an investment visa.

Taxes and Fees for Buying or Selling Property in Thailand

When buying or selling property in Thailand, various taxes and fees are applied. Here’s an overview of these costs:

  1. Registration Fee: This fee is generally 2% of the property’s appraised value. Typically, the buyer and seller share this cost equally, unless agreed otherwise in the contract.
  2. Specific Business Tax (SBT): This is a tax of 3.3% on the sale price or appraised value of the property (whichever is higher), including a municipal tax. This tax is applicable mainly to the seller, and is only applied if the property is sold within the first five years of ownership.
  3. Stamp Duty: In cases where SBT does not apply, a stamp duty of 0.5% of the sale price or appraised value (whichever is higher) is levied. This is usually paid by the seller.
  4. Withholding Tax (WHT): The withholding tax rate varies depending on whether the seller is an individual or a corporate entity. For a corporate entity, the tax is 1% of the sale price or appraised value, whichever is higher. If the seller is an individual, the tax is calculated on a progressive scale based on the appraised value and the period of ownership.

For individual sellers, calculating withholding tax involves considering the sales price, deductible expenses, net income, and the duration of ownership. This tax is calculated on the annual tax income, multiplied by the number of years the property has been owned to determine the withholding tax amount.

TaxRatePayer
Registration Fee2% of the appraised valueUsually, the buyer and seller pay this fee equally, unless the contract states otherwise.
Specific Business Tax (SBT)3.3% of the higher of the sale price or the appraised value (including municipal tax)Seller
Stamp Duty (if SBT is not applicable)0.5% of the higher of the sale price or the appraised valueSeller
Withholding Tax (WHT)– For corporate sellers: 1% of the higher of the sale price or the appraised value.
– For individual sellers: Calculated on a progressive scale based on the appraised value and the duration of ownership.
Seller
Overview of Taxes and Fees Applicable in Property Transactions in Thailand

Land and Building Tax in Thailand

The new Land and Building Tax Act has been in effect since January 1, 2020. This tax replaces the previous taxes that were essentially income taxes on rent, rather than a property tax.

Taxpayers

The taxpayers of the land and building tax are the owners, holders, and users of land and buildings, including apartments in condominiums.

Tax Base

The tax base for the land and building tax is the appraised value of the land, buildings, or condominium apartments, determined according to the Land Code.

For land and buildings without an appraised value, the value is determined in accordance with the rules, procedures, and conditions set by the ministry’s acts.

Maximum Tax Rates

The tax rates for land and buildings will be set by Royal Decrees but shall not exceed the following maximum rates:

Purpose of Land and BuildingsMaximum Tax Rate
Agricultural use0.15%
Residential use0.3%
Other uses1.2%
Unused/unoccupied properties1.2% (*)

Note:
(*) For land or buildings that are idle (not used) for three consecutive years, the rate will increase by 0.3% every three years, up to a maximum rate of 3%.

Land and Building Tax Rates

Agricultural Land and Buildings

ValueTax Rate
1 million – 75 million baht0.01%
76 million – 100 million baht0.03%
101 million – 500 million baht0.05%
501 million – 1 billion baht0.07%
> 1 billion baht0.1%

Individual owners of agricultural land or buildings are exempt from tax for 2020-2023.

Residential Land and Buildings Owned by Individuals Registered in the House Book

ValueTax Rate
1 million – 25 million baht0.03%
26 million – 50 million baht0.05%
> 50 million baht0.1%


Residential Buildings Owned by Individuals Registered in the House Book

ValueTax Rate
1 million – 40 million baht0.02%
41 million – 65 million baht0.03%
66 million – 90 million baht0.05%
> 90 million baht0.1%


Residential Land or Buildings Not Specified Above

ValueTax Rate
1 million – 50 million baht0.02%
51 million – 75 million baht0.03%
76 million – 100 million baht0.05%
> 100 million baht0.1%


Land or Buildings for Other Uses

ValueTax Rate
1 million – 50 million baht0.3%
51 million – 200 million baht0.4%
201 million – 1,000 million baht0.5%
1,001 million – 5,000 million baht0.6%
> 5,000 million baht


Unused Land or Buildings

ValueTax Rate
1 million – 50 million baht0.3%
51 million – 200 million baht0.4%
201 million – 1,000 million baht0.5%
1,001 million – 5,000 million baht0.6%
> 5,000 million baht

Tax Deductions

Type of PropertyNon-Taxable Value
Agricultural land and buildings owned by individualsUp to 50 million baht
Residential land and buildings owned by individuals registered in the house book on January 1 of the reporting yearUp to 50 million baht
Residential buildings owned by individuals registered in the house book on January 1 of the reporting year, but the land is owned by another personUp to 10 million baht

Lease

In Thailand, the maximum lease term for property is 30 years, with the possibility of renewal for no more than another 30 years, according to Section 540 of the Civil and Commercial Code of Thailand.

Any property lease agreement must be in written form.

If the lease is for more than three years, it must be registered with the Land Department. Otherwise, the contract will only be valid for three years.

For commercial and industrial purposes, there are additional leasing options under the Lease of Immovable Property for Commercial and Industrial Purposes Act B.E. 2542 (1999) and the Eastern Economic Corridor Act, allowing lease terms from 30 to 50 years with the possibility of an additional 50-year renewal.

Also Read:

Leasehold in Thailand

Due Diligence

Before engaging in real estate transactions in Thailand, it is crucial to conduct due diligence – a thorough legal examination. This process includes investigating the property’s title history, searching for possible restrictions and burdens, identifying other potential problems, inspecting the property, and ensuring compliance with land use, construction, and zoning regulations.

The examination should be conducted by experienced professionals to identify potential issues early and make informed decisions before finalizing the transaction. This helps save time, effort, and money, ensuring a safe and successful real estate deal.

For questions regarding real estate transactions in Thailand, please email me, contact me through convenient methods or use the form below.

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