Property Ownership Options in Thailand for Foreigners

Buying property in Thailand for foreigners is strictly regulated. Foreigners are allowed to invest in the economy through government programs, which allows them to buy condominiums. Buying land for personal residence is almost impossible, and transactions through a Thai spouse do not provide sufficient legal protection.

The property may be needed to create a holiday home, a retirement home or an investment base. Direct land purchases are restricted and the ability to buy a small plot with ministerial approval is extremely rare due to strict requirements and government concerns about the impact of mass purchases on the market.

Foreigners may be granted ownership of buildings or land under certain conditions, but such exceptions are interpreted with particular strictness by government authorities and are under constant scrutiny.

The article was prepared based on materials from the law firm “Lorenz & Partners”.

General information about land and property ownership in Thailand

For individuals

It is extremely difficult for individual investors to legally purchase land in Thailand, and attempts to circumvent the law using unofficial schemes are associated with high risks. It is recommended to conduct any transactions only after consulting a lawyer to protect the invested funds from possible loss.

According to the Land Code, there are exceptional procedures for foreigners to acquire land. In particular, the option under Sec. 86 requires a special international treaty that has long been out of effect, and the option to purchase land for residential purposes (up to 1,600 sq. m) under Sec. 96 bis and ter requires an investment of at least 40 million baht , primarily in large cities. Additional conditions, such as the mandatory use of the site for two years, significantly limit access to this option.

An alternative is to purchase real estate through marriage to a Thai citizen. However, purchasing real estate after marriage results in joint ownership, which is contrary to the requirements of the law. Division of property by preliminary agreement is possible, but is only formalized before marriage registration, and the scheme with registration of the right of permanent residence grants the foreigner only the right of use, leaving the property to the Thai spouse.

Thus, any options for the acquisition of land or buildings by foreigners are associated with strict restrictions and a high level of government control, which requires a thorough legal analysis of each transaction.

Purchase of buildings

It is much easier for foreigners to acquire ownership of a building than of land. In Thailand, the law allows for the separation of ownership of a building and a plot of land, which opens up the possibility of leasing undeveloped land for construction.

A foreigner can lease a plot of land for 30 years with the possibility of extending it for another 30 years. However, a lease for a period exceeding 3 years must be registered with the land department to protect the rights of the lessee.

The ownership of the constructed building is formalized separately and is confirmed, for example, by a building permit, and not by a certificate of ownership of the land. When the owner of the plot changes, the new owner may demand the demolition of the building, so it is recommended to provide additional guarantees and conditions for the extension of the lease in the contract.

For legal entities

Foreign companies with more than 49% non-Thai ownership are generally not allowed to acquire land. Exceptions are possible only with permission from the Minister of the Interior or with investments of at least 40 million baht, which must benefit the Thai economy and remain in the country for at least five years.

Outside industrial zones, companies with foreign participation of over 49% are subject to the same rules as individuals. Participation of between 40% and 49% requires the consent of the land department or provincial governor. It is common to set up companies with foreign participation of less than 40%, with the share subsequently increasing, but such schemes are subject to careful scrutiny by the authorities.

In specially created industrial zones, foreign companies can legally acquire land if they are engaged in approved activities. However, if the business is terminated or transferred, the land must be sold within three years.

Companies that have received incentives from the Board of Investment (BOI) can also purchase land. However, if foreign participation exceeds 40%, written approval from the BOI is required, and after the incentives are lost, the acquired land must be sold within one year.

Buying a condominium

Buying a condominium is the easiest and most reliable way for foreigners to acquire property in Thailand. According to the Condominium Act 2008, both individuals and legal entities can enter into such a transaction, provided that foreign ownership does not exceed 49% of the total number of units in the building. The opportunity to purchase a condominium is provided if the foreigner has a residence permit, has received support from the BOI, or makes payment in foreign currency.

Confirmation of ownership of a condominium is similar to the registration of rights to a plot of land. The owner is issued a certificate indicating his name, the location and size of both the plot and the residential unit, as well as the share in the common areas of the building. However, the right to the common area remains with the Thai owners.

The procedure for transferring ownership is carried out through the land department. To register the transaction, a formal contract must be signed, and in the case of a mortgage, additional documents must be present at the time of registration. The following fees are charged: 2% of the assessed value upon transfer, 0.5% of the purchase price or assessed value (whichever is higher) in the form of stamp duty, and 1% of the mortgage amount upon its registration.

Foreigners can also inherit a condominium as long as it does not exceed the 49% foreign ownership limit. If the quota is exceeded, the inherited property must be sold within one year of receiving it.

Land for rent in Thailand

When leasing land, it is important to ensure that the landlord is the legal owner of the property.

Commercial and industrial leases are regulated by a 1999 law. It allows for long-term leases of up to 2x50 years, which must be in writing, registered with the land department and include information on the type of use. Leases over 100 Rai require additional approval and registered leases can be used as collateral, inherited and, if properly registered, subleased.

For residential purposes, the lease agreement may not exceed 30 years, with the possibility of two extensions for a similar period. A written agreement is a prerequisite for its legal force, and transactions for a period exceeding three years are subject to mandatory registration with the land department. Transfer of lease rights or sublease are only permitted if the contract contains the relevant clauses.

Taxes associated with purchasing real estate

Each owner has the right to resell the land or condominium at any time. However, tax regimes for individuals and legal entities may differ.

Specific business tax

The sale of commercial land is subject to a tax of 3% of the greater of the assessed value or the actual transaction price. For non-commercial land, this tax applies if the transaction is made within five years of acquisition, except in cases of expropriation, inheritance and transfer to state organizations.

Local tax

The local tax is an additional payment to the specific business tax and amounts to 10% of its amount.

State duty for transfer of ownership

The title deed transfer fee is 2% of the assessed value of the property. From February 3 to December 31, 2021, for properties with buildings or condominiums worth less than 3 million baht purchased from developers, reduced rates were in effect: the transfer fee was reduced to 0.01%, and the mortgage registration fee was reduced from 1% to 0.01%.

Stamp duty

Stamp duty is 0.5% of the greater of the assessed value or the actual purchase price. This duty only applies if the transaction is not subject to a specific business tax.

Withholding tax (for legal entities)

When a legal entity sells real estate, the assessed value is subject to a 1% tax. This tax is withheld by the buyer and transferred to the tax office, and the seller receives a certificate for offsetting against corporate tax.

Commercial Land Sales Tax (for individuals)

When selling commercial land by individuals, income tax is applied. The tax base is determined by the estimated value, even if it is lower than the actual transaction price. The amount of tax depends on the period of ownership of the sold plot.

The resulting amount is divided by the number of years of ownership, and then the resulting figure is taxed at general progressive tax rates.

The final result is multiplied by the number of years of ownership, which determines the amount of tax payable by the seller. If the land was acquired by inheritance or other non-commercial legal transactions, only 50% of the assessed value is taken for taxation.