I am planning to live permanently in Thailand. Can a US citizen purchase a condo in Thailand?
Owning property in Thailand is not easy when it comes to land, in fact, it is virtually impossible. Condominium ownership, however, is a little easier but there are a few things to be aware of before you invest.
Land can be purchased on a 30-year lease but this is a bit of a minefield of ever-shifting regulations and lack of consistency between government land offices. It is also now illegal to purchase property through a shell company, so looking at the condo market is a better option for many.
Under certain circumstances, it is possible for US citizens to own a condo in Thailand. There are some major differences though between Thai and US condominium markets. Under Thai law, a foreigner can only own up to 49% of a condominium development.
This does not mean you cannot purchase a single unit or more, just that the majority of ownership or 51% of the saleable units in the development must be Thai.
If you are buying a secondhand condo from a Thai citizen, you will need to check with the development’s condo association office to make sure the building has not reached the foreign ownership quota.
Another stipulation is that foreigners must purchase a condo with foreign currency and not locally or through a mortgage. US citizens will need to prove that they transferred USD into a Thai bank using a Foreign Exchange Transaction Form (FETF). This can work in your favor as Thailand restricts foreigners taking money out of the country unless they can prove they bought it in.
Thai property tax is another minefield so the price of the condo may not include one of the extra fees and taxes that may be applied to the purchase. New condos on a development are subject to a Special Business Tax (SBT) which the property developer usually pays. There is also a transfer fee that will be determined by the land office when the title deed is transferred from the owner to you. It is supposedly set at 2% of the assessed value that is down to the discretion of the land office.
Buying or selling secondhand condos is subject to a different set of taxes depending on the length of ownership. Usually, the seller pays the tax which is 3.3% of the land office determined value if the unit has been owned for less than five years.
Condos owned for more than five years are only subjected to 0.5% stamp duty. This was supposedly setup to prevent property speculation. There is also 1% withholding tax which is a prepayment of the seller’s income taxes and something the buyer usually pays.
There are some advantages to buying new over secondhand. New units purchased off plan are usually cheaper than secondhand ones. However, there have been a lot of developments that failed to reach completion so there is an added risk. Secondhand condos normally command a higher price depending on location, but you know exactly what you are getting.