Thailand property investment
There are two types of property that can be purchased in Thailand, one is the villa and another is the condominium unit. In this article, Horizon Homes will explain the basic information you need to know before you buy a condominium unit.
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In Thailand, the advantage of buying an off-plan condominium unit is that the price is relatively cheaper. One disadvantage is that you may need to wait a longer period of time until construction is completed, compared to already completed units.
For buildings classified as condominiums, developers are allowed to sell 49% of all saleable units of the building to foreigners, including Chinese, in the form of free hold property rights. The remaining 51% must be sold to Thai citizens. That’s why you’ll find some development projects list different prices or payment terms.
The part that can be purchased by foreigners is called Free Hold. Foreigners can own real estate licenses and title deeds. The property rights are permanent and can be bought and sold freely.
For the 51% portion that is allotted to Thais citizens, foreigners can only lease (Lease hold) with the Thai owner (with long-term lease, 90 years under Thai law).
There are three types of taxes that need to be paid to the Land Department. They are: 2% as the transfer fee, 3.3% as the special business tax, and 0.5% as the stamp duty – 6.3% of the tax in total. Taxes and fees are shared between the buyer and the seller, and the major developers use different methods in splitting taxes and fees. Therefore, the actual taxes paid by the buyer can vary from 1% to 6.3%, depending on their respective development projects.
A sinking fund is a one-time expense used as an emergency fund for any one-time repair or improvement required by a development project at a time in the future (e.g. repainting the exterior wall every few years). The sinking fund must be paid when the condominium is delivered to the buyer. The amount of the fund depends on the size of the condominium, so it is quoted per square meter.
Maintenance costs (property fees) are used for day-to-day operation of the development project (e.g. security, reception, and cleaning staff salaries; pool maintenance; lift, etc.). Like the sinking fund, it calculates the monthly fee based on the area (square meter) of each condominium. Once the condominium is completed and delivered, most developers require a pre-payment of the annual maintenance fee. Each year thereafter, the annual maintenance fee is paid in advance.