Owning a Condominium in Pattaya
Foreigners are allowed to purchase Condominiums in Pattaya. Buying a condominium is the simplest and most popular form of purchase by a foreigner in Pattaya. Under Thai law, 49% of the internal area of a condo building development excluding common ares, can be assigned to be owned by foreigners. In order to make the purchase of a condominium, foreigners are required to transfer funds from overseas with funds denominated in foreign currency. Once the funds are transferred, they are required to be marked as a condominium purchase. It needs to be verified through obtaining an FET – Foreign Exchange Transfer or what is known as a Tor Tor Sam document from the receiving bank in Pattaya. The FET document is required when transferring the Title Deed at The Lands Department. The purchaser is then issued with a certificate of ownership.
Owning a House&Land in Pattaya
Ownership of land is governed by the Land Code BE 2497 (1954) The Civil & Commercial Code, Land Reform for Agriculture Act BE 2518 ( 1975 ) and the regulations set forth by the Ministry of The Interior. Although Thai Law prohibits foreigners from owning land in Pattaya, there are various ways in which you can structure and establish a controlling interest in a Thai Company that owns the land or owns a lease for the land in your own name, all complying with existing Thai Law. Long term leases of land are the most common way to purchase a house and land in Pattaya for foreigners today. A foreigners lease rights are formally recognized by the Thai Law.
The land lease is executed and registered once, after which very little legal maintenance is required. You can have a 30 year lease which is registered at the Land Office; with a prepaid option to renew for a further two periods of 30 years each. The foreigner may also be given the option to purchase the land should the law in respect of foreign ownership of land change in the future. In order to be enforceable, any lease for a period of longer than three years must be registered, which involves payment of a registration fee and stamp duty based on a percentage of the rental fee for the whole lease term.
Limited Liability Company
This form of purchasing property has been popular with foreign investors as The Articles of Association. It can be varied to allow greater protection for foreign minority shareholders where majority Thai ownership is required under Alien Business Law. Thai law requires that 51% of the shares be held by Thai juristic persons, however, any company with more than 40% foreign interest that purchases land will be investigated by the Central Land Office in Bangkok ( under Section 74 of the Land Code ).It is to ensure that the company has not been organized in an attempt to circumvent the prohibition against foreign ownership of land. This results in the foreign ownership of the company being limited to 39%, but with changes to the Articles of Association, the use of two tiered stocks ( ie. Ordinary Shares and Preferred Shares with different voting rights), plus the foreigner being the the only director of the company who can commit or bind the company in any contractual dealings – it is possible to effectively give the minority shareholder control over the company. It is also a common practice to buy existing properties which are registered in the name of Companies. One does not actually buy the property; one buys the directors shares and is installed as the Companys sole executive director, thereby taking over full control of the company and its asset, the property.
This takeover procedure must, of course, be administered by a law firm. All documents are in the Thai language, but English translations can be provided and notarized.
Land Title Deeds The Title Deed ( Chanote )
is the purest form of land ownership. It ensures easy transfer. One original set is kept in the District Land Office where the registration of land transfer takes place. The other original set is given to the owner of the land. Look for the red coloured crest at the head of the certificate. Chanote titles are accurately surveyed, plotted in relation to a national survey grid, and also marked by unique numbered marker posts set in the ground. It is the long term goal of the Land Department, that all land in Pattaya will be covered under the Chanote title system. Confirmed Certificate of Use ( Nor Sor Saam Kor )
This document certifies the right to use land and is often issued pending title deed. Transfer of the certificate is mainly completed at the District Land Office or Branch District level, as the case may be. Look for the green coloured crest at the head of the certificate. The holder of this certificate cannot leave the land unattended for more than 12 years. The two documents above are the easiest titles to transfer ownership. Avoid any other ownership documents.
THAILAND PROPERTY TAXES
The main types of tax levied on Pattaya property are:- 1. Income Tax or Withholding Tax
– This is usually 1.0% – charged on the transfer of Pattaya property (this is the equivalent of capital gains tax in the West) It is calculated on a most complex formula based on the Land Department assessed value of the Pattaya property, the length of time owned and the personal income tax rate. (normally paid by the seller) 2. Transfer fee
of 2.0% of the Pattaya Land Department assessed value, on all transfer of Pattaya land or structure ownership. This fee is payable to the officer at the Pattaya Land Department on the day of the transfer of ownership. (normally paid by the buyer) 3. Stamp Duty
– on all purchase/sale of Pattaya property there is a stamp Duty of 0.5% charged on the Pattaya Land Department assessed value or purchase price, whichever is the higher. This tax is not charged if Specific Business Tax is applicable to the transaction. (normally paid by the seller) 4. Specific Business Tax (SBT)
of 3.3% only levied against the Pattaya property owner who has been in registered possession of the Pattaya property less than 5 years or against all sales by companies.(normally paid by the seller) 5. The Land Tax
levied on Pattaya land is so minute. That in practice the body charged to collect it, rarely bothers to do so, and if they do, they usually wait several years until the amount accumulates.
|TAX||WHICH PARTY NORMALLY PAYS||AMOUNT|
|Transfer fee||Buyer||2% of registered value|
|Stamp Duty||Seller||0.5% of registered value|
|Withholding Tax||Seller||1% of appraised value|
|Business Tax||Seller||3.3% of appraised value|
There are no set rules on who pays for which taxes and it is just another part of the bargaining process – so make sure you discuss it with both the real estate agent and your own lawyer. Pattaya property taxes can amount to a considerable part of the real estate purchase price. Therefore, it should be made clear during the purchase negotiations who is going to pay for what or you could be facing a sizeable tax bill two or three months after the thailand property sale is completed. Thai Lawyer
You need to know the correct legal process in Pattaya for a foreigner. The fees charged by lawyers are very reasonable and well worth the piece of mind. It is extremely advisable to employ the services of a Thai lawyer in all aspects of property purchase in Pattaya. Although it is often possible for individuals to purchase a property without the services of a local law firm. This may be risky unless you are familiar with the country, the language and its legal system.