Selling a Property in Thailand

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Selling a Property in Thailand

Disclaimer: What follows is a summary of the procedures involved in owning a new home in Thailand. Apart from condominiums, buyers should be aware that owning property is not a straightforward process in Thailand. The laws regarding ownership of land in Thailand are complex and are frequently open to misinterpretation even by experts. It is extremely advisable to speak with an independent lawyer before going ahead with any type of contract.

Selling a Property

The selling process in Thailand can be less problematic than the purchasing process.

Advertising the property

A property may be sold in Thailand without the use of an agent. If an agent is hired, the seller should reserve the right to sell the property themselves and avoid signing a contract with an unlimited time.

Properties can be advertised online, in newspapers or homes can be placed for sale with a real estate agent. Adding a small sign in the window or outside the door is also popular. If a real estate agent is used a commission of three percent of the final sales price is typical.

A few tips to make the home sell faster:

• Any repairs should be finished before the house is shown
• If the property is vacant, make sure the house is cleaned regularly and the lawn and garden are regularly trimmed
• Have an appraisal done to discover the market value
• Gather all documents relating to the home and have them accessible when needed
• Be realistic. Do not fix on a price that is well above market levels
• Have a draft purchase and sale agreement ready to hand

The purchase contract

When a prospective buyer is found the two parties must negotiate the terms, including the agreed price, what items are included and the possibility of renewal (if a leasehold). When all parties involved reach an agreement a purchase contract should be drawn up and all parties must sign the documents. There is no legal requirement for documents to be notarised in Thailand but all copies of documents have to be signed as being true copies of the original. All parties listed on the deed must sign the purchase agreement. A deposit is normally paid by the purchaser at this stage.

The agreement can be prepared by the agent or the seller and purchaser. It is important to include everything that is included with the property (for example furnishings, refrigerator).

Withdrawing from a sales agreement

A sales agreement can be cancelled by withdrawing the property from sale and returning any deposit that has been collected. This should be included as a condition in the purchase agreement to avoid any legal disputes.

Closing the sale

The seller and buyer meet to sign the appropriate documents. The meeting usually takes place either at the real estate office or, if a lawyer was hired, at the lawyer's office. Unless power of attorney is given it will also be necessary to visit the local Land Department office.

The documents required at the time of sale will depend on the type of property being sold and the form in which the property is owned. If a company is involved the amount of paperwork required is large and it is essential that a lawyer is involved. Documents needed will include some or all of the following, check with a lawyer for exact details.

• Land or condo title deed
• Passport or ID card
• House Registration Document if applicable (Tabien Baan)
• Marriage or divorce certificate if applicable
• Any relevant tax, warranty and documents relating to the property
• Purchase agreement
• Power of Attorney form if applicable
• Foreign Exchange Transfer form from the bank (Condo only)
• Document stating the percentage of foreign owned condos is less than 49 percent (Condos Only)
• Document stating that there are no outstanding maintenance fees owed for any common ground

If the property has an outstanding mortgage then the bank will need to be involved with the selling process as the land title will be in the bank's name.

Seller Assuming the Mortgage

It's possible for the seller to finance the purchase in part or entirely, depending on what is negotiated. This is a private arrangement between buyer and seller that sometimes occurred because foreigners historically had great difficulty in obtaining a mortgage.

The owner sells the house to the buyer, but only receives a certain percentage of the amount. The rest will be paid on a monthly basis plus interest. The exact terms are all open to negotiation. Until the money has been completely paid the land title will still be in the original owner's name.

If both parties agree on this course of action, the purchaser must be absolutely certain that the seller is indeed the owner and has legal authority to sell the home or lease the land. A title search will list the legal owner(s) of the property. Make sure that all documents and agreements are notarised.

Taxes

There are different taxes for different types of property transactions in Thailand.

Renting of movable property is subject to house and land tax at the rate of 12.5 percent of annual rental value of the property. In addition, if the lessee is a corporate entity, they must deduct income tax at source of 5 percent on rental payments. Letting of movable property is not subject to VAT.

For the sale of property by a corporate entity, there are three types of taxes involved:

• Withholding tax of 1 percent, based on the actual sale price or the appraisal value, whichever is higher
• Specific business tax of 3.3 percent, based on the actual sale price or the appraisal value, whichever is higher
• Transfer fee of 2 percent, based on the value of the property transferred as appraised by the land office regardless of actual price

Where an individual sells land, buildings or a condominium (but not in the course of a business) they must pay income tax on the capital gain at a rate from 0 to 20 percent, at the time the transfer is made. The tax is assessed on the assessed price, less a standard deduction based on the length of time that the seller has owned the property. The usual personal tax rates of 10-37 percent are applied to the deemed profit, but in any event the tax may not exceed 20 percent of the gross sale price. When a natural person files their annual income tax return, they can declare the actual profit or loss, or ignore the matter, and the tax paid at the registration office will be deemed to be the actual tax.

Further Information

• Thailand Real Estate Directory
• Mortgage Calculator
• AngloINFO INFOrmation Page Buying a Property in Thailand

Prepared by Graeme Laird
President and CEO Andrew Park Company Limited
Property Agents and Consultants – Bangkok and Phuket
BB Building, Level 19, Suite 1913, 54 Asoke Road, Sukhumvit 21, Wattana, Bangkok 10110, Thailand
Bangkok Tel: 02 260 8002 Phuket Tel: 07 635 4016 to 8 Fax: 02 260 8007/ e-mail/ Website