Phuket Real Estate Buying Guide
Buy Phuket Real Estate And Properties For Sale The Right Way
Phuket Real Estate Guide
Many foreigners and investors choose to invest in the Phuket real estate and property market as it offers a combination of western luxury and an exotic tropical lifestyle. Over the past 10/15 years, property developments have been sprouting around the island. Currently, the demand for Phuket real estate is high, and besides the thousands of private owners wishing to sell and rent, there are over 240 Villa and Apartment type project developments that are either selling or have re-sales available.
There are various form of real estate property in Thailand which includes condominium, house, land and villas. Despite the fact that a lot of foreigners are interested in investing with real property in Phuket Thailand, Thai law restricts foreign land ownership. Foreigners are not allowed to purchase land under his name, but can only own the structure built upon the land. Thus, attempting to own a real property in Thailand can be challenging. A reputable law firm can present options available for a foreigner who are interested on buying real property in Phuket, Thailand.
If you are thinking of purchasing Phuket real estate, be it for a second home, holiday home, as a retirement home, to set up a business or to simply live, then we offer you our Phuket property concierge service where we will take care of all angles of any purchase you make.
Phuket Ownership And Transfer Fees
Foreign nationals may own:
- A unit in a registered Condominium. (Leasehold or Freehold)
- A building distinct from its land. (Leasehold)
- A registered leasehold of up to 30 years for all types of titled business, land or buildings.
Foreign nationals may not own:
- Freehold land.
- More than 49% of the shares in a Thai company that owns freehold land or business
Difference between Freehold and Leasehold
- Buying leasehold means that you will purchase the property only for a fixed amount of time and will eventually need to return the property to the original owner. Saying this the leases are normally for 30 years but also can be extended by law to include 30+30+30 years.
- Buying freehold means that you are purchasing that property forever, or until you want to sell it to someone else.
There’s a lot more to it but that’s the basics for buying/leasing property or businesses on Phuket.
Phuket Property Transfer fees
|Category||Sale of Freehold Land & Property||Transfer of Leasehold Land||Sale of Building||Liability to Tax|
|Lease Registration Fee||N/A||1%||N/A||Lessor/Lessee|
|Specific Business Tax||3.3% or N/A||N/A||3.3% or N/A||Seller|
|Stamp Duty||0.5% or N/A||0.1%||0.5% or N/A||Seller|
|Withholding Tax||1% or 5 – 37%||N/A||1% or 5 – 37%||Seller|
This is how the property taxes are calculated in Thailand:
- Transfer fee – 2% of the registered value of the property
- Stamp Duty – 0.5% of registered value. Stamp duty is only payable if exempted from business tax
- Withholding tax – 1% of the appraised value of the property or sales price, whichever is higher
- Business tax – 3.3% of the appraised value of the property if selling within 5 years of purchasing. This applies to both individuals and companies.
- Total: 5.9%
- The Withholding Tax is a prepayment of the seller’s income taxes.
- If the seller is a company or the developer, withholding tax is fixed at one percent (1%) over the registered sale value or appraised value whichever of these two is higher.
- If the seller is a private person, withholding tax is calculated at a progressive rate based on the assessed value and the duration of the sellers ownership.
- When you buy second hand, the buyer usually pays all of the taxes, because it lowers the purchase price and thus the total taxes due.
- When you buy from the developer, the developer usually pays the Special Business Tax (SBT) (3.3% tax on the sales price if the seller has owned the property for less than 5 years) and splits the rest of the taxes 50/50. Stamp Duty is owed instead of the SBT if the seller has owned the property for 5 years or more.
Transferring Funds Into Thailand:
If you wish to purchase property in Thailand using Thai Baht, ensure that your funds are transferred to Thailand in foreign currency and converted to Thai Baht in Thailand. The receiving bank will issue a Foreign Exchange Transaction Form confirming the transaction for individual inward transfers exceeding 20,000 US$, which is one of the documents you may need in the future if you wish to repatriate funds without incurring tax penalties.
Thai to Metric
- 1 Wah = 2 m
- 1 Talang Wah = 4 sqm
- 1 Rai = 1600 sqm
- 1 Rai = 400 Talang Wah
- 1 Rai = 0.40 Acre (approx.)
- 1 Rai = 0.16 Hectare
- 1 Ngan = 100 Talang Wah
Metric to Thai
- 1 m = 0.5 Wah
- 1 sqm = 0.25 Talang Wah
- 1 Acre = 2.53 Rai
- 1 Hectare = 6.25 Rai
Phuket Property For Sale Options
Phuket Hotel Deals mainly only offers Apartment/Condo units and Hotel type businesses for sale and lease.
Buying into a condominium development is a very popular option for foreign buyers. Condominiums are set up so that 49% of the condominium will be allocated to foreign freehold ownership, meaning that you will own the condominium unit in your name forever, unlike a leasehold unit where you can only lease on a 30+30+30 year basis
Apartments that do not have Condominium title can only be leased on a 30+30+30 year basis. Most development are using a protected leasehold structure. This means that when you purchase your leasehold unit you will actually be buying the shares in the landholding company where your unit sits. Once all the units are sold out the owners will have voting rights in the land holding company, effectively giving you a perpetual lease.
Development with hotel or rental facilities
Developments with Hotel facilities will give you the options to add your unit to the rental pool. They will not give you a guaranteed rental like the compulsory leaseback but will give you a varied income depending on occupancy rates. Where as some developments do not have hotel facilities they do have rental options. However developments that are run as a hotel will generate a higher rental income as they will charge for your unit to be in their rental pool and the income will be split between owner and hotel. This is a popular investment as it has the advantages of knowing your unit is being looked after by the hotel and they are driven to make money for themselves which will ultimately benefit you as the owner.
Note: In some cases the same applies to buying an Apartment or Condo due to some smarter Condominium developers or management teams also also offer a rental pool or buy back options as a buying incentive, so purchasing a Condo, Apartment or development unit comes down to what you really want.
Residential villas tend to have a more long term rental income or specifically for high season rental. Most people who are looking at staying in Phuket for maybe 6 months of the year would prefer this option as they would have someone to look after the unit, but is available for you use 365 days a year. In term of an investment, it will be through appreciation of your property and unlikely by rental income.
Hotels, Resorts And Guest Houses
The Foreign Business Act limits the rights of foreigners to own and operate a hotel business. Foreigners must obtain a Foreign Business License from the Department of Business Development prior to commencement of operation. However, it is worth noting that a Thai limited company that is majority owned by a Thai will not encounter such restrictions. Consequently, it is beneficial for many to form a business partnership with a Thai national, in order to meet the legal definition of a “Thai company”, i.e. at least 51 percent of a company’s shares must be held by Thai citizens.
In some instances, foreigners may be exempt from certain requirements. Hotels with 100 rooms or more, or with the minimum investment capital of not less than 500 Million baht are qualified for not tax privileges granted by the the Board of Investment. Moreover, for some projects, depending on the location, the BOI may allow foreigners to hold a majority of shares in some promoted projects when it is deemed appropriate.
The number of licenses that should be obtained prior to commencement of business operation depends on the facilities and services provided by hotel.
- Any hotel that has more than 4 rooms or may accommodate more than 20 guests must obtain a license to operate a hotel business from the Department of Provincial Administration for hotels located in Bangkok, or from the Provincial Governor’s Office for other areas.
- Hotels that provide catering or restaurant services must obtain a Permit for Selling Food, Liquors and Cigarettes.
- An entertainment permit must be secured by any hotel that provides conference room services or has places of entertainment, such as pubs, clubs, bars and spas.
- Date of land acquisitions, land title deeds, lease agreements, household registrations
If you wish to lease a Phuket Hotel, Guest House or Resort the below details are the basics:
1. The lessee ( You or who ever is the lease name title holder ) will enter into a reservation agreement in his/her own name or set up the Thai company first so that the signatory is the Thai company. Either way is fine because it’s just a reservation. This reservation can be discarded also and just proceed to #3 right away.
2. Set up the Thai company.
3. Enter a Lease Agreement, which is between the owner of the property (as Lessor) and the Thai company (as Lessee – which is you or who ever is the lease name title holder). You will need to be the director of the Thai company as well.
4. Obtain a Non-B visa and work permit for the lessee (You/New title or business owner). For this, the company will also need to file the social security for the 4 Thai staff which is required by law.
5. Hotel license, food license, liquor license, etc will also be needed, but dependent if the Hotel you lease sells food, liquor etc. you will require a Hotel license though.
There are four different types of hotel licenses (The prices/rates are just a guide):
Hotel, Resort, Guest House business only, for up to 50 rooms: application fee at 10,000 THB
Hotel, Resort, Guest House and restaurant business: application fee of 20,000 THB
Hotel, Resort, Guest House, restaurant and seminar rooms: application fee of 30,000 THB
Hotel, Resort, Guest House, restaurant, seminar rooms, entertainment business: application fee of 40,000 THB
The normal fee to set-up a Thai company + business visa + work permit ranges from 120,000 THB to 150,000 THB. Our Thai lawyer who handles this service can provide the retainer and full details when it’s needed.
That’s the basics of how to set up, and be able to lease a Hotel on Phuket
: QUESTION: Can I have my own private beach in Thailand?
:: ANSWER: No, all beaches in Thailand are public!
::QUESTION: What kind of fees can I expect on top of the purchase-price, when buying a property?
0.5% = Stamp Duty = of the Phuket Provincial Land Office’s estimated asset value or of the full value (selling/purchase-price), whichever is highest.
2.0% = Transfer Fee = of the Phuket Provincial Land Office’s estimated asset value, which is usually lower than the selling/purchase-price.
3.3% = Business Tax (if the property is less than 5 years old (since last transfer of ownership), or less than 1 year as a registered domicile) of the Phuket Provincial Land Office’s estimated asset value or of the full value (selling/purchase-price), whichever is highest.
The Stamp Duty, Transfer Fee and Business Tax is in most cases, shared 50/50 between the seller and the buyer.
0-20% = Income Tax (withholding tax, comparable to capital gain tax). For Entities = 1%, Individuals = 0-20% (depending on income or appreciation) at the time the transfer is made. The tax is based on the asset value, less a standard deduction for the amount of time the seller has owned the property.
The Income Tax, comes as a surprise to many sellers, and the seller might ask the buyer to share this??
1.1% of the “selling/purchase-price”
Cost of Construction
:: QUESTION: What are the different land-titles in Thailand and what do they mean?
Chanote = The best available in Thailand. Land-Title deed (full), Accurately surveyed and plotted in relation to a national survey grid and also marked by unique numbered marker posts set in the ground.
Nor Sor 3 Gor = The next best available in Thailand. In general accurately surveyed and each plot is cross referenced to a master survey of the area and a corresponding aerial photograph.
Nor Sor 3 = The third best available in Thailand. The boundaries are only recorded in relation to the neighboring plots and survey errors in length of boundary or area are not unusual. A 30 days public notice is necessary before any change of status over the land can be registered.
Chanote, Nor Sor 3 Gor & Nor Sor 3 are the only land-titles, where registered right of ownership or lease can exist, therefore any land-titles lower than these are not recommended for foreigners.
Sor Kor 1 = entitles the holder to occupy and farm the land. The land must NOT be sold – it may only be transferred by inheritance!
Sor Por Kor 4-01 = intended for poor people and/or farmers only! The land must NOT be sold! Ownership can only be transferred by inheritance!
:: QUESTION: What kind of financing is available in Thailand?
:: ANSWER: General speaking, the Thai banks are very cautious when it comes to property-financing (mortgages), Thai national or not.
Owner financing (by Seller) is only available in a few cases.
Some of the bigger developments, might be offering some kind of financing (off-shore typically (and for qualified buyers only) against off-shore and/or overseas assets).
:: QUESTION: I am non-Thai national (foreigner), how can I own a property in Thailand?
:: ANSWER: Basically there are two ways of owing a property in Thailand: 1. Freehold, 2. Leasehold:
Freehold = Applicable for Thai nationals and/or companies (majority Thai owned) only!
Leasehold = Applicable for all nationalities!
Under the current law in Thailand, foreign nationals (with a few exceptions) are not allowed to own LAND in Thailand, only the building / structure built on the land.
What foreigners do today is: go for the Leasehold-ownership (30 years, renewable, with a maximum 90 years total), buy in a Thai company name, or a combination of the two.
A Thai company with the majority of shares held by Thai nationals (51%) is allowed to own any property (including the land) Freehold, so you as a foreigner can set up a Thai company, where you maximum can posses 49% of the shares.
There are different ways to ensure that you, as the foreign minority shareholder, have complete control of the company in terms of management and finance.
Phuket Real Estate Picks
Below you will find an example selection of properties and real estate for sale on Phuket. This is just our ‘Top Pick’ example suggestions. For a full Phuket real estate and property listing please search using the ‘Search”’ tab, or alternatively for better communication and property selection please feel free to send us either a Phuket property search email, or go back to out main Real Estate home page and submit a property enquiry from there. Thank you.
Our Top Phuket Real Estate Picks
We offer the best Phuket Real Estate and property deals, which we believe are priced with-in today’s market value and which offer you, the buyer, genuine value for money. Below you can search for the best unbeatable example deals on offer today on Phuket, and if you find cheaper our best price guarantee will beat it.
Phuket Real Estate And Property Listing By Location
Sellect Phuket properties by location