Rights and obligations of foreign buyers. Which country’s citizens have the right to buy real estate in Thailand?

By law, any foreigner has the right to own 49% of any property in Thailand. The rest should belong to a Thai citizen or a legal entity, where again 51% of the share capital should be held by Thai and 49% – by foreigners.

But there are ways to get the property into full ownership – Freehold. For example, the developer of the condominium has the right to sell to foreign individuals 49% of the residential area of the apartment building in full ownership (Freehold). If a foreigner does not have time to purchase real estate from the quota of 49%, the apartment of the remaining 51% of the living space of the apartment building, a foreigner can arrange for long-term rent (Leasehold) for 30 years with the right to extension. Please only pay attention to the terms and conditions of the lease extension set out in the contract. It should be made clear that the lessor does not have the right not to renegotiate the lease if the lessee has not violated the terms of the contract.

The house can be fully owned by the foreign buyer (Freehold). But the land under it is registered in long-term rent (Leasehold) for 30 years with the right of extension. Please only pay attention to the terms and conditions of the lease extension set out in the contract. It should be made clear that the lessor does not have the right not to renegotiate the lease if the lessee has not breached the terms of the contract.

Leasehold – registration of title to land, including under the building, to a Thai company. The share of a foreign citizen in such a company may not exceed 49%. The share of a Thai citizen who actually participates in this company should be not less than 51% of shares. In case of revealing the nominal ownership of shares in order to obtain 100% control over the land, such a transaction may be recognized as fictitious and, as a consequence, invalid, and the participants will be subject to administrative and/or criminal liability.

The Phuket Land Department is in charge of executing the transactions. A certified copy of the passport is required from the documents. The rest of the work will be done by lawyers. For villas in luxury complexes there is often a mixed scheme. The whole land of the complex is decorated on a Thai company. The community of owners creates an offshore company, which owns a minority stake in this Thai company. Each owner has a share in an offshore company (the size of the share depends on the size of the site) and its own offshore company, through which the share is registered. At the same time, each plot of land has a long-term lease between the Thai company (landowner) and the offshore companies that belong to the owners.

What rights does a foreigner get after buying real estate in Thailand?

Buying real estate in Thailand does not entitle you to a residence permit or citizenship. Visa regime is the same as for other foreigners.

The Kingdom has the Thailand Elite program, which allows a foreigner to get a special VIP-card (as a bonus, VIP-service in hotels, airports, golf clubs, etc.) and a long-term visa for 5-20 years when the investment amount is $15,000 or more.  Some developers of elite complexes offer their clients to apply for visas under this program on account of purchase of housing.

What obligations do foreigners have after buying property in Thailand?

Thailand does not have a general annual property tax (ed. – The Law on Land and Property Tax came into force, from 2020 the tax on real estate objects will be charged). There are one-time fees when registering a property in the Land Department – 2-3% of the value of real estate. They are paid on the day of the transaction in the Land Department.

Annual payment of taxes is necessary only in case of commercial use of the property. Thai real estate is subject to three types of taxes:

Land tax – small, only a few baht
The development tax that’s levied on the land.
Tax on the use of buildings, i.e. rent

Any owner must also pay for utilities.

At the same time, tax residents from other countries (who actually live for more than 183 days a year) have obligations to their country as well. Must notify the tax authorities on the establishment of accounts in foreign banks or legal entities. This may be required during the transaction.