In the two previous ‘Investing in Bangkok Real Estate’ blogs we have looked at the advantages of investing in a property in Bangkok. We have reviewed the individual types of Bangkok property for sale and the formats of buying a townhouse, condo or apartment in Bangkok. In this article we will briefly look at the method of buying a townhouse or detached house in Bangkok.
Before we start it is important to state that we always advise that an individual seeks advice from a Real Estate Agent or/and a legal representative before buying real estate in Thailand or Bangkok. Although legal disputes are rare involving a foreigner buying a property in Thailand or Bangkok, it is of course best to seek advice so that you optimize your Bangkok property purchasing decision.
In an earlier article on www.easyhomes.tv we covered the details involved in buying a Bangkok condominium by a foreigner http://www.easyhomes.tv/blog/how-can-a-foreigner-buy-a-condo-in-thailand . As mentioned in the previous Real Estate Blog in this series Investing in Bangkok, Real Estate, Apartments and Condos Pt. 2 condominiums were identified as the easiest format for a foreigner to purchase in the Thailand real estate market. Therefore buying a condominium is the most popular way to invest in the Thai real estate market.
When purchasing a townhouse or detached house in Thailand it has to be considered that there is a land purchase also involved as the property is ‘grounded’ therefoe under the rules of land ownership in Thailand by a foreigner, the property has to be owned by a Thai registered company. A foreigner can own 49% of the Thai registered company, but the other 51% shares must be in Thai hands.
Most foreigners wishing to buy a townhouse or detached house in Bangkok therefore will form a company particularly to buy a property or more than one property. In effect the company owns the property and the foreigner owns a major shareholding in the company. The other 51% of the shares in the company are often split between 7-8 Thai shareholders who therefore only own minor stakes in the company. Also the format and preparation in setting up the company often means that the other Thai shareholders are not able to contact each other, and therefore their voting right and control over the company is minimal.
As and when the foreign owner wishes to sell his Bangkok Townhouse or detached house, it is relatively simple and even cheaper than if one Thai individual sold to another. Land Taxes in Thailand are fairly substantial and upon sale of any type of property in Thailand the following taxes will need to be paid:
1. Stamp Duty (Land Tax) – 2%
2. Withholding Tax – 1.5%
3. Business Tax (if the property has been owned for less than 5yrs) – 3.3%
However if the property is held by a company then the foreign owner only has to sell the company to the new buyer. This is a simple and inexpensive administrative exercise in changing the shareholder’s details, in effect the foreign shareholder sells his 49% stake to the new owner, thus avoiding all of the above taxes.
So although organizing the ownership of a townhouse or detached house in Thailand and Bangkok may seem more troublesome at first it can be seen that it has its advantages and is cheaper to sell the Thai property than an individual foreigner owning a Thai condo 100% in their name.