Selling a Property in Thailand

Find out how to go about selling property in Bangkok: what to expect from the process, the seller's obligations and the property taxes due...

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.

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.

Property 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 the annual rental value of the property. In addition, if the lessee is a corporate entity, the lessee is required to deduct income tax at the 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 or individual, there are four types of taxes involved:

  1. If the seller is a company the withholding tax is 1 percent, based on the actual sale price or the appraisal value, whichever is higher. If the seller is an individual, the withholding tax is quite complicated and there are more details below.
  2. Specific business tax of 3.3 percent, based on the actual sale price or the appraisal value, whichever is higher.
  3. A transfer fee of 2 percent, based on the value of the property transferred as appraised by the land office regardless of actual price.
  4. Individual and corporate sellers are subject to stamp duty unless they have already paid the specific business tax in which case they will be exempt.

Where an individual sells immovable property, they must pay income tax calculated at progressive rates of 10 to 37 percent on any gain arising, regardless of whether the individual acquired the property by way of inheritance, gift from another person (free of any consideration) or purchase (but without any commercial intention to sell the property at a later date).

However, if the seller acquired the immovable property by way of inheritance or gift (free of any consideration), then the permitted rate of expenditure that can be deducted against tax is fixed at 50 percent, and a seller who acquired immovable property either with or without commercial intention will be entitled to varying rate of deduction according to the number of years the property was owned by that seller before sale.

Below is the schedule of permitted deduction according to the number of years owned an individual seller:

Years owned Permitted deduction
1 92%
2 84%
3 77%
4 71%
5 65%
6 60%
7 55%
8 50%

An individual seller who acquired immovable property by any of the methods mentioned above will normally be subject to withholding tax on income from the sale of the immovable property, but at the maximum withholding tax rate of 20 percent of the sale price.

However, an individual seller who acquired immovable property by way of inheritance, gift (free of consideration) or any without commercial intention, and withholding tax has been deducted upon sale of that property, the seller has a choice: they can treat this payment of withholding tax as final tax due on the transaction, or include this income with all other income derived by the seller in that year when he completes his tax return.

Note that the method of calculation of withholding tax on income from sale of immovable property is different from that used normally. If chosen, allowances will not be taken into account, and the income tax threshold of Baht 150,000 will not apply. On the other hand, if the seller decides to aggregate the income from property sale with all other income, then the exemption for the first 150,000 Baht of income will normally apply.

Further Information

  • Samuiforsale: detailed information on issues related to owning property and building in Thailand
Prepared by Graeme Laird