Buying real estate in Thailand

Let’s start with the Golden Rule:
When buying a house, apartment, or land, always consult a Thai lawyer! The lawyer will check and verify the documents and protect your investment.

Freehold or Leasehold Explained

Freehold (Full Ownership)

You are the full owner of the property, such as an apartment. Your name is listed on the Chanote (the official land title deed).

As a foreigner, you cannot directly own land in Thailand, as per Thai law. In the case of a villa, this means the land must be in the name of a Thai partner, a Thai company, or leased from a developer — the latter is explained in the next section.

Who is Freehold suitable for? For anyone looking to buy a house or apartment, similar to how it works in Europe. Foreigners can own Freehold condos, as long as no more than 49% of the building’s total floor area is foreign-owned. Every house can be purchased under Freehold, but not the land.

Advantages:

• Full ownership rights.
• You can sell, rent out, or pass it on to your heirs.
• No annual lease fees or renewal procedures.

Leasehold (Long-Term Lease)

You lease the property (and/or land) for a fixed term, usually 30 years, with possible extensions (commonly 2 x 30 years, totaling 90 years).

Who is Leasehold suitable for? Often used by foreigners who want to buy a villa or house in their own name, without involving a Thai partner or company. If you’re investing, Leasehold can be the better option, as you pay less tax in both Thailand and your home country.

Advantages:

• Less legal complexity than using a company.
• You can use the property as if it were yours.
• You can live in it, rent it out, or sell the lease.

Disadvantages:

• You are not the owner of the land, only a tenant.
• Lease renewal is not guaranteed, though specific clauses can be included in the contract.
• Less attractive for resale.

Summary Table

Taxes in Thailand

1. Land and Building Tax

Paid by the landowner.

• With Leasehold, you’re not the landowner, so you usually don’t pay this — the landowner pays.
• With Freehold (e.g., villa or land via a company), you or your company is the owner, so you pay this tax (rate depends on usage and value).

2. Transfer & Registration Fees

• Leasehold: Lease registration at the Land Office costs 1.1% of the total lease value, usually shared between buyer and seller.
• Freehold: Ownership transfer costs up to 6.3%, usually shared as well.

3. Income Tax on Rental Income

You are taxable on rental income in Thailand under both structures. With Leasehold via a company, costs for maintenance, depreciation, etc. can be deducted, offering tax benefits.
                                         Source: Thai Revenue Department – www.rd.go.th

Taxes in your home country (in general)

1. Wealth Tax / Reporting Foreign Assets

• Freehold: Must be declared as foreign real estate in your wealth portfolio.
• Leasehold: Considered a rental or usage right, not ownership — often treated more favorably.

2. Inheritance Tax

• Freehold property is only taxed if the value exceeds 100 million THB.
• Leasehold is not subject to inheritance tax.

Tax Summary Table

Conclusion

Leasehold can be more tax-efficient, especially:

• If you don’t want to legally own land
• If you want to avoid high transfer fees
• If you’re looking to optimize your foreign tax declaration

Inheritance Tax in Thailand – Key Information

1. Applies to assets in Thailand

Yes, inheritance tax applies to Freehold property in Thailand, but only if the value exceeds 100 million THB.

2. Exemption threshold

Only levied if the total value of inherited assets in Thailand exceeds 100 million THB (approx. €2.5–2.7 million, depending on exchange rate).

3. Tax rates

• 10% for non-related heirs (e.g., friends, distant relatives)
• 5% for direct heirs (e.g., children or parents)

4. Foreigners inheriting Thai real estate

• Foreign heirs can inherit condominiums (Freehold) under the same rules — as long as the 49% foreign quota is not exceeded.
• For landed properties (villas) it’s more complicated: foreigners still cannot own land, even through inheritance. In many cases, the land must be sold unless a legal structure (like a Thai company) is used.

5. Other transfer costs

Even if inheritance tax is not due, there are still transfer fees, stamp duty, and withholding tax when updating the Chanote title.

Inheritance Summary Table