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Real Estate Transfer Fees and Property Taxes in Thailand

Transcript of the above video:

In this video today we are going to be discussing, as the title stipulates, property taxes, real estate transfer fees. Again, I am an American attorney; I am not a Thai attorney so I’m not going to get too in depth in this. It’s just basically a general overview for foreigners to understand some of these issues and moreover, this is going to be a video which is designed, so if you wanted to contact say, our firm, the Thai attorneys would be dealing with this sort of hands on. Again, this is just an overview if you will.

These are just some observations as a foreign legal professional looking from the outside, looking in at the Thai property tax system. In many ways, those who come to Thailand are sort of flabbergasted by really the lack of a lot of property tax or taxes on property directly. Like in the United States, we have things like mill levies and all kinds of different types of taxes but most notably, we have property tax. There’s a tax that’s assessed on the value of the property every year and that tax is then tolled against the property owner assessing the property owner and collecting from the property owner. In Thailand, with some rare, not rare, but exceptions, for residential purposes, sort of an on going yearly property tax doesn’t really exist in that same way. Again, I am speaking in generalities and I am speaking vaguely on purpose because again Thai legal professionals are better equipped to handle this; this is simply an overview.  But that being said, there is an aspect of taxation with respect to property on real estate in Thailand. It is very different from the way we do things in the United States but it is somewhat more straightforward in a way but it’s just something that most folks aren’t used to dealing with and that is the property transfer fee or transfer tax. One of the ways in which the Thai system deals with taxation on immovable or real property is by assessing taxes at the time of transfer. So the land office, which is called the Land Office of the Land Department is in charge of assessing a transfer tax based on a formula of percentages, based on the type of land involved, be it residential, commercial etc., the usage of the land, the various structures on the land etc. etc. etc.  very much in the same way that an appraisal of land in the United States or real property in the United States is undertaken by appraisers or adjusters. Over here sort of the same formula comes into play with respect to the land office in Thailand. That being said, at the time of the transfer, this fee has to be paid and frankly, if it is not paid, the land office simply won’t perfect the transfer, they won’t affect the transfer. So if it’s not paid, you are not going to get your land or your real property, you as the buyer; and the seller isn’t going to get their money.

So again, it’s sort of an elegant way of dealing with this matter because it creates an impetus to get the tax paid and move on with everyone’s lives basically. But that being said, it’s quite different when compared to say the tax regime in the United States or other countries similar that operate on a similar system, whereby there is sort of this ongoing tax. There are proposals which have been announced in recent years to create a property tax that looks a little bit more like the western system, if you will, although the amount on which the property will be taxed is quite high, especially for residences. But that being said, it is not a foregone conclusion that that tax regime is going to be passed so we have yet to see implementation of anything such as that but as far as the transfer fees, these have been in effect for quite some time. The percentages and the formulas by which the transfer fees are assessed are going to change depending on the circumstances of the underlying case but as far as it goes for the purposes of this video, the thing to take away is when purchasing real property here in the Kingdom, the issue of the transfer fee is going to be pretty darn important when it comes to the matter of conveyancing.