Thailand Law Online

Sharing the real estate transfer costs

In a normal transfer of ownership of a real estate property in Thailand there is no fixed rule who pays the transfer fee, stamp duty, specific business tax or even personal withholding income tax. As a standard rule the following general formula for sharing these costs is advised in a private sale and purchase of real estate:

• Transfer fees: the seller's or the buyer's duty or shared
• Specific business tax: the seller's duty
• Stamp duty: the seller's duty
• Withholding tax: always the seller's duty

The above fees and taxes are paid in the land office at the time of transfer of the property. The sale and purchase agreement should clearly specify who will be responsible for the above taxes and fees. Only in a government licensed housing or condominium development the law specifies that only up to half of the 2% transfer fees may be transferred to the buyer by the developer. All other transfer costs are by law the responsibility of the developer, even though it is common that developers try to charge a higher percentage in the sale and purchase agreement. 

Sample calculation transfer costs of a condominium

Sample calculation for the transfer of a condominium unit with a 5 million baht value and 3 year ownership by a private owner at the time of transfer under the normal rates. In case the seller is a company the withholding tax is fixed at 1%. These amounts must be paid at the Land Department at the time of the transfer (the final exact fees for any specific transfer are calculated by the Land Department based on the actual sale price, appraised value, term of ownership). This is a sample only:

Transfer of a condo (value of 5 million) under the current rates:

1. Transfer fee 2% over 5,000,000 THB	100,000 THB
2. Specific Business Tax & Local Tax 3.3%	165,000 THB
3. Income Withholding Tax approx	100,000 THB
4. Application fee and others approx.	300 THB
Total	365,300 THB

• Related: Thailand Revenue Department's tax calculator

Appraised value

A real estate property appraised or assessed value is an actual evaluation price of the property by the government and is used by the land office to determine the amount of tax that must be paid. The appraised value of a house (separate from the land) depends for example on criteria like floor area of the house, number of floors, materials used (e.g. wood or concrete) and location.

Registered value is the actual registered sale price between the parties. The appraised value used by land office value is often pretty much lower than the actual sale price, and in practice the Thai seller tends to insist on declaring and registering a sale price close to the appraised value as this decreases his taxes. This is a known practice but not so common practice. The parties are required by law to state the correct true sale price at the Land Department.

Specific Business Tax

SBT is charged at a rate of 3%, plus a municipal tax of 10% on the amount of the specific business tax, bringing the total tax to 3.3%. This is charged if the seller is a company (specific exemptions applied), or if the seller is an individual and sells the property within five years of the purchase registration date. The transfer is not subject to business tax if the seller is an individual and has possessed the property for more than 5 years before the transfer. Other exemptions are for example if the seller transfers the real property to a legal heir or heir by a will or the seller transfers the real property to a legitimate child (there are other specific exemptions). Companies transferring property are subject to Specific Business Tax, irrespective the period of ownership but there are exemptions depending on the business objectives of the company.

Stamp Duty

Stamp Duty depends if the seller is subject to any Specific Business tax. In case Specific Business Tax is paid the seller is exempt from the payment of the Stamp Duty. However, if the stamp duty has been paid to the Land Department, the seller shall have the right to claim for the refund in full within 6 months after the payment. Specific Business Tax 3 % + local maintenance tax at the rate of 10% charged over the business tax, calculated over the registered value or actual sale price (whichever is higher).

Withholding Personal Income Tax

For individuals withholding tax depends if the immovable property is acquired by inheritance or gift or if the sale and purchase of the property has a trade or profit seeking purpose or not, usually the final Withholding Personal Income Tax income shall be calculated at progressive rate based on the government assessed value with a deduction depending on the number of years of possession.

If the seller is a company, then withholding tax is fixed at 1 % over the registered or sale price or government assessed value of the property, whichever is higher.

Related: Thailand Revenue Department's tax calculator