Thailand property taxes differ from those in the West!
There are no set rules on who pays for which taxes and it is just another part of the bargaining process - so make sure you discuss it with both your Chiang Mai Lanna House Agent and your own lawyer. These property taxes can amount to a considerable part of the real estate purchase price. Therefore, it should be made clear during the purchase negotiations who is going to pay for what, or you could be facing a sizeable tax bill two or three months after the property sale is completed.
Taxes applied to property ownership in Thailand
There are two taxes levied on owners of property: the Land Tax and the Structures Usage Tax. The Land Tax is an annual tax but it is rarely collected annually because the amounts payable tend to be so small (a few thousand Baht) that the collecting body tends to wait for a few years or until the title is transferred to a new owner. The Structures Usage Tax, as the name implies is a tax on the building of a structure, but it only applies to commercial buildings
Taxes applied to property acquisition in Thailand
Unlike taxes associated with ownership, taxes linked to buying and selling property are taken more seriously by the Government. There are four taxes to consider:
a) Stamp Duty
0.5% of the assessed value or sale value of the land, whichever is higher
b) Land Transfer Fee
2% of the assessed value of the land
c) Specific Business Tax (SBT)
3.3% of the assessed value or sale value of the land. Only applies to transactions involving the sale of a company and to all private sales which occur within five years of the original purchase.
d) Income Tax
Varying between 1% & 3% of the acquisition price and is calculated using quite a complicated formula.
e) Land Tax
A small amount that, in practice, is usually only collected after several years have passed.
f) Structures Usage Tax
Charged on Properties used for Commercial Purposes and is collected by the Municipal Office or District Office.
It is common that some of these taxes are shared between the buyer and the seller. It is important that you ascertain exactly what tax burden the seller is take during the course of the negotiation. Your Chiang Mai Lanna House Agent can help you with this.
Legal Costa must also be considered when Buying or Selling a Property. Depending on the Price of the Property, and your Lawyer’s Charging Scale, these can be sizeable and amount to up to 10% of the Purchase Price.
Some Foreigners choose to Purchase Property without a Lawyer to save this money but we strongly recommend that you not do this. Your Chiang Mai Lanna House Agent can recommend a Reasonable Lawyer who is Trustworthy.
Remember, you are buying Property in a Foreign Land where the Contracts are written in THAI.