Selling a Property in Thailand – Associated Costs
What are the costs associated with selling property in Thailand?
Selling a property in Thailand involves several costs and taxes that sellers must consider before putting their house or condo up for sale. It’s important to understand these costs to ensure a smooth and successful property transaction. This article provides an overview of all the associated costs, taxes, and fees, from transfer fees to stamp duty and withholding tax.
Transfer fees
Transfer fees are calculated at 2% of the property’s appraised value by the Land Department. These fees are typically split between the buyer and the seller, which means that as the seller, you are responsible for paying a transfer fee of 1% of the property’s value.
For instance, if a condo is appraised at THB 5 million, the transfer fee would amount to THB 50,000, with both parties usually sharing this cost equally. The fees need to be paid at the Land Office when the transfer of ownership is registered.
Real estate agent fees
Real estate agent fees usually range from 3-5% of the sale price. These fees encompass the agent’s work in marketing the property, negotiating with buyers, and managing various transaction details. They can also assist with sending money to Thailand or abroad. Collaborating with an agent can simplify the selling process and potentially result in a higher sale price, making the fees a valuable investment.
Specific Business Tax (if applicable)
Specific Business Tax (SBT) is applicable to properties sold within five years of their purchase. The tax amount is 3.3% of the property’s sale price or its appraised value, whichever is higher.
For example, if a property is sold for THB 6 million within five years of its purchase, the SBT would be THB 198,000. The seller is required to pay the SBT at the Land Office during the transfer of ownership.
Stamp duty (if applicable)
Stamp duty is applicable if SBT is not paid, usually when the property is held for more than five years. The rate is 0.5% of the appraised or sale value, whichever is higher. It’s wise to first do a value appreciation of the property before starting to sale, to get a better overview of the potential costs.
For example, on a property sold for THB 7 million, the stamp duty would be THB 35,000 if applicable. The seller pays this tax at the Land Office.
Withholding tax
The withholding tax applies to both individuals and companies. Companies pay a flat rate of 1% of the appraised or sale value. For individuals, it’s a progressive tax based on the appraised value of the property and the duration of ownership. Initially, individuals can deduct a percentage from the appraised value based on the years of ownership. The deduction is 92% if owned for one year, and 50% if owned for eight years or more. Subsequently, progressive income tax is paid on the remaining value, which falls between 5% and 35%.
If a company sells a property for THB 8 million, it would need to pay THB 80,000 in withholding tax. For an individual seller who sells a property with an assessed value of THB 7,995,000 and has owned it for seven years (resulting in a deduction of THB 4,397,250), a 15% income tax would apply, leading to the seller paying THB 77,094 for each year of ownership in taxes, resulting in a total payment of THB 539,662. The tax is paid by the seller at the Department of Lands during the ownership transfer.