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Condominium in Thailand

Buying a Condominium in Thailand

Buying a condominium (more precisely a condominium unit, or several units) in Thailand is extremely attractive for foreigner investors. Condominium prices and take up rates in Bangkok’s prime areas are constantly rising. In addition to this, condominiums are proving exceedingly popular as places of residence among foreigners in Thailand, mainly because life in a condominium is convenient – entailing facilities such as pools, gyms and restaurants operating right on your doorstep.

First of all, an understanding must be developed of what a “condominium” in Thailand is. According to the Condominium act, the term “condominium” refers to a building that can be separated into units for individual ownership – which includes personal and common properties. Furthermore, the condominium must be registered as such.

Legally, the only difference between a common apartment building and a condominium is that the units in a condominium can belong separately to different owners: a practice that requires special registration. In practice condominiums are often bigger and offer more common facilities than apartment buildings, which always belong to only one owner. However, in terms of size and number of floors there are no general regulations for condominiums.

Landownership of foreigners is restricted under Thai law. Ownership of a condominium is one exemption from these restrictions. Foreigners can acquire 100% ownership of a condominium, foreign natural persons and companies alike, as long as they fulfil the conditions of the Thai Condominium Act.

There are two conditions which must both be fulfilled if a foreigner wants to acquire 100% ownership of a condominium unit whereby the first condition refers to the ratio of the foreign ownership within the whole building and the second condition refers to either the residence or domicile of the foreigner in Thailand or to the origin of the money paid as purchase price. The two conditions are in detail:

1. The ratio of foreign ownership must not exceed 49% of the total floor area of all units combined. The law looks at the whole condominium building or condominium project. Under old law this condition did not apply in certain areas like Bangkok, so that foreign ownership of the total floor area in a condominium could be 100% in these areas, but this possibility has expired in 2004.

2. Additionally, the foreign individual or foreign company who wishes to acquire 100% ownership must be eligible which is the case if at least one of the following conditions is fulfilled:

  • The foreigner holds a Permanent Residence Permit in Thailand (in the case of a foreign juristic person: registration as Thai juristic person but with foreign ownership majority as specified under Sections 97 and 98 of the Land Code), or
  • The foreigner resides in Thailand under the laws governing investment promotion (in the case of foreign juristic persons: promotion by the Board of Investment proven by the BOI-certificate), or
  • The foreigner brings the purchase price in foreign currency to Thailand from abroad (must be proven by Foreign Exchange Transaction Form), or
  • The foreigner brings the purchase price withdrawn from a Baht-account abroad, or
  • The foreigner pays the purchase price with funds from a foreign currency account within Thailand.

Please note that the details are specified in the Condominium Act and by the competent land officer, so this article can only give a rough overview. In any case, you need to consult with a qualified Thai lawyer before you enter into any purchase agreement or even before you just pay for a reservation in a condominium project. This is also important as a so called ‘Condominium Due Diligence’ is highly advisable before you before you invest in a condominium.

I would like to make some additional comments regarding the above conditions for eligibility to answer some questions I frequently encounter from foreign investors. First of all, the law does not speak of eligibility, but I use this word to refer to the group of conditions one of which must be fulfilled alternatively besides the condition of the maximum 49% foreign ownership ratio which must always be fulfilled.

When does a foreigner reside in Thailand “under the laws governing investment promotion”? This condition refers to a foreign expert or skilled worker who is employed by a company holding a BOI-certificate and therefore entitled to bring such experts and skilled workers to Thailand.

Can the foreigner pay the purchase price using funds which were brought to Thailand in cash? In order to become eligible for the 100% foreign ownership the foreign buyer has to pay the purchase price with funds transferred from abroad. To bring the money to Thailand in cash is typically insufficient.

As a certificate of title the buyer of a condominium unit will receive a Condominium Unit Title Deed (Nangsue Kammasit Hong-Chut) which is comparable to the full ownership title deed for land ownership called Chanote in Thailand.

If the foreigner invests at least 10 million Baht in the purchase of condominiums or certain other financial investments, he/she can try to apply for a one-year visa. However, as immigration officers have a discretionary leeway in practice it might be difficult to obtain such an investment visa. You should always consult a qualified Thai immigration lawyer if you wish to invest at least 10 million Baht and plan your life in Thailand.

The Condominium Act also contains provisions regarding the rights and duties of the joint owners. The unit owners manage and use the common property jointly. The details of the management and use are set forth in the condominium’s regulations. The joint owners attend and vote in general meetings. The required quorum is not less than one-quarter of the total number of votes.

Foreigners can inherit condominium property if the above conditions for 100% foreign ownership are fulfilled. That means that the foreign ownership ratio within the whole building does not exceed 49% and the foreign heir is eligible. If the foreigner has no Permanent Residence Permit in Thailand and does not reside in Thailand under the laws governing investment promotion, the foreign heir can still inherit a condominium unit if the purchase price was paid for by funds from abroad or a foreign currency account in Thailand. If the conditions for 100% foreign ownership as explained above are not met, the Land Department will order a foreign heir to dispose of the inherited property within one year.

The heirs must show various documents for the unit transfer to be completed, such as the death certificate, the last will or testament or other documents proving the connection to the deceased in case of absence of a last will or testament, etc.

Currently condominium owners still pay a land and house tax of 12.5 % on annual rental income if the foreign owner rents out his condominium unit. The Thai government has recently approved a new Land and Building Tax which might replace the current tax on rental income by a tax on property ownership with progressive tax rates on the value of the condominium unit, as many condominium owners did not declare their rental income. We will discuss the new tax when it is certain that it will become effective.

When the rental income is remitted abroad a withholding tax at a rate of 15% will apply as final withholding tax besides the above mentioned land and house tax. However, there are legal ways to reduce the tax burden on your rental income which a qualified Thai lawyer needs to explain to you, depending on the details of your individual case.

Christian Moser

Senior Associate at Jus Laws & Consult

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