Payment for a Thai Condo
A deposit of 10- 30% is usually required to secure a property and total payments should be made within 30-60 days (see your lawyer first) but normally once the transfer has gone through. If signing a purchase agreement then up to 30% down & 70% following transfer. Normally the seller will pay the changeover tax which starts at 2.5%. However if the seller has owned the house longer than this [period it is discounted. Some Land Offices will charge up to 8% depending on the area and office. An agreement can be made between buyer and seller than each pay 50%. You can obtain longer periods but you will probably be required to pay a higher deposit. Deposits are normally non refundable, except by default of the vendor, so bear in mind that once the deposit is placed you are committed.
This situation also prevails for the vendor. He must refund your deposit and pay a penalty of an equal amount if he defaults on the contract. Deposit in escrow is still rare in Thailand, but it is becoming an increasingly recognized way of proceeding. It generally trades off greater security for the buyer’s deposit versus a weakened claim for damages in the event of vendor default.
Beyond the price, payment and closing schedules, it’s important that a contract includes clauses to cover who will pay the legal fees, transfer fees and taxes (there is often a business tax and always an income tax assessment made at time of sale) as well as an understanding of the value at which the sale will be declared – this is typically (for tax reasons) at or close to the government minimum assessed value.
A foreigner buying a condo must transfer funds from a bank account out of Thailand in foreign currency and verify the transfer on paper. The transfer of funds must be in the same name as the name that will appear on the final purchase contract ie. the buyer. Funds must be transferred into a Foreign Currency Account in Thailand opened in the Buyer’s name. Use Bangkok Bank, Thai Farmers Bank and Siam Commercial Bank and make sure you tell them that the purpose of his or her opening a Foreign Currency Account is to purchase a condo in Thailand. This law is somewhat a catch 22 situation as the Foreign Banks usually will not write such a letter but don’t worry. You can remit as much as you like to Thailand via your bank. Transfers out of this Foreign Currency Account in Thailand into a Thai Baht Account or some form of Thai Baht draft or check to the Seller must be made in amounts US$5000 or more in order to qualify for a “Tor Tor 3” Certificate issued by the Buyer’s bank to verify that the originating funding came from outside Thailand in a currency other than Thai Baht. On the “Tor Tor 3” Certificate, it should state explicitly that the Thai Baht funds are used “to purchase a condominium” in Thailand. Taxes are payable by the buyer or seller of a condo in Thailand such as the Transfer Fee/Stamp Duty Tax of 0.5% usually payable by the seller upon the date of the actual sale or a Special Business Tax of 3.3% which is usually payable by the seller if the property has been owned for less than 5 years. By the way there is no limit on how much you can remit into a Thai account from overseas and no tax. Tax levied at 15% is on interest earnings only.
REMITTING FUNDS: If sending over funds to purchase a house you must tell the National Bank what you are using this money for with sums exceeding 2,000,000 baht quantities. If remitting funds from abroad to purchase property which is the law over sums of 2m baht it may save you when it comes to a divorce situation of whose funds were used to purchase the property. If you wish to know more than ask us.