Sales of condominiums subject to four different taxes

July 30, 2008

Foreign nationals in Thailand are permitted to own condominium units not exceeding 49 per cent of the total area of a condominium building.

However, foreign buyers are required to transfer the funds for the purchase from abroad or withdraw the money from their local non-resident bank account.

Buying a condo may seem relatively straightforward. There is usually a helpful sales agent ready to assist in completing the documentation for you to sign on the dotted line.

When it comes time to sell, however, it is important that you equip yourself with a basic understanding of the costs associated with a sale, so that you can take these into consideration when agreeing a price.

The sale of a condominium is subject to four different kinds of taxes and fees that are each paid to the relevant government office: government transfer fee, specific business tax (SBT), stamp duty and withholding tax.

Under the law, only the government transfer fee is shared equally between the buyer and the seller, and the remaining taxes are the responsibility of the seller.

The calculation of the government transfer fee is quite straightforward, with the amount payable 2 per cent of government appraised value irrespective of the actual selling price.

Nevertheless, the sale of a condominium between March 29, 2008, and March 28, 2009, is eligible for a fee reduction of 0.01 per cent in the government appraised value.

The SBT is a special levy on certain business transactions. It applies to the sale of a condominium by an individual at the rate of 3 per cent of the government appraised value or sale proceeds, whichever is higher.

This tax is payable if the condominium is sold within one year of acquisition if the individual has registered the condominium as his or her official residence in the government household registration system or if the condominium is sold within five years of acquisition in other cases.

The sale of a condominium by a company is generally subject to SBT at the rate of 3 per cent of either the sale proceeds or the government appraised value, whichever is higher.

An additional local tax of 0.3 per cent is collected at the same time and on the same basis as the SBT.

For the period from March 29, 2008, to March 28, 2009, the rate of the SBT and local tax applicable to condominium sales, either by individuals or companies, has been temporarily reduced to 0.11 per cent.

The stamp duty is applied to all condominium sales that are not subject to SBT. The rate is 0.5 per cent of government appraised value or the selling price, whichever is higher.