Overview of Transfer Taxes and Fees
When property ownership is transferred at the Land Department, four main taxes and fees may apply. The total burden depends on whether the seller is an individual or company, how long the property was held, and whether the seller has their name in the house registration.
| Tax/Fee | Rate | Base | Paid By |
|---|---|---|---|
| Transfer Fee | 2% | Appraised value | Usually split 50/50 |
| Stamp Duty | 0.5% | Appraised or sale price (higher) | Seller |
| Specific Business Tax (SBT) | 3.3% | Appraised or sale price (higher) | Seller |
| Withholding Tax | 1% (company) or progressive (individual) | Appraised value | Seller |
Appraised Value vs. Sale Price
The Land Department maintains official appraised values for all registered properties. These values are typically updated every four years and are often below market prices. For transfer fee calculation, only the appraised value matters. For SBT and stamp duty, authorities use whichever is higher: the appraised value or the declared sale price.
Transfer Fee (2%)
The transfer fee is the Land Department's registration fee for recording the change of ownership. It is calculated at 2% of the government's appraised value, regardless of the actual sale price.
How It Is Typically Split
By longstanding custom in Thailand, the transfer fee is usually split equally between buyer and seller, with each party paying 1%. However, this is a matter of negotiation, not law. Some scenarios where allocation varies:
- Buyer's market: Buyers may negotiate for sellers to pay more or all of the transfer fee
- New developments: Developers sometimes advertise "free transfer fee" as a promotion
- Distressed sales: Sellers eager to close may agree to pay the full 2%
Always Clarify in the Sales Agreement
The allocation of transfer fees should be explicitly stated in your sale and purchase agreement. Never assume the standard 50/50 split applies. Disputes over who pays what at the Land Department can delay or derail transactions.
Specific Business Tax (3.3%)
Specific Business Tax (SBT) applies when property is sold within five years of acquisition, or when the seller is engaged in real estate as a business. The rate is 3.0% plus a 10% municipal tax, totaling 3.3%.
When SBT Applies
- Holding period less than 5 years: If the seller has owned the property for less than 5 years from the date their name appeared on the title deed
- Commercial sellers: Companies or individuals in the business of buying and selling real estate
- Multiple sales: Individuals who sell multiple properties may be deemed to be in the real estate business
Exemptions from SBT
The 5-year rule has important exceptions. You may be exempt from SBT even if selling within 5 years if:
- Your name has been in the house registration (tabien baan) at that address for at least one year
- The property was inherited
- The transfer is between family members under certain conditions
- The seller is not in the business of property trading
The House Registration Exception
Having your name in the house registration book (tabien baan) for at least one year before sale can exempt you from SBT regardless of actual holding period. This is a legitimate tax planning tool, though it requires genuine residency intention rather than registration manipulation.
Stamp Duty (0.5%)
Stamp duty of 0.5% applies to property transfers where Specific Business Tax does not apply. These taxes are mutually exclusive: you pay either SBT (3.3%) OR stamp duty (0.5%), never both.
When Stamp Duty Applies
- Property held for more than 5 years (and seller not in real estate business)
- Property where seller qualifies for house registration exemption from SBT
- Inherited property transfers
For sellers who have held property long-term, stamp duty at 0.5% represents significant savings compared to the 3.3% SBT that would apply to short-term holdings.
Withholding Tax
Withholding tax is deducted at the Land Department and represents a prepayment of income tax on the seller's gain. The calculation method differs significantly between corporate and individual sellers.
Corporate Sellers: Flat 1%
When a company sells property, withholding tax is simply 1% of the appraised value or declared sale price (whichever is higher). This amount is credited against the company's annual corporate income tax liability.
Individual Sellers: Progressive Rates
For individual sellers, the calculation is more complex and uses a progressive rate structure based on appraised value and years of ownership. The Land Department calculates this automatically, but understanding the methodology helps estimate costs.
| Years Owned | Deduction Percentage |
|---|---|
| 1 year | 92% |
| 2 years | 84% |
| 3 years | 77% |
| 4 years | 71% |
| 5 years | 65% |
| 6 years | 60% |
| 7 years | 55% |
| 8+ years | 50% |
The deduction percentage is applied to the appraised value to determine "deemed income." This deemed income is then divided by years of ownership and taxed at progressive personal income tax rates. The resulting tax is multiplied by years owned to get the final withholding amount.
Example Withholding Tax Calculation (Individual)
Property appraised at 5,000,000 THB, owned for 4 years:
Who Pays What: Common Scenarios
While taxes are legally the obligation of specific parties (seller pays income-related taxes, transfer fee is joint), the practical allocation is determined by negotiation and market conditions.
Scenario 1: Individual Selling After 5+ Years
An individual Thai or foreigner selling a condo held for more than 5 years:
BUYER TYPICALLY PAYS
- Transfer fee: 1% (half of 2%)
- Total: ~1%
SELLER TYPICALLY PAYS
- Transfer fee: 1% (half of 2%)
- Stamp duty: 0.5%
- Withholding tax: ~1-3%
- Total: ~2.5-4.5%
Scenario 2: Individual Selling Within 5 Years (No House Registration)
An investor selling a property held less than 5 years without house registration exemption:
BUYER TYPICALLY PAYS
- Transfer fee: 1% (half of 2%)
- Total: ~1%
SELLER TYPICALLY PAYS
- Transfer fee: 1% (half of 2%)
- Specific Business Tax: 3.3%
- Withholding tax: ~1-2%
- Total: ~5.3-6.3%
Scenario 3: Company Selling Property
A Thai company selling property (SBT usually applies regardless of holding period):
BUYER TYPICALLY PAYS
- Transfer fee: 1% (half of 2%)
- Total: ~1%
SELLER TYPICALLY PAYS
- Transfer fee: 1% (half of 2%)
- Specific Business Tax: 3.3%
- Withholding tax: 1%
- Total: ~5.3%
Understanding the Tax Calculator Concept
Given the complexity of these calculations, particularly withholding tax for individuals, online calculators and Land Department estimates can help you plan. However, several factors affect accuracy:
- Appraised value updates: Government valuations change periodically and may not match current figures
- House registration status: Determining SBT exemption requires verification
- Holding period calculation: Count from title deed registration date, not purchase contract date
- Sale price declaration: Declared price affects SBT and stamp duty if higher than appraisal
Getting an Official Estimate
You can request a formal tax estimate from the Land Department before proceeding with a transaction. Bring the title deed and identification. The estimate is free but requires a visit to the specific Land Office where the property is registered. Allow 1-2 hours for the process.
Special Considerations for Foreigners
Foreign buyers and sellers face the same tax rates as Thai nationals for property transfer taxes. However, some additional considerations apply:
Foreign Exchange Transfer Form
Foreigners purchasing condominium units must transfer funds from overseas and obtain a Foreign Exchange Transfer Form from their Thai bank for amounts exceeding $20,000 USD (or equivalent). This form is required at transfer to prove foreign-sourced funds.
Company Structures
Foreigners who own property through Thai company structures (whether legitimate or nominee arrangements) should be aware that the company bears the tax obligations. However, if the company structure is challenged as an illegal nominee arrangement, all parties face criminal liability under the Foreign Business Act and Land Code, separate from any tax matters.
Tax Residency Implications
Selling property does not itself create Thai tax residency. However, if you are already a Thai tax resident (present 180+ days in a calendar year), capital gains from property sales count as assessable income. The withholding tax paid at transfer is credited against your annual tax liability.
Underreporting Sale Price
Some parties attempt to declare a sale price lower than actual to reduce SBT or stamp duty. This is tax fraud and carries serious penalties. The Land Department compares declared prices against appraised values and market rates. Discrepancies may trigger audits, and false declarations can result in fines of up to 200% of evaded tax plus potential criminal prosecution.
Practical Tips for Property Transactions
- Negotiate net price: When discussing purchase price, clarify whether it is "net to seller" or "inclusive of taxes." This prevents surprises at the Land Department.
- Request seller's tax estimate: Ask the seller to obtain a Land Department estimate before signing the purchase agreement. This ensures all parties understand the costs.
- Plan for holding period: If you are selling, waiting until after the 5-year mark (or arranging legitimate house registration) can save 2.8% in taxes (3.3% SBT vs 0.5% stamp duty).
- Bring sufficient funds: Payment of all taxes is required at the time of transfer. Plan for transfer day liquidity, as the Land Department does not accept credit cards.
- Keep records: Retain all transaction documents, tax receipts, and payment records for at least 5 years for potential audit purposes.