What Does Buying Property Really Cost?
Anyone buying property in Thailand pays more than just the purchase price. At the point of transfer, taxes and fees apply that can amount to between 3% and 6% of the property's value depending on the situation. That may sound manageable at first glance – but on a villa priced at 15 million THB, that quickly adds up to 450,000 to 900,000 THB (approx. EUR 11,500–23,000) in additional costs. It is therefore worth knowing exactly what each item involves.
The Four Main Fees at a Glance
At the Land Department, up to four different charges may apply upon ownership transfer. Which ones actually arise depends on how long the seller has owned the property and whether they are acting as a private individual or a company.
Transfer Fee
The transfer fee is 2% of the official appraised value (not the actual purchase price). The official appraised value is set by the Treasury Department and is often below market price. In practice, this fee is frequently split 50/50 between buyer and seller – but this is a matter of negotiation and should be clearly set out in the purchase agreement.
Stamp Duty
Stamp duty is 0.5% of the purchase price or the official appraised value, whichever is higher. Important: stamp duty and Specific Business Tax are mutually exclusive. If SBT applies, stamp duty is waived. Stamp duty is normally borne by the seller.
Specific Business Tax (SBT)
SBT at 3.3% (3% tax plus 0.3% municipal tax) applies when the seller has owned the property for less than 5 years, calculated from the date of ownership transfer. If the seller has held the property for more than 5 years, the lower stamp duty applies instead. Note: an exemption exists if the seller is registered in the house registration book (Tabien Baan) as their primary residence – but for most foreign sellers, this exemption is not available in practice.
Withholding Tax
The calculation of withholding tax is the most complex part. For companies, it is straightforward: 1% of the purchase price or appraised value, whichever is higher.
For private individuals, the tax is calculated on a progressive scale. The basis is the official appraised value as determined by the Land Department. A standard deduction is applied based on the holding period – the deductible percentage ranges from 92% for 1 year of ownership down to 50% for 8 or more years. The remaining taxable income is divided by the number of years held, taxed according to Thailand's progressive personal income tax rates (0%–35%), and then multiplied again by the number of years held. The calculation is capped at a maximum of 8 years.
The total tax burden on a sale typically falls between 5% and 7% of the purchase price and is shaped by two opposing factors: for short holding periods (under 5 years), SBT of 3.3% applies, increasing the overall burden. For longer holding periods, SBT no longer applies but withholding tax rises. On balance, a holding period of more than 5 years is slightly more tax-efficient. An individual advance calculation by a tax adviser is recommended in every case.
Who Pays What?
Thai law does not prescribe who bears which charges – everything is negotiable. In practice, however, the following split has become standard: the transfer fee is shared 50/50 (1% each), while stamp duty or SBT and withholding tax are borne by the seller. For new developments, it is common for the buyer to cover the transfer fee in full while the developer absorbs the remaining charges. Always ensure that the allocation of costs is explicitly confirmed in writing in the purchase agreement.
Important practical note: property listings in Thailand frequently state "transfer fee 50/50". Be aware that in practice this often refers not just to the transfer fee itself, but to the total transfer costs including all taxes – meaning SBT and withholding tax as well. This means the buyer is effectively taking on half of the entire tax and fee burden, which can amount to significantly more than 1% of the purchase price depending on the situation. Always have the exact cost allocation confirmed in writing in the purchase contract before signing.
Annual Property Tax (Land and Building Tax)
Since 2020, Thailand levies an annual property tax on all real estate under the Land and Building Tax Act B.E. 2562. The tax is based on the official appraised value of the property and is collected once a year by the local administrative authority. Assessment notices arrive in February and payment is due by the end of April.
For a primary residence: if the owner is a natural person registered in the house registration book (Tabien Baan), the first 50 million THB of the combined appraised value of land and building is tax-exempt. Those who own only the building – for example, a condominium owner on leasehold land – receive a tax-free threshold of 10 million THB on the building value. For most foreign buyers, however, this exemption is not available in practice, as they are not registered in the Tabien Baan.
For non-primary residences – meaning holiday homes, rental properties or second homes – there is no tax-free threshold. Rates are applied progressively based on the appraised value: properties up to 50 million THB are taxed at 0.02%, those between 51 and 75 million THB at 0.03%, between 76 and 100 million THB at 0.05%, and above 100 million THB at 0.10%. For most foreign buyers in Hua Hin, the annual tax burden remains very modest – a condominium with an appraised value of 4 million THB, for example, incurs just 800 THB per year.
Vacant land is taxed at 0.3%, with an additional surcharge of 0.3% every three years if left unused, up to a maximum of 3%.
Practical Example
Suppose you are purchasing a condominium in Hua Hin for 5 million THB (official appraised value: 4 million THB) from a private seller who has owned the property for 3 years. The transfer fee is 2% of 4 million THB = 80,000 THB, typically split 50/50, meaning 40,000 THB each. SBT amounts to 3.3% of 5 million THB = 165,000 THB, borne by the seller. Withholding tax is approximately 40,000–80,000 THB (seller, calculated progressively). Stamp duty does not apply as SBT is due.
Your costs as the buyer amount to approximately 40,000 THB (0.8% of the purchase price) – provided the contract explicitly states that only the transfer fee is split 50/50. If the contract instead reads "all transfer costs 50/50", your costs as the buyer could be significantly higher. The total transaction cost amounts to approximately 285,000–325,000 THB (5.7–6.5%).