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  2. Purchasing A Property In Thailand - What You Need To Know
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  4. Expats Buying Property In Koh Samui: 10 Things You Must Know

Expats Buying Property in Koh Samui: 10 Things You Must Know

FazWaz
Written by FazWaz
Niratchaphon Parnchoem
Edited by Niratchaphon Parnchoem
Wacharaporn Laroeng
Reviewed by Wacharaporn Laroeng
Expats Buying Property

 

Koh Samui is a coveted spot for expatriates to buy property. The island's attractive beaches, tropical climate and relaxed ambiance make it a tempting choice for those pondering relocation or investment. But before deciding to buy, there are several essential things to ponder. This piece will enumerate the top 10 points for expats to bear in mind when buying real estate in Koh Samui.

"Property for Sale in Koh Samui" - Understand the Different Types of Property Available

It's crucial to familiarize oneself with the varied kinds of real estate available for holding. Some of the most sought-after options such as standalone villas, apartments and plots of land. Villas in Koh Samui are generally single-unit properties that feature a private garden and swimming pool. Apartments are mostly part of a larger building and come with shared facilities such as a swimming pool or gym. Plots of land are also an option for those who desire to construct their own residence or investment property.

Location - Consider the Location of the Property

Koh Samui is a tropical island in Thailand with three popular areas for visitors: Chaweng, Lamai, and Bophut. Chaweng is the main tourist hub with lively nightlife, crystal-clear waters, and sandy beaches. Lamai is more peaceful, with a mix of locals and expats and a long sandy beach. Bophut is a charming fisherman's village with a clear-water beach and an attractive walking street with shops, cafes, and restaurants. Koh Samui offers something for everyone, whether visitors seek a vibrant atmosphere, a laid-back ambiance, or a glimpse into local life and culture.

Legalities - Understand the Legal Process of Buying Property in Thailand

Understanding Thailand's legal system is essential before purchasing property for sale in Koh Samui. This includes obtaining the necessary documents and paying the relevant fees. Expats are not allowed to own land in Thailand, but they can own a house or condominium on leasehold or freehold. It is serious to seek the advice of a qualified lawyer when navigating the legal process of buying property in Koh Samui.

  • Own a house distinct from the land it is on: The process of owning a house in Thailand typically involves owning the land it stands on. As per Section 139 of the Civil and Commercial Code, the owner of the land also owns anything that is fixed to it or considered a part of it. However, there are some exceptions to this rule. For instance, if a foreigner wishes to purchase real estate in Thailand, they can register and transfer the ownership of the house separately from the land it is built on. To do so, the transfer procedure must comply with the regulations outlined in Book IV 'Property' of the Thailand Civil and Commercial Code. This includes ensuring that the transfer is documented in writing and registered with the Land Department's branch or provincial office.
  • Land ownership by foreign nationalsAs per the Thailand Civil and Commercial Code, foreigners are entitled to the same property rights as Thai nationals, but they are not allowed to own or possess the land in Thailand due to the Land Code Act B.E. 2497 (1954). Since land ownership is an essential component of real estate ownership, it can be concluded that apart from owning an apartment in a licensed condominium, there is no option for foreigners to have freehold ownership of real estate (land and house) in Thailand.
  • Real estate ownership by a Thai married to a foreigner: In Thailand, non-Thai citizens who are married to Thai nationals are not allowed to own land or have joint ownership of land as matrimonial property. However, the Land Department permits Thai nationals who are married to non-Thai citizens to own land as personal property, provided they make a joint statement with their foreign spouse that the funds used to purchase the land belong solely to the Thai spouse. This implies that the land, and sometimes a house or condominium, is registered exclusively in the Thai spouse's name and is not regarded as jointly owned property between spouses. According to Thai family laws, the foreign spouse has no direct ownership rights. Furthermore, if a divorce occurs, the land remains the personal property of the Thai spouse and is not subject to asset division.

Due Diligence - Research the Property and the Seller

It is important to conduct thorough research on the property and the seller before making a purchase. This includes checking for any outstanding debts or legal issues, as well as visiting the property to ensure that it is in good condition. Engage a property lawyer to do due diligence work for you.

Currency - Be Familiar with the Currency Used in Thailand

Understanding the Thai Baht, which is the currency used in Thailand, is crucial when purchasing property in Koh Samui. The current exchange rate and how it might impact the price of the property should also be taken into account.

Taxes - Understand the Taxes and Fees Associated with Owning Property in Koh Samui

In cases where a freehold apartment unit is being purchased from a project that is licensed under the Condominium Act or from a government-licensed housing development, it is important to note that consumer protection laws state that the developer is only allowed to pass on a transfer fee of 50% to the buyer. However, when it comes to private sales or sales in a private development, there are no fixed rules in the law regarding how land office fees and taxes should be split between the seller and buyer. Therefore, it is necessary for both parties to agree on this matter as part of the sale and purchase process. The Land Office charges transfer fees (2%), Specific Business Tax (3.3% and only applicable in certain cases), Stamp Duty (0.5% and can be waived if Specific Business Tax is paid), and Income Withholding tax (fixed at 1% for companies and progressive for individuals) for condos, land, land and house, and the transfer of a house separate from the land.

Currently, in Thailand, there is no overall annual property tax in place. However, for properties and land that are utilized for commercial purposes, such as being rented out, owned by a company, used for storage or investment (and not used as the main residence of the owner), an annual land and house tax is imposed. This tax is calculated at a rate of 12.5% over the annual rental or assessed yearly rental. The government is considering reforming the current tax system and introducing a more comprehensive property tax. Additionally, there is a small local maintenance tax that is levied only on undeveloped land.

Maintenance - Consider the Ongoing Maintenance and Upkeep Costs

It is critical to consider the ongoing maintenance and upkeep costs when purchasing property in Koh Samui. These can include regular cleaning, gardening and pool maintenance. These costs can add up over time, so include them in your budget when purchasing the property.

Rental Potential - Consider the Potential for Rental Income

Properties in popular areas such as Chaweng and Lamai can fetch a high rental income, particularly during peak tourist seasons. This can provide a steady stream of income and help to offset the costs of owning property.

Insurance - Obtain Insurance for the Property

It's important to achieve insurance for your property in Koh Samui to protect against potential risks. This can include property insurance to cover any damage or loss, as well as liability insurance in case of accidents on the property.

Support System - Have a Support System in Place

Having a dependable property manager or attorney by your side can make the process of purchasing and owning real estate in Koh Samui much more seamless. A property manager can take care of daily maintenance and renting of the property, while an attorney can assist with legalities and any challenges that may occur. They can also help manage the property if you decide to lease it out. Furthermore, having a capable real estate agent to guide you through the process can also be useful as they possess the expertise and experience to assist you in finding a suitable property.

Before making a purchase decision on a property in Koh Samui, it's important to thoroughly assess all factors and research the market. Real estate is a major investment, therefore it is critical that you are making a well-informed decision. Buying property for sale in Koh Samui is a long-term commitment, so do your homework before making a decision. The island offers an appealing lifestyle and an opportunity to own a piece of paradise, but it's crucial to choose the right property that aligns with your needs and preferences. With the perfect property, expats can take advantage of the island's natural beauty, beaches and culture and make it a place they can call home.

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