What type of ownership will enable me to save money?
Owning property through a Thai company can be tax advantageous but only if the buyer agrees to purchase the property with the company structure still intact. This essentially means that the buyer will purchase the shares in the Thai company, replacing you as the majority shareholder.
Here’s how it works:
The ownership of the property does not actually transfer out of the company, so there is no technical transfer of ownership at the land office. Hence, the taxes and transfer fees for the house and land are avoided. While it is a good way to save money, it is important to note that it only applies if the buyer agrees to purchase the property within the structure of the existing Thai company.
If your buyer does not want to purchase the company, then you’ll have to pay taxes and transfer fees for the house and land, like in any other sale. The taxes are calculated at a progressive rate if the seller is an individual, which means that the longer the individual has owned the property, the lower their taxes will be. This is advantageous for individuals who have owned properties for at least five years as the Special Business Tax (3.3% of the assessed property value) is no longer applicable.
On the other hand, if the seller is a Thai company, the Special Business Tax will always apply.This means that if you purchase a property owned by a Thai company but do not wish to keep the company ownership, the tax burden will be higher for the seller.
In conclusion, both leasehold and freehold ownership have their pros and cons, and each method has its own advantages and disadvantages when it comes to security and risk.
To make an informed decision that suits your individual needs, consult with a professional real estate agent and a lawyer. The McGee’s Estate is always available to answer your ownership questions. Please feel free to contact us for further information.