Thailand

Buying Property in Phuket: Taxes, Costs, ROI and Obtaining a Residence Permit

Buying Property in Phuket: Taxes, Costs, ROI and Obtaining a Residence Permit

Phuket Property Prices

Apartments (flats):

  • Prices start from 3-6 million Thai baht ($90,000 - $180,000) for properties in the best resort areas (Bangtao, Kamala, Kata, Karon).
  • On the first line, the lower limit is higher, prices start from 7 million Thai baht ($200,000).

Villas:

  • Budget options for ready-made villas with a private pool start from 14 million Thai baht ($400,000).
  • Elite villas with an ocean view - from 50 million Thai baht ($1,400,000).

The Phuket property market remains undervalued and property prices here are still significantly lower than in other developed resorts around the world, such as Dubai or the Maldives.

The potential for further price growth makes the island an attractive place for investment.

Taxes and fees when buying real estate

There are two types of property ownership in Thailand: freehold (full ownership) and leasehold (long-term lease with the possibility of extension).

Taxes and fees vary depending on the type of ownership. When buying a new building, the main tax to keep in mind is the registration fee (Transfer Fee) - a fee for transferring ownership of the property upon sale.

The amount of this tax is 2% when selling in Freehold. With Leasehold, the Transfer Fee is not charged, but a registration fee for rent (1%) is possible.

The fee is divided between the seller and the buyer 50/50 or in some cases is fully covered by the developer.

When reselling real estate in Thailand, taxes also arise:

  • Transfer Fee, as well as when buying from a developer. It is usually divided 50/50

Depending on the period of ownership, one of the following taxes is paid:

  • Up to 5 years of ownership - this is a specific business tax (Specific Business Tax - SBT): 3.3%
  • More than 5 years of ownership - this is Stamp Duty: 0.5%
  • Withholding Tax (WHT) is levied only in the case of purchasing real estate in freehold (therefore, for investment transactions, leasehold is usually chosen - in this case, Stamp Duty is paid at 0.1%). The tax has a complex calculation formula with a progressive tax scale, as well as deductions for each year of ownership and is calculated by the Land Department.

To summarize this brief overview of taxes and fees in real estate transactions, we note that for investment transactions for the purpose of resale, Leasehold is more profitable, as it allows you to save on Transfer Fee (1% instead of 2%) and reduces taxes on sale (Stamp Duty 0.1% instead of SBT 3.3% + WHT).

For personal use and long term ownership by foreigners - Freehold is the preferred option when purchasing apartments.

Property Maintenance

Property maintenance in Phuket is cheaper than in most resorts, and professional management companies ensure comfortable ownership.

One-time payments:

  • Sinking Fund: 500-1000 THB per m². This is a one-time payment to the capital repair fund of the complex, which is made when the developer transfers the apartment to the buyer.

Monthly maintenance costs:

  • Common Area: from 30 to 85 THB per m² per month. This is the fee for servicing the common infrastructure of the complex: swimming pools, elevators, reception, security, gym, lobby, garbage disposal, etc.
  • Electricity: 4-6 THB per kWh
  • Water: 20-30 THB per m³

If you own a villa, there are costs associated with the care of your private pool and garden.

Investment Strategies and ROI

Strategy 1: Buying during construction and resale

How it works: The investor buys the property during construction at a minimum price. After construction is completed, its value increases significantly and the investor sells the finished property.

ROI of the resale strategy:

  • The increase in value is 30-100% over 2.5-4 years of construction.

This strategy allows you to quickly increase your capital due to the increase in the value of the property.

Strategy 2: Buying a finished property and renting it out

How it works: A finished property is selected and purchased in an area or complex with high year-round tourist demand. Then this property is rented out short-term through a management company, without requiring the investor's involvement.

Rental rates in the best resort areas:

In high season:

  • Villas - from 250,000 THB per month.
  • Apartments - from 50,000 THB per month.

In low season:

  • Villas - from 100,000 THB per month.
  • Apartments - from 25,000 THB per month.

ROI:

  • Apartments: 7-10% per annum.
  • Villas: 3-7% per annum.

Completed properties bring in a stable income, especially in the high tourist season, when rental demand increases significantly.

Strategy 3: Buying a new building with subsequent renting out

How it works: You buy a property at the construction stage, getting the opportunity to use an interest-free installment plan for the entire construction period, and after commissioning, you rent out the property.

Pros of the strategy:

  • The increase in the value of the property is 30-100% during the construction period.
  • Stable rental income after completion of construction.
  • Interest-free installments reduce the financial burden.
  • ROI: Combined profitability: increase in value + rent.

This strategy combines the advantages of two approaches - increase in value and stable rental income, making it especially attractive to investors.

Conditions for obtaining a residence permit through the purchase of real estate

Although Thailand does not have a residence permit as such for property buyers, there are very convenient visas that allow you to use your property without restrictions.

If you plan to spend up to 60 days in Thailand within six months, you can simply fly in without worrying about visas and receive a stamp in your passport upon arrival.

If you plan to stay in Thailand for a longer period or do not want to leave the country every 60 days, then there are the following options:

  • Elite Visa for 5 - 15 years. This visa costs from 650 thousand Thai baht ($20,000) depending on the visa duration.
  • LTR Visa for 10 years. The visa also requires proof of income of $80,000 per year.
  • Retirement visa for 1 year with the possibility of extension. The applicant's age is from 55 years. It is necessary to confirm the presence of savings of at least 800,000 Thai baht ($23,000) or a monthly income of 65,000 Thai baht ($1,800)

In addition to these, Thailand has a number of other visas that allow you to comfortably stay in Thailand for the required amount of time (study visa, DTV, etc.)

By purchasing real estate in Phuket, you will receive a number of opportunities not only for recreation, but also for long-term or permanent residence.

Buying property on Thailand's premier resort, Phuket, is profitable. Low taxes, affordable prices, flexible investment strategies and high returns make this market ideal for capital investment.

If you want to learn more about investment opportunities in Phuket or discuss the details, contact us! We will select the ideal property and provide full support at all stages of the purchase.

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