One of the most important questions when purchasing real estate is the total amount you will have to pay. Buyers often worry about hidden taxes and fees. This information is essential for those who will live in a new apartment themselves and for investors who want to plan their potential income more accurately.
Content:
- The purchase price of a new apartment in Phuket
- The cost of maintaining an apartment in Thailand
- The total cost of purchasing property in Thailand
The purchase price of a new apartment in Phuket
The price of an apartment will vary depending on the location of the building, the year it was constructed, the floor level, the view from the windows, the configuration, and much more. When you buy an apartment in a new building, you could also get a discount from the property developer. It has been offered more frequently in the last year because of the global decline in purchasing power caused by the pandemic.
Phuket is not the most affordable region in Thailand. This resort island is trendy among foreigners. Life here is often more expensive than on the mainland since all products are brought by sea. Today, you can purchase a small studio of about 30 m2 in a new house for approximately 3,000,000 baht in Phuket. You can find a similar room for only 1,500,000 baht in an older home. For off-plan housing units, payment is made in installments under an agreement with the developer. They often agree to payment plans or offer other bonuses. In Phuket, large companies have Russian-speaking employees. This makes administration much more accessible since government employees in Thailand rarely speak foreign languages, and all paperwork is conducted in Thai.
Before closing the transaction, it is necessary to draw an agreement to reserve a property. To remove the unit from the sale, you need to deposit approximately 10% of the property value.
You can expect to pay various fees and taxes during the purchase and sale process. They are shared between the parties involved in the transaction. Since there are two types of real estate transfers in Thailand: a long-term lease (leasehold) and a purchase of property (freehold), the taxes for each transaction type are different. The buyer pays a rental registration tax of 1% of the apartment’s value for long-term rent, while a 2% transfer tax is due if it's a freehold transfer. The seller pays stamp duty and the services of a real estate agent.
It is advisable to hire a local lawyer for the transaction. He will check the documents and ensure that the property is free of encumbrances. The cost of his services is about 40,000 baht.
Modern new buildings in Thailand are rented out with complete finishing and often already with the basic necessary furniture and appliances, so there will be no need to spend excessive money on this.
The cost of maintaining an apartment in Thailand
In Thailand, property tax first appeared in 2019. Due to the crisis caused by the outbreak of COVID-19, the authorities have introduced a 90% reduction in еру property tax from 2020. However, it has already been announced that this relief will not be extended to 2022.
Residential property worth less than 25,000,000 baht is taxed at 0.03% of its appraised value. Residential real estate valued at more than 25,000,000 baht but less than 50,000,000 baht is taxed at 0.05%. The owner should pay an annual tax of 0.1% of the cadastral value of a residential unit with a price of more than 50,000,000 baht. This value, in practice, is less than the amount paid for real estate.
When you move into an apartment, you will need to make a one-time contribution to a Housing Fund, or a Sinking Fund, of about 20,000 baht. The fee is charged only with purchasing an apartment in a new building. This money is used for unscheduled maintenance of the public areas of the condominium. Also, the buyer himself should install water meters and electricity meters in new units. It costs around 20,000 baht.
The management company charges about 20,000 baht a year for its services. This amount varies depending on the range of services and the construction year. It includes payment for all available services in the residential complex. These are often for security, cleaning, parking spaces, swimming pool and garden maintenance, and renovation of public areas.
Utility bills are billed monthly according to the indicators of installed meters. You will pay 3 baht per kilowatt of electricity and 35 baht per cubic meter of water. The Internet costs around 1000 baht a month. If you spend 500 kilowatts of energy and 10 cubic meters of water a month, you will need to pay about 35,000 baht a year. The amount will change depending on the number of people living in the apartment and rooms. All of this affects the actual water and electricity consumption. The primary electricity consumption is for air conditioning. It is necessary for living in a hot climate. If the property is rented out, the tenant pays the utility bills.
It is worth thinking about insuring your property against damage, especially if you rent it out. This insurance usually costs 2,000 baht a year.
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The total cost of purchasing property in Thailand
As mentioned above, the total purchase amount and annual expenses for housing maintenance depend on many factors. The buyer can use the services of a lawyer or not, take out property insurance or not. For example, for an apartment worth 3,000,000 baht in freehold, the property transfer tax will be 60,000 baht. To illustrate, let's provide all the taxes and other expenses calculations for this apartment in the table.
| One-time payments | Baht |
|---|---|
| Price of the apartment | 3,000,000 |
| Property tax | 60,000 |
| Lawer’s services | 40,000 |
| Housing fund contribution | 20,000 |
| Meters instalment | 20,000 |
| Total | 3,140,000 |
| Annual expenses | Baht |
| Real estate tax | 900 |
| Condominium’s maintenance | 20,000 |
| Public utilities | 35,000 |
| Insurance | 2,000 |
| Total | 57,900 |
The table shows that during apartment registration, you need to pay another 140,000 baht in addition to the original cost of the property. The annual housing maintenance will be 57,900 baht.
If you plan to rent out your apartment, the annual expenses will be 22,900 baht. The tenant will pay for utilities.