Buying condo in Thai company

[luis888]

I'm interested in buying a condo that is in a company name, what are the disadvantages of this. Is it mainly that when you want to sell its unattractive to foreigners or is there more to it. Are the yearly costs higher. I believe that Thais prefer to buy new unless they are sure that no one has died in the condo, making it more difficult to  resell. I appreciate your input.

[KittenKong]

I see many downsides to this.

 

Farangs may be uninterested in buying it later.

Thais may also be less interested in buying it, unless you just sell them the condo without the company, which means that you will pay sales taxes and will also have to close the company which is expensive to do.
You will have annual accounting fees and possibly taxes related to the company itself.

You may get a bill for local property tax, depending on where you live.

51% of the company will be owned by Thais, whom you probably wont even know by sight.

You may find it inconvenient for showing ownership for visas, extensions, immigration reports etc.

It is probably illegal and may at some point be targeted for action by the government.

You will also be buying any and all existing liabilities and debts that the company may have. These could potentially be huge and cannot be fully verified.

You will not have to show a debt-free letter at the land office, so the unit could have unpaid common fee debts outstanding (these can be verified though).

You will have to deal with a Thai lawyer, which for me is something I would always rather avoid.

 

Plus sides are that a company-name condo will often cost less than a farang-name one. But ask yourself why that should be: the answer is simply because they are much less attractive to most buyers. The other pluses are that there will be no transfer tax or fees to pay at the Land Office (because no transfer takes place), and you may find it easier/cheaper for inheritance purposes if you die and want to leave it to someone.

 

 

[baansgr]

Unless it's a sought after condo with a waiting  list of buyers don't do it.  Advantage  of condo  ownership is as a Foreigner  you can own outright. Yearly costs plus all the other reasons as above post makes it a pointless  exercise 

[luis888]

I see many downsides to this. Farangs may be uninterested in buying it later. Thais may also be less interested in buying it, unless you just sell them the condo without the company, which means that you will pay sales taxes and will also have to close the company which is expensive to do. You will have annual accounting fees and possibly taxes related to the company itself. You may get a bill for local property tax, depending on where you live. 51% of the company will be owned by Thais, whom you probably wont even know by sight. You may find it inconvenient for showing ownership for visas, extensions, immigration reports etc. It is probably illegal and may at some point be targeted for action by the government. You will also be buying any and all existing liabilities and debts that the company may have. These could potentially be huge and cannot be fully verified. You will not have to show a debt-free letter at the land office, so the unit could have unpaid common fee debts outstanding (these can be verified though). You will have to deal with a Thai lawyer, which for me is something I would always rather avoid. Plus sides are that a company-name condo will often cost less than a farang-name one. But ask yourself why that should be: the answer is simply because they are much less attractive to most buyers. The other pluses are that there will be no transfer tax or fees to pay at the Land Office (because no transfer takes place), and you may find it easier/cheaper for inheritance purposes if you die and want to leave it to someone.

 

 

Thank you for your advice and very detailed reply. 

The condo is in a good location, is reasonably priced (not exceptional) and potentially a good rental unit (which generally isn't the best business at the moment in Pattaya), although I made an offer to purchase to make  it closer to "exceptional deal" but it wasn't accepted. Maybe a good thing. 

I will keep in mind your advice, thank you 

[luis888]

1 hour ago, baansgr said:

Unless it's a sought after condo with a waiting  list of buyers don't do it.  Advantage  of condo  ownership is as a Foreigner  you can own outright. Yearly costs plus all the other reasons as above post makes it a pointless  exercise 

I doubt very much this is the case. 

As I said, its attractively priced and location good but both not exceptional. Maybe a good thing my offer was declined. I do however believe that they may reconsider my offer and get back to me as condo sales aren't exactly booming in Pattaya at the moment, and I may really have to think about and consider what the two of you have said.

Thank you 

[luis888]

19 hours ago, KittenKong said:

 

 

Plus sides are that a company-name condo will often cost less than a farang-name one. But ask yourself why that should be: the answer is simply because they are much less attractive to most buyers. The other pluses are that there will be no transfer tax or fees to pay at the Land Office (because no transfer takes place), and you may find it easier/cheaper for inheritance purposes if you die and want to leave it to someone.

 

 

As I'm 18 years older than my Thai wife it's almost certainly guaranteed that I'm going to kick the bucket long before her and because I'm looking more at investment rather than resale,  the inheritance factor you mentioned may be a very good plus point.

[KittenKong]

25 minutes ago, luis888 said:

The condo is in a good location, is reasonably priced (not exceptional) and potentially a good rental unit (which generally isn't the best business at the moment in Pattaya), although I made an offer to purchase to make  it closer to "exceptional deal" but it wasn't accepted. Maybe a good thing. 

If you have patience it should not be hard to find a farang-name unit in a fire sale. Farang owners here are always dying or getting ill or leaving or wanting to sell for other reasons.

[KittenKong]

Just now, luis888 said:

As I'm 18 years older than my Thai wife it's almost certainly guaranteed that I'm going to kick the bucket long before her and because I'm looking more at investment rather than resale,  the inheritance factor you mentioned may be a very good plus point.

I know very little about the tax implications of leaving property or money to Thai partners, not least because I dont have one and would never want one under any circumstances.

 

But as far as I know there is no particular charge applicable to property inherited by a legal Thai spouse, and that spouse can take full ownership of a farang-name condo (albeit with a small loss in value due to the unit then becoming Thai quota - someone else will probably benefit from the ability to sell their Thai-owned unit to a farang to put the building ratio back up to 49/51). A lot depends on individual circumstances, and what your wife would want to do with the condo if you die before she does.

 

I have seen so many people lose so much money here to Thai partners (both emotional and business) that I would only ever advise any farang here to always retain full ownership of everything themselves. Sad but true.

[khunPer]

On 1/8/2019 at 5:29 AM, luis888 said:

I appreciate your input.

If the condo is with the 49% lot allowed for foreign ownership, you can be legal registered owner; in that case don't buy through a Thai company limited, if the condo is for private living.

 

Downsides, to my knowledge, are:

• You'll need to have a performing company limited, that has other activities than owing a condo and leasing it out to a major shareholder.
• You only own 49% of "your" condo, as a foreigner can legally only own 49% of the shares in a company limited.
• There will be running expenses for accounting and auditor's annual report, including semi-annual tax-statements; which could be 20k to 30k baht a year for a non-performing company limited.
• What is the financially and legally status of the company you intend to buy..?
• Would others buy a second hand, or third hand, company limited when you wish to sell your condo..?
• Thais don't need to buy a condo in the name of a company limited, so you limit potential clients to foreigners only the day that you should resell your condo, if sold as a company limited.
• If you sell the condo only, or rather "your" company sell the condo, the tax might be higher than if personally owned, and 51% of the remaining funds should in principle shall be paid to the Thai shareholder(s); closing a company limited takes time, and might be more costly than setting up a company limited.

There are normally plenty of condo offers on the market within the 49% foreign ownership allotment. The major reason for company ownership would be business with a portfolio of condos for lease out.

[khunPer]

4 hours ago, luis888 said:

As I'm 18 years older than my Thai wife it's almost certainly guaranteed that I'm going to kick the bucket long before her and because I'm looking more at investment rather than resale,  the inheritance factor you mentioned may be a very good plus point.

There is a the moment no inheritance tax in Thailand, but if not married you'll need to make a Thai Last Will; which is also advisable if you're married and have siblings abroad.

 

Don't focus too much on "investment" when buying property in Thailand. It's slightly different from many a Western country, as Thais don't value second hand buildings in the same way as foreigners, it's the land under the construction, that is the investment.