Buying Property In Thailand

[KnooKie]

Hello

My long term Thai girlfriend and I currently run and manage a small Bar/Restaurant/Guest House in Chalong, Phuket. We are renting from the building owner. The building owner is about to sell the building to another Thai. The new owner would like us to move out.

As we will be forced to move out soon we are looking at buying a nearby property to continue our business in.

I have capital in the form of a house in London which i am thinking of selling (been in Thailand 5 years now and plan to stay).

My understanding is that being married would help me get a better deal on any property that we would buy should we ever sell.

What would be the best way of purchasing the property? Either through a Thai company or with the 2x30 yr lease option that i have read about?

Can i only own 49% of the company?

We would look to rent out some of the rooms in the property (3 or 4 rooms).

Would the best way of moving the money over be by SWIFT from my UK account to my Thai (SCB) account?

Any advice/links on the best way of me doing this would be greatly appreciated.

[Tropicalevo]

I will add my 10 pence worth based on a course that I attended some time ago 'Thai Law for Foreigners'. There will probably be some conflicting answers here from different posters, I certainly do not know everything. You make your own mind up.

My understanding is that being married would help me get a better deal on any property that we would buy should we ever sell.

I am not sure why this should be - but someone married to a Thai will tell you if it is true.

What would be the best way of purchasing the property? Either through a Thai company

I would guess that most foreigners who have bought land in Thailand have gone this route. There are a number of ways of structuring your company to do this - talk to a good International lawyer. (Not your mate's, friend's local guy who will do you a deal.) This is your hard earned cash that you are spending. Do it properly. AND get your lawyer to do a proper search on the land at the land office. It's amazing how many people do not do this. We do it in Europe, why do we not do it here?

On the course I was advised NOT to set the company up with preference shares. ie your 1 share is worth 10 Thai shares or whatever. This is perfectly legal, but not advisable because if there was a problem in the future with your Thai shareholders, a Thai court would not look favorably on a business where a foreigner says that he is worth 10 Thais!

One more thing when purchasing the land. There is a bit of a thing re sales tax and what is the value of the land when you buy. Sales tax can either be paid on the actual price that you pay, or on a price nominated by the local government office. The person paying the sales tax usually recommends the government price (it is always lower). This could mean that you pay more capital gains tax when you sell.

Simply put - You buy for 4 mil, the government values at 2 mil. Sales tax is paid on 2 mil. When you sell - for 6 mil in the future, but the buyer wants the full price on the contract - you pay capital gains tax on the 4 mil even though you only gained 2 mil.

or with the 2x30 yr lease option that i have read about?

If you go for the lease, then make sure that your girlfriend and possibly nearest family member are named on it as well. If you are the only named person, when you die it goes back to the original owner, no matter what your will says.

There have been some problems with leases where the original owner sells the land and the new owner kicks the lessee out.

Remember that even if a foreigner cannot own land - we can own buildings! We just have to jump through a few hoops re documentation in Bangkok first.

Can i only own 49% of the company?

Yes - or less, but there might be other ways of structuring your company. Talk to your lawyer about the two company scenario.

By the way - some documents and people say that if the company owns land - a foreigner can only own 38% But this seems not to be consistent or enforced.

We would look to rent out some of the rooms in the property (3 or 4 rooms).

There is a list of activities that a foreign company can carry out. (40 - 50 of them from memory.) Put all of them in your company articles. That way you are covered pretty well whatever you do.

Do not forget that if you rent to foreigners then you should inform the local immigration office every week.

Would the best way of moving the money over be by SWIFT from my UK account to my Thai (SCB) account?

For sure. Make sure that you document everything about the transfer and keep it in a safe place. This makes it easier when you sell and maybe want to take the cash out of the country (after capital gains tax of course).

I hope that this makes some sense.

Check everything with a lawyer first.

If you understand all that I have written - you did better than I did when I first bought land. "Mistakes, I made a few, but then again, too few to mention!"

[ZOOKA]

Hi

Just do a previous forum serach on Land / Property to decide on the methods. This subject has been done to death!

Most will say avoid the Thai companies but they do work. Obviously no guarantees for the future though

At the end of the day you have to make your own decision that suits your personal circumstances. One that your happy with.

Good solicitor from BKK and Land search for sure. No such thing as 2 x 30 yr leases, 30 yrs ONLY is the normal.

The old saying about never invest more than you can afford to lose in Thailand is very true if it all goes tits up.

Condo safer bet for sure or rent, plenty of good deals out there and empty houses!!!

Cheers

[johnnyk]

There is no 2X30 year lease. 30 years is all that is recognized by the Land Office and is all that goes on the chanote. The other 30 years is a wet dream devised by real estate agents to lure suckers.

[dave111223]

My understanding is that being married would help me get a better deal on any property that we would buy should we ever sell.

How would being married get you a "better deal"...? People are going to lower their asking price after they find out your are married?

Unless you are ready to commit permanently to this women it sounds like a very very bad idea to invest your nest egg into a property with her.

The company ownership route essentially illegal and could blow up in your face at any time.

And even if you have a 30 year lease you have no "ownership" of the property and you cannot sell the property, you have no right to any proceeds of the sale of the property. (And if the relationship turned sour how long do you think do you think you could hang around once the "heavies" start coming around trying to turf you out and sell it)

Basically ask yourself "Do i trust this women enough to put the property completely in her name"... because this is essentially what you will be doing, no matter what bit of paper you've got. If her wants you gone and the property sold, it will happen. So if the answer to the above questions is "No", then don't invest, if answer "Yes" go for it.

Edited October 5, 2010 by dave111223

[ESB7]

Commercial leases used to be apply upto 50 years....if you have been together long term and probably still will be, just have it in her name, if you do split later on not so good terms, is a few million loss that much after 10 or more years together...

[Khun Jean]

Good that she is your girlfriend! When you are married she can void a lease or usefruct.

My 2 "cents".

1) The girfriend buys the land you buy the house. Then you take a usufruct on the land for life (cost you 100 baht). (Landoffice will probably not know how to do this so bring a lawyer)

2) Start a company with you owning 49% and your girlfriend 51%. Company buys the property/land. 49%/49% and 2% to another Thai with a stronger bond to you then your girlfriend is maybe even better.

The second option is a lot easier to sell later.

[WormFarmer]

You say that you and your long term Thai girlfriend currently run and manage a small Bar/Restaurant/Guest House in Chalong, Phuket but soon you will be forced to move out and are looking at buying a nearby property to continue your business.

From what I have read and heard, the main problem about establishing a company for the sole purpose of buying a house is that the Thai Authorities are aware of this loophole and will scrutinise any such sham companies very carefully to ensure they remain within the law, such as the requirement to submit annual audit reports and six monthly balance sheets. When setting up a company you need to set out the company aims and objectives and you can hardly list "taking advantage of a loophole to own property" as a valid aim, so unless the company has some other genuine aim you are at risk of being found at fault, then you may lose everything.

However, in your case it seems to me you should be setting up a company anyway in order to run your Bar/Restaurant/Guest House business. This would allow you to set up a legit company which could also act as a vehicle for you to own your land and property.

But be aware, that even setting up and running a small company is a pain in the butt, I know because we have done it and we don't even use it to own our (her) land or house. You have to keep all sorts of documents and accounts and not forget to submit your returns on time, the need for which seem to come round ever so fast.

Others have already commented on the need to trust your gf/wife before sinking your savings into any venture here.

Edited October 5, 2010 by WormFarmer

[bojo]

I have heard from a developer in Koh Samui that a Thai company with a foreign shareholder cannot buy a property here in samui, the land office just refuses to do it. The same developer told me that he was registering any/house land in a Thai friend's name and then transferring it into the Foreign buyers name a month after. Great if you have a solid relationship with that Thai person. I don't know if this still applies as it was a few months ago and things change fast here and I also wouldn't know if it applied in Phuket.

Also I did see an advert in a Pattaya magazine from a Thai lawyer company that offered a 'fix' to the new FBA act, I think it was and I assume this was in a similar vein.

How true all the above is I cannot be sure, but it would certainly be worth investigating.

I do like the sound of the previous poster's suggestion of a 2% going to a friend and only 49% to 'er indoors.Best if they didn't know one another though!

Good luck

regards

Bojo

[rgs2001uk]

Best you explain the laws to your g/f.

Let her put in 51% of the capital outlay and you will put in the other 49%.

Any reluctance on her part to input capital or inability to provide capital should tell you all you need to know.

[WormFarmer]

I do like the sound of the previous poster's suggestion of a 2% going to a friend and only 49% to 'er indoors.Best if they didn't know one another though!

If I remember correctly, to register a Thai company you need seven sponsors/shareholders. We gave 1% each to four close'ish Thai friends, 16% to our daughter with 40% each for me and the wife.

Edited October 5, 2010 by WormFarmer

[Khun Jean]

I do like the sound of the previous poster's suggestion of a 2% going to a friend and only 49% to 'er indoors.Best if they didn't know one another though!

If I remember correctly, to register a Thai company you need seven sponsors/shareholders. We gave 1% each to four close'ish Thai friends, 16% to our daughter with 40% each for me and the wife.

This has changed a few years ago, to be exact on 1 july 2008.

Number of promoters and/or shareholders are reduced to be at least 3 persons. That is why i suggested the 49/49/2 ratio.

[johnnyk]

Many Land Offices, if not all, will apply the sniff test for companies with more than 39% falang-owned shares.

[WormFarmer]

I do like the sound of the previous poster's suggestion of a 2% going to a friend and only 49% to 'er indoors.Best if they didn't know one another though!

If I remember correctly, to register a Thai company you need seven sponsors/shareholders. We gave 1% each to four close'ish Thai friends, 16% to our daughter with 40% each for me and the wife.

This has changed a few years ago, to be exact on 1 july 2008.

Number of promoters and/or shareholders are reduced to be at least 3 persons. That is why i suggested the 49/49/2 ratio.

I bow to your superior knowledge Khun Jean :jap: , I registered my company well before 2008

[KnooKie]

Firstly thank you for all the replies.

I will try and take all this on board and not rush in to anything.

The getting married idea was something I read on another post here about it being easier to get a split of any assets should we ever part ways, perhaps this is untrue or unnecessary as a number of you mention.

Again thank you, all very sound advice, I will certainly seek professional help before making any decisions.

Paul