Key takeaways
- The costs of a land purchase are not a single lump sum, and the buyer does not bear all of them. They must be separated by law and by contract.
- In the example, for land priced at THB 100 million, the buyer may bear anything from THB 0.90 million to about THB 5.04 million, depending on the negotiation.
- A holding company or BOI is not a standard way to reduce transfer-day costs. Check before setting up any structure.
The team was buying land for THB 100 million and had budgeted exactly the right amount of cash. The week before transfer, the seller said the agreed price was a net price, with all taxes to be paid by the buyer. It was like buying a car and discovering transfer costs on top of the price. The cause was not that the law is too complicated, but that the price and who bears each cost were not stated clearly before the contract was signed.
Who pays what in principle
| Item | Typical rate | Base | Party bearing it in principle |
|---|---|---|---|
| Transfer fee | 2% | Appraised value | Negotiable; if not agreed, split equally under Civil and Commercial Code s.457 |
| SBT including local tax | 3.3% | Selling price or appraised value, whichever is higher | Seller, where applicable |
| Stamp duty | 0.5% | Selling price or appraised value, whichever is higher | When SBT is not payable |
| WHT, corporate seller | 1% | Selling price or appraised value, whichever is higher | Seller; treated as a tax credit |
| WHT, individual seller | Progressive rates under a specific method | Appraised value after standard deduction | Seller |
| Mortgage registration fee | 1% | Mortgage amount, capped at THB 200,000 | Borrower, as is usual |
SBT and stamp duty are payable as one or the other, never both. WHT is not an additional cost to the buyer; it is deducted from the seller's proceeds on transfer day. This principle is consistent with this website's page on SBT and transfer fees.
0.01% fee reduction measure According to news of the Cabinet resolution, the measure applies until 30 Jun 2027 to houses, commercial buildings and condominium units priced at no more than THB 7 million, where the buyer is an individual of Thai nationality. A company buying vacant land for development should therefore not put this measure into its budget. Always check the announcement before relying on it.
Example: THB 100 million of land under two contract structures
Hypothetical example The seller is a company and is subject to SBT. Selling price THB 100 million, appraised value THB 70 million. The buyer mortgages the land with a facility of THB 60 million. Figures in THB million.
| Item | Option A: transfer costs split | Option B: seller's net price |
|---|---|---|
| Buyer pays the transfer fee | 0.70 | 1.40 |
| Buyer bears SBT | 0 | 3.44 |
| Mortgage registration fee (1% exceeds the cap) | 0.20 | 0.20 |
| Buyer pays on top of the land price | 0.90 | 5.04 |
| Seller pays SBT and the transfer fee | 4.00 | 0 |
| WHT deducted from the seller (tax credit) | 1.00 | 1.00 |
Option B: if the buyer bears the seller's SBT and transfer fee, the amount borne on the seller's behalf is included in the SBT base under Revenue Department practice, so SBT = 3.3% × (100 + 0.70) ÷ (1 − 3.3%) ≈ 3.44. WHT may also need to be recalculated depending on the terms on which the costs are borne.
These figures show that the often-quoted range of 5–8% of appraised value should not be used as a rule. The actual result depends on the type of seller, the appraised value, the mortgage amount and the contract.
Common misunderstandings
| Belief | What to check |
|---|---|
| Put a lower price in the contract to reduce tax | Should not be done. It misstates the facts, and the appraised value is already the minimum base for several items. |
| Buying through a holding company means no transfer costs | Transferring ownership to a company still incurs the usual costs. Buying the shares of a company that holds land is a different type of transaction, and hidden liabilities must be checked. |
| A BOI certificate reduces transfer costs | This should not be assumed. BOI privileges must match the business and the certificate, and the conditions on land holding must also be checked. |
| Transfer costs are all part of land cost | Land developed for sale is inventory under TAS 2. Costs incurred to acquire it are included in cost, but only the portion the buyer actually bears. |
Next steps
- Obtain the latest appraised value from the Treasury Department or the land office before setting the budget
- State clearly in the contract whether the price includes or excludes taxes and fees
- Specify who bears each item, and how it is calculated if one party bears a cost on behalf of the other
- Prepare transfer-day cash according to the payment methods the land office specifies
- Ask the seller to confirm its taxpayer type and holding period
- Keep the documents needed to record cost and tax credit entitlements correctly