THE EXPENSES OF PURCHASING PROPERTY

Phuket property investment is on the rise due to the island’s attractive beaches, warm climate, and flourishing tourist industry. However, before embarking on your property search, it’s crucial to understand the expenses of purchasing property in Phuket.

This guide takes you through the costs of buying property in Phuket, including transfer fees, stamp duty, withholding tax, legal fees, due diligence, maintenance fees, property tax, and insurance costs.

The initial and obvious cost when buying a property is the purchase price, which varies based on the location, quality, size, and type of property. Before negotiating the property price, ensure that you can afford the property and are committed to purchasing it.

Property Purchase Price
The first and most obvious cost when buying a property in Phuket is the purchase price of the property itself. This can vary greatly depending on the location, quality, size, and type of property you are looking to buy.

Always remember not to make any property price negotiation or offer until you have firmly decided that you can afford it and are fully committed to buying the property if the owner accepts your offer.

Transfer Fee
When you buy a property in Phuket, you will need to pay a transfer fee. This fee is calculated based on the appraised value of the property and is usually around 2% of the purchase price. You can find more information here.

Stamp Duty
Stamp duty is a tax that is payable on the transfer of property ownership. In Phuket Thailand, the stamp duty is generally 0.5% of the appraised value of the property. You can find more information here

Withholding Tax
If you are buying a property from a Thai company, you may need to pay a withholding tax of 1% or more of the appraised value of the property. This tax is deducted by the buyer and paid to the Revenue Department on behalf of the seller. You can find more information here.

Specific Business Tax
If you are buying a property that has been owned by the seller for less than five years, you may be required to pay a specific business tax of 3.3% of the appraised or agreed selling price, whichever is higher.

Legal Fees
You will need to hire a lawyer to help you with the legal aspects of buying a property in Phuket and it is highly recommended to use a reliable and reputed local one. Legal fees can vary depending on the law firm and the complexity of the transaction, but you should budget around 1-2% of the purchase price.

Due Diligence
Before buying a property, it’s important to carry out due diligence to ensure that there are no hidden issues or problems with the property. This can include a title search, a survey, and a structural inspection. Due diligence costs can vary and it is normally related to the previously stated Legal Fees.

Maintenance Fees
If you are buying a property in a development or condominium, you may need to pay monthly maintenance fees. These fees can vary depending on the facilities and services provided, but you should budget around 30-50 ฿ per square meter per month. You must also be aware that certain luxury estates could exceed this cost and you can find this information from your agents before further decisions are made.

Property Tax
Property tax is also due annually, approximately 0.1% of the property’s appraised value.

Sinking Fund
In addition to monthly maintenance fees, condominiums, and developments require buyers to contribute to a sinking fund. A sinking fund is a pool of money set aside to cover major repairs and upgrades to the property, such as roof repairs or the installation of a new elevator. The amount of the sinking fund varies depending on the property, but it can range from a few thousand baht to tens of thousands of baht per unit.

Insurance
The cost of house insurance varies, depending on several factors such as location, size, and value of the property, and the level of coverage and deductibles. On average, homeowners in Phuket pay between 1% to 2% of the value of their home per year for home insurance coverage.

In conclusion, buying property in Phuket can be a wise investment, but it’s essential to understand all the costs involved before making any decisions. The rates provided above are only approximate, and it’s advisable to verify the exact amount of each fee with the relevant individuals before proceeding with any agreement.