We have explained in many previous articles how condominium ownership is the safest and easiest way for foreigners to own real estate in Thailand.
The Condominium Act allows up to 49% foreign ownership of the unit area, as long as the other 51% is owned by Thai nationals.
If you are a foreigner, the main attraction of a freehold Phuket condominium is that you can fully and legally own it. The ownership is permanent and in perpetuity until you decide to sell it.
The Other Reason to Own a Condo – Condominiums Provide More Favourable Inheritance
Freehold ownership is obviously a major plus point for foreigners. Being able to own something outright without worrying about circumnavigating Thai laws, or leasing a property which may only give you 30 years of occupancy, is obviously an attraction for many people looking for a home in Phuket.
But another benefit of a freehold condominium is the favourable treatment for inheritance, i.e. foreigners can pass their Thai condominium on to their heirs.
Competing Legislation For Condo Inheritance
Things do seem to be a little easier with leaving a condominium to loved ones on your passing.
But while the inheritance laws may be more beneficial than other ownership structures, they are neither perfect, nor perfectly clear.
There is competing legislation at work here. The Condominium Act states that any foreigner who inherits a condominium must notify the relevant Land Office within 60 days of the inheritance.
Failing to meet specific criteria for ownership, the foreign heir may then be compelled to sell the unit within 1 year of the death of the owner.
The Thai Civil and Commercial Code (CCC), however, indicates that the inheritor of the property would also inherit the right to own the property.
This has actually been the formal legal opinion of the Land Department – that the right of the deceased owner to acquire property and retain ownership passes to his/her heir upon death.
But the Land Department’s interpretation of inheritance law under the CCC is not yet backed by sufficient case law for an heir to be 100% certain of receiving permanent ownership rights.
Overcoming FETF Requirements – List ALL Beneficiaries Names on the FETF
One of the five requirements for condo ownership stipulated by the Condominium Act is a Foreign Exchange Transaction Form (FETF) issued in the name of the condo owner.
One way to make any future inheritance easier is for the buyer to have their overseas bank put multiple names on the telegraphic transfer instruction when wiring the money to Thailand for the property purchase.
The Thai receiving bank will then be able to list all of those names on the FETF. The names on the FETF must be recorded as co-owners of the condo, which secures inheritance in the event of the death of the principle buyer of the property.
Without the more favourable CCC interpretation of inheritance law, anyone who inherits a property — should they choose to keep it — may have to transfer into Thailand the amount necessary to buy the unit.
It may sound counterintuitive, but it is possible that someone must effectively buy a condo they have just inherited.
A strict interpretation of the Condominium Act may require them to do exactly that. But if the names are already on the FETF, the problem is solved.
Writing a Will in Thailand for Your Condominium
If you have a parent who owns a condominium you should encourage them to make a Will in Thailand. Likewise, if you are the owner of a condominium in Thailand, you should motivate yourself to write a Will.
Experience tells us that things happen unexpectedly. You probably know people who have suddenly taken ill, and sadly passed away without any warning.
When owing any assets in a foreign country it makes complete sense to plan for such events. Making a Last Will and Testament is vitally important, especially as it easy to do and relatively inexpensive.
Depending on your individual situation, not leaving a Will could potentially turn into a nightmare for your family. The inheritance of your estate could take many years to resolve, and the lawyers fees may wind up taking a huge bite out of what is left.
Anyone who inherited a condominium in Thailand must notify the local Land office within 60 days of the death of the original owner, and being named in the Last Will and Testament as the intended recipient of the condo obviously makes the whole process that much smoother.
You can read our full article on Making a Last Will and Testament in Thailand here:
Using an Offshore Company for Inheritance of a Condominium
Some owners decide to purchase their condominium through an offshore company, such as the Seychelles or more often, the British Virgin islands (BVI).
This is because when it comes to sell the property, they do not need to involve the Land Department in Thailand. The ownership of the condo remains with the company, it is just the offshore company ownership that changes.
The advantage of the offshore company when it comes to inheritance is that a company does not “die” and the condominium remains registered under the company name.
The passing of an owner means that, provided that succession of the company shares has been taken care of, the beneficiaries simply take over the company. And with the company comes the ownership of the Thai condominium.
As for taxation, the property itself has not been sold, only the offshore company, so this attracts no tax liability in Thailand.
Making an offshore company the registered owner of the property, therefore, is a fairly good strategy to ensure an easier succession.
The FETF will be always be in the name of offshore company, so whoever owns the company will also own the FETF.
You can read our full article on using an offshore company for condominium ownership here:
Foreigners are drawn to Phuket condominiums because they are allowed to own their unit outright on a freehold basis. The favourable laws on inheritance makes this type of property investment even more attractive.
By ensuring that the names of your heirs are also on the foreign exchange transaction form and on the title deed you can ensure a seamless transition of ownership.
Alternatively, ownership through an offshore company – of which your heirs are shareholders and/or directors – would mean that, in the event of your death, there would no probate procedures required in Thailand to pass on your condo to your dependents.
This is an excerpt from the Thai Residential Phuket Property Guide 2019/20. To download your free copy, please click here.
You can read some of our related Phuket condominium articles here: