SECTION 13: TRANSFERRING MONEY INTO PHUKET
Transferring Money into Phuket
Any foreigner planning to purchase a property in Phuket must follow the correct procedures for transferring money into Thailand. If the proper steps are not taken it may prove impossible to repatriate the money when it comes time to sell your Phuket property, and for it to leave Thailand.
If more than US$ 50,000 is being remitted for the purchase of a Phuket condominium, a Foreign Exchange Transaction Form (FETF) must be requested from the receiving bank.
If funds are being remitted for the purchase of a villa, for a long term lease on a property, or to provide share capital for a Thai company, the FETF is not a statutory requirement. As long as all evidence of the original transaction can be presented and is clear, and there is proof that all requisite taxes have paid, the funds can be sent out of Thailand at a later date.
This process does take longer than it would with an FETF, so even if you are buying a villa in Phuket, it may be worth requesting one from your receiving bank/developer even though it is not required.
The FETF Required for a Phuket Condo Purchase
The Condominium Act states that any non-resident of Thailand who wishes to buy a condominium, must transfer the requisite funds from overseas specifically for that purpose. Regardless of the buyer’s country of origin, the funds must be sent in a foreign currency, to be converted into Thai Baht (THB) by the receiving bank upon arrival in the country.
In order to register a new condominium purchase with the Phuket Land Department, the FETF documentation must be presented to prove that the full purchase price was transferred into the Kingdom from abroad. (The instruction on the bank transaction form should also state that the payment is for the sole purpose of purchasing a condominium.) From an estate planning perspective, it is a good idea to always have multiple names (including children or grandchildren) added to the original telegraphic transfer, so they may be included on the FETF.
If the only way to arrange payment is by transferring funds to the developer directly, then the developer must arrange the FETF forms on behalf of the foreign buyer.
Taking the money out of Phuket at a later date is relatively straight forward, provided all the supporting documents can be presented. This is especially important if the funds have been borrowed from an overseas financial institution and/or there is an overseas mortgage on the condo.
Please also note that no repatriation of money will be possible until any income/capital gains taxes have been settled on the sale of the condominium. The FETF must also be presented to the tax authorities as proof of the legitimate ownership.
Whether ultimately remitting the funds back to a private account, or to repay a bank loan, the Foreign Exchange Transaction Form is an absolute requirement. By ensuring multiple names are on the FETF, not only is inheritance made easier, but funds can also be returned to the account of an heir. This document should be kept in a safe place at all times.
Again, it is wise to consult a good Thai lawyer throughout this process.
Buying and Leasing Property in Phuket Articles
SECTION 8: Buying a Foreign Freehold Condominium in Phuket
Condominiums are the safest way for foreigners to purchase real estate in Phuket. Condominium law allows 49% of the living area in each condominium project to be sold to foreigners as foreign freehold. Foreign freehold ownership means the foreigner will own the condo unit in perpetuity i.e. forever. This ownership is registered at the local Phuket Land Department. If a foreigner is considering buying property in Phuket, then this article explains everything you'll need to know, and why a Phuket condominium is the best option!!!!
SECTION 9: The Option of a 30-Year Leasehold When Buying a Villa in Phuket
We do not necessarily dispute the concept of a Phuket leasehold, however, anyone entering into a Phuket landed property leasehold, must be aware of all the risks associated with this type of legal arrangement. A leasehold in Phuket is very safe, in the sense that it guarantees you a 30 year lease period, but any term over and above this initial 30 year period must be viewed as a mere verbal promise. It is not guaranteed. It is simply a verbal guarantee to extend the lease for further renewals, but if denied, it is questionable whether it will upheld in a court of law in the favour of the foreigner.
SECTION 10: Using a Thai Company Limited To Own Villas, Town Homes and Landed Property in Phuket
It is possible for a foreigner to own a Thai company in Phuket, if the Thai company is adhering to all the corporate laws of Thailand. However, if that Thai Company owns landed property, there are other implications. A company set up with the sole existence of owning property for a foreigner, with shareholders, who have not invested in the Thai company, and who the foreigners does not even know, are deemed as nominees. This is illegal. All foreigners entering a sale and purchase agreement in which they either transfer ownership of shares of a Thai Company Limited, or set up their own Thai Company must know these rules and the laws governing Thai companies, and the legal implications of their company owning land in Phuket.
SECTION 11: Evolution of the Phuket Property Sector – Why So Many Foreigners Own Villas Illegally
Foreigners in Thailand are not allowed to own land. However, over the last few decades, it has been commonplace for foreigners to set up a Thai company, which allows them maintain control of the company which owns the physical land. This is all fine, if done correctly. It really depends on whether the Thai company is adhering to all the corporate laws of Thailand, and if everything is done correctly, such as the company having legitimate Thai Shareholders. If everything is set up correctly, it may be acceptable to the authorities. This section explains why and how so many foreigners today are blatantly violating Thai laws, and for the most part, most have no idea they are doing so.
SECTION 12: An Overview On The Thai Baht
When any foreigner invests in Phuket property, they are also exposing themselves to the Thai currency. Any fluctuations in the Thai Baht to, obviously affects their investment value, depending on how the Thai Baht strengthens and/or weakens against their home currency. They make gains if the Thai Baht strengthens, yet they make losses when the Thai Baht weakens. However, the situation is different for buyers, who may hold off on a purchase should the Thai Baht get too strong. Currency fluctuations play a major part in the Phuket real estate market dynamics.
SECTION 13: Transferring Money into Phuket
If transferring money into Phuket to purchase a Phuket property, it is important to seek legal advice. Many foreigners make the mistake of transferring money into Thailand and then later finding out they can’t purchase the condominium (or building) without sending the money back out of Thailand again and sending it back in to get the correct documentation. This happens quite frequently, because many foreigners decide to move to Phuket without understanding the laws and procedures. This is especially the case with a condo purchase, as it is important to understand how important the FETF is when registering the condo in the buyer’s name, as well as repatriating the funds back the buyers home country upon sale.
SECTION 14: How Low Are The Fees And Taxes When Purchasing Phuket Real Estate?
Government fees and taxes are low in Thailand compared to most other countries. In fact, they are some of the cheapest in the world, which is a big attraction to potential Phuket property buyers. Although taxes and fees are easy to understand, they depend on the given situation, legal structure, and whether it is a new build or a resale condominium unit or a villa. A reputable lawyer will be able to ascertain the taxes due on any property purchase.
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