A Guide To Inheriting A Condo In Phuket, Thailand

In previous articles we’ve explained that owning a condominium is the easiest and safest way for Foreign nationals to legally own real estate in Thailand. Thailand’s Condominium Act allows foreign ownership of up to 49% of any condo unit area, providing that the other 51% is owned solely by Thai nationals.

For Foreign nationals one of the main attractions of Freehold Condominiums that are available in Phuket is that you can own it fully, legally and in complete perpetuity. This ownership is permanent until you decide to sell the property.

A More Favourable Inheritance With A Condo In Phuket

It’s obvious to see why as a Foreign national, Freehold ownership of a condo is definitely a major plus point. Freehold ownership affords you the right to own something 100% without having to worry about circumnavigating Thai Property Law, or without you being forced to lease your dream property while only really securing 30 years of occupancy.

Another great advantage of owning a Freehold condominium, and the main point of this article is the favourable treatment for inheritance. This means that Foreigners that own a Freehold Condo are able to leave it to their own choice of beneficiaries.

Legislation For Inheritance Of A Phuket Condo

It will come as no surprise that leaving a condominium to your loved ones after passing on is a little easier than other forms of property here in Phuket. While the laws that govern inheritance are more advantageous for Foreign nationals that own condos as opposed to Leasehold properties, they still aren’t perfect or 100% clear, due diligence is still a must.

At this stage, two different pieces of property legislation come into play. The first, as mentioned above, is the Condominium Act which states that Foreign nationals must inform the local Land Office when they inherit a condominium in a period of no later than 60 days.

Failure to comply to this specific criteria will potentially force the Foreign beneficiary to sell the Condo. You will be afforded a period of 1 year after the original owners death for this sale to go through.

Secondly, there is the Thai Civil & Commercial Code (The CCC) which has a different take on property inheritance. In the CCC it is suggested that anyone that inherits property will also inherit the right to own that property also.

The notion that the late owner’s right to buying and owning the condo is, upon their death, passed over to his or her beneficiaries is actually the most established legal stance according to the Land Department of Thailand.

However, the interpretation that goes under the CCC of laws that govern inheritance by the Land Department has not been used and confirmed by sufficient case law to allow the previous owner’s heir a 100% certainty of being given permanent ownership rights.

How To Overcome The FETF Requirements

Section 19 of the Condominium Act stipulates that there are “Five Doors” to Foreign ownership for condominiums in Thailand. One of these “Doors” is the FETF (Foreign Exchange Transaction Form) which is issued in the Foreign buyers full name and confirms the exact amount, and purpose, of the funds that have been transferred into the country for he purchase of the property.

To help your heirs have an easier inheritance process in the future, as a buyer you should ensure that your heirs name, including their spouse’s name and the names of any other beneficiaries, should be included with the transfer instructions supplied from their overseas bank.

When it comes to transferring funds over to Thailand, the property buyer must ensure that the amount sent is at minimum the equivalent to the total purchase price of the property. This must also include the relevant purchases taxes. The telegraphic transfer instructions must also clearly state that the sole purpose of the transfer is to buy the property.

The chosen bank in Thailand that is receiving the funds will need to confirm that the names have been supplied and clearly list each of the individuals on the FETF. Regardless of whether the people listed are a spouse or an eventual beneficiary of the property, the FETF record must reflect each name as a Co-Owner of the Condo. In the even that the “Main Buyer” passes away, this will ensure that the inheritance is secured.

Anyone that is inheriting a property in Thailand that is without the more favourable interpretation of the Inheritance Laws provided by the CCC, if they choose to maintain ownership of the property, may still have to send a telegraphic transfer that equals the total purchase sum for the Condo to a Thai Bank.

As strange and possibly confusing as this may sound, it’s not unheard of that you may end up being forced to “Buy” the Condo that you have just inherited. A much stricter interpretation of Thailand’s Condominium Act may very well require them to do just that, but if the heirs names are already listed clearly and properly on the FETF – your problem is solved!

The Importance Of Writing A Will In Thailand

If you have loved ones and / or parents that own a condominium in Phuket, you should try to encourage them to make a Will that’s recognised in Thailand. On the same note, if you are personally an owner of a Phuket Condominium, you should be motivated to write a Will also.

Things have a way of happening unexpectedly and often quite quickly and you probably have first hand experience with this in regards to friends, family or loved ones being suddenly taken ill and even passing away without any warning signs.

It makes complete sense to plan for any unforeseen events, especially so when you own assets in a Foreign country. Documenting a Last Will and Testament is a relatively inexpensive procedure, but also a vitally important one.

In the event that you do not leave a Will, certain situations can be turned quickly into nightmare scenarios for your family and it could end up taking many years to resolve the inheritance of your estate. On top of this, additional Lawyers fees may end up taking a huge bite out of what’s left of the inheritance.

You must notify the Local Land Office within 60 days from the death of the previous owner if you have inherited the condominium and if you are named on the Last Will and Testament as the official intended recipient of the property, it will make this process at lot smoother, especially during such a trying time.

Registering Your Condo To An Offshore Company

Some property owners opt to purchase their condominiums by using an offshore company that is located in areas such as the Seychelles, Mauritius, or more often, a BVI (British Virgin Isles) company.

The reason for doing so is that when it comes time for them to sell the property, the Thailand Land Department does not need to be involved. As the property belongs to the company, it is in fact the company and the companies assets that change hands, not just the property itself.

The main advantage that registering a property through an offshore company is that the company itself does not “die”, keeping the condominium registered as an asset under the company name.

The passing of a property owner will mean that providing the succession of the shares in the company have been taken care of properly, the beneficiaries listed in the inheritance can simply take over the company, therefor taking over the ownership of the Thai condominium at the same time.

For taxation purposes, the condo itself has not been sold, the company has just changed hands. This itself attracts no tax liability in Thailand. Having an offshore company as the registered owner of the condominium property is therefore a fairly good strategy if you’re looking for ways to ensure an easier succession.

The FETF will always be in the offshore companies name which means that whoever owns said company, owns the FETF.

Our Final Summary

Foreigners that are drawn to Phuket and would like to own property here will look for condominiums as they are allowed to own their condo units 100% with a Freehold ownership. The investment is made more attractive by having more favourable laws of inheritance on these kinds of properties.

You can ensure a seamless transition of ownership by having the names of your heirs also listed on the FETF (Foreign Exchange Transaction Form) and on the title deed of the condo. Alternatively you can go down the route of ownership through an offshore company and have your heirs listed as shareholders and / or directors of the company. In the event of your death, this would mean there would be no probate procedures required in Thailand for you to be able to have your condo passed onto your dependents.

To find out more about the CCC and the Thailand Condominium Act please visit the links below.

The Thailand Condominium Act: https://www.dol.go.th/estate/DocLib/act%202008.pdf
Thai Civil & Commercial Code: https://library.siam-legal.com/thai-civil-and-commercial-code/