Irene

When a company sells a property, any gain thereof will have to form part of the company's taxable profit and subject to the tax rate at 30% and when that profit is remitted out to the shareholders as dividends, a 10% withholding tax on the dividends shall apply. So the net effective tax rate is 37% which is also the top rate of income tax on an individual. (37% of a company is 30% corp. tax plus 10% of 70 being the net- after- tax profit).

Furthermore, the company will also be subject to a transaction tax, called specific business tax, at 3.3% of the selling price which is quite hefty when compared with the stamp duty at only 0.5%. For an individual, if the property is owned by 5 years and over, that specific business tax will not apply and that individual will suffer 0.5% stamp duty instead. For a company holding of more than 5 year, there is no exemption on that specific tax.

So, in sum, it does not make sense to have a company owning a property unless it is designed to circumvent the corporate laws such as foreign business laws or to utilise the losses of the company.

Unless the property is situated in an ideal position, the run down of the value is normal and Thais abhored leased properties. Worse for a house built on a leased land.

Lease can be safe for the first 30 years once registered with the land department.

I guess there must be some form of cost of living index regularly published in Thailand but I cannot see that a general index will apply to most farang that are living here.

The question was addressed in the pub yesterday as to how the cost of living for a farang has increased over the past three years. A statement was made that the cost had virtually doubled during the period.

I appreciate that many items (particularly fuel and fuel related items) have increased in price substantially but I cannot agree that my cost of living has. My retirement pension has increased by approximately 6% in the period in question and although I have not made any conscious effort to curtail my spending, I am still not spending more than I receive.

Has anyone any ideas?

I remember that the Joint Foreign Chamber of Commerce used to prepare for this index yearly. You might be able to obtain the information from the British Chamber of Commerce or the American Chamber of Commerce.

The -sub prime- mortgage problems are far from over:

Capital One Closes GreenPoint Mortgage, Idling 1,900 (jobs lost)

http://www.bloomberg.com/apps/news?pid=206...&refer=news

Thornburg Sells Securities to Revive Home Lending, sold $20.5 billion of securities at a discount to pay down debt it couldn't refinance.

http://www.bloomberg.com/apps/news?pid=206...&refer=news

SunTrust Plans to Cut 2,400 Jobs by End of 2008

http://www.bloomberg.com/apps/news?pid=206...&refer=news

Countrywide Financial Corp took out advertisements in many newspapers to reassure customers their bank deposits were safe. The largest U.S. mortgage lender has faced a flurry of withdrawals following the company's unexpected August 16 announcement that it tapped an $11.5 billion bank credit line.

http://today.reuters.com/news/articlenews....C1-ArticlePage1

LaoPo

I see this as a time of reckoning and good sign of coming back to normal. It is the time to let all the bad loans to rear their heads and be counted. If there is no shocking news affecting the financial system as a whole, such as major runs on banks, or illiquidity in lubricating business sectors, then we should be back to the normalcy by 2008 after the audit of 2007 accounts and improved methods of accountability of hedge funds.

But I would like to know what happened the last time there was one. Did the condo and house prices come tumbling down? Just stay depressed and steady for a long time? Possibly continue to go up?

Thanks

After the 1997 crisis, there was not much dealing on property transactions for a few years. Mostly, those buildings and housing development in progress were stopped because of lack of fund and those for sale whatever the price demanded were not met with much interest because there was no source of funds to support purchases. It started to have a market in 2000 when the bankers were forced to liquidate their non-performance loans that the collaterals to the loans, such as condos, came into the market. By then, the price has not come down that much. So, do not expect the marketing of condos will be the same as stock market where there is a ready market of buying and selling. The property market here is imperfect without much mechanism to bring out the willing buyers and willing sellers.

To answer your question, the market after the crisis would remain in a vacuum and become steadier later on and rise again when the economy starts to pick up. Why should it be this way? The answer lies in the long legal process that favours debtors not to pay their debts quickly.

Asian Stocks May Rally After Federal Reserve Cuts Discount Rate

Aug. 20 (Bloomberg)

New Zealand's NZX 50 Index, Asia's first benchmark to start trading, jumped 2.5 percent as of 11:30 a.m. in Wellington. The S&P/ASX 200 Index futures contract due in September climbed 3.4 percent to 5,778 at 6:59 a.m. in Sydney.

From: http://www.bloomberg.com/apps/news?pid=206...r=world_indices

LaoPo

Not will, but how high? 3%, 5% or 7%. For Thailand, there is an added incentive on the favourable voting on the draft constitution.

So what is the Thai for "Bedsit"........and do yer get a kettle and a toaster?

Thais call them as "haung chow". In English, it means "room rental".

Ministry wants a target set

Published on August 20, 2007

BOT 'to be asked to drop its 30% control measure'

The Finance Ministry plans to ask the central bank today to abandon its unpopular capital-control measures and instead adopt an exchange-rate target for the baht that mirrors regional currencies.

Bank of Thailand Governor Tarisa Watanagase has invited Finance Minister Chalongphob Sussangkarn, Deputy Finance Minister Sommai Phasee, well-known economists including Ammar Siamwalla and Olarn Chaipravat, academics, industrialists and businessmen to discuss foreign-exchange management strategy at the central-bank head office today.

Tarisa said on Friday that the central bank would ask the economists for suggestions on sharpening forex policy-making to cope with the recent baht volatility and possible global spill-over from the US mortgage-securities turmoil in the medium term.

"We are open to ideas from them," she said.

nationmultimedia.com

If BOT accepts the advices, it would be the best news for Thailand and the current weakening of the baht even to 38 is likely. Our competitiveness would be at par with our neighbouring countries.

I'm thinking about selling my condo in Pattaya. I wasn't going to use an agent as my Thai wife can handle the documentation. How and what are the costs and how are they split between buyer and seller?

You have to agree this early , as a buyer if i get a good deal on the land or property seller takes my offer then i will split 50/50 , if the seller sticks to the asking price and i agree to buy then he picks up all the fees or he does not get his sale .

Simple realy seller pays

JB

The cost is comprised of transfer fees at 2% and stamp duty at 0.5%. Instead of stamp duty, 3.3 % of the proceeds or the assessed value is applicable if the ownership of the condo does not reach 5 years or over. In addition there will be income tax applicable. The amount is depending on the number of years of holdings of the condo by the owner. An unofficial enquiry could be made at the Land Department of the amount involved.

Who is going to bear this transfer costs? That depends on the negotiation between the buyer and the seller. The common practice is 50/50.

I would not call a company that was founded with 12 people 10 years ago that was built up to employing 6000 people greedy , hedge funds are good for the markets they give liquidity they have given a lot of people a good living for many years . The markets are heavy regulated hedge funds are not the root of the problems .

JB

They are the necessary evils in the modern world!!!

From Wikipedia, "condominium" is defined as a form of property ownership only:

"A condominium, or condo for short, is a form of housing tenure. It is the legal term used in the United States and in most provinces of Canada for a type of joint ownership of real property in which portions of the property are commonly owned and other portions are individually owned. In Australia and the Canadian province of British Columbia, the legal term for this is strata title. In Quebec, it is known as syndicates of co-ownership. In England and Wales the equivalent is commonhold, but this form of ownership was only introduced in 2004 and so far is hardly used. Colloquially, the term "condo" is often used to refer to the apartment unit itself in place of the term "apartment". This clearly signifies ownership of the property."

Wonder what the future holds, reckon it might tank. Good time for shadow watchers who are just waiting to make the big buy-ins...

I used to do that. Thought that the wisest move is to watch and go in big when the time is ripe. It turned out to be only good in theory. Whenever it happens, it is always too late. With the big jump, you then tend to think it is too high. So, in the end, you don't have anything cheap.

My revised tactic is to accumulate if I think the current situation is irrational. Whenever, I buy bits and pieces almost daily, I always have the feeling whether I have done the right thing. With that feeling and averaging cost, it has proved to be right subsequently.

Dear Forum

Please forgive me if I am covering 'old ground' here, but can anybody tell me what percentage do the Land Registry charge to transfer Title Chanote

Deeds.

But, in this case the owner will be transferring ownership to another member of the same family, living in the same property, and listed in the same Tabian(blue) bahn.

Confused! Yeh, so am I but seek your vast wealth of knowledge ............................................

Kind regards FV

Transfer fees 2% and stamp duty 0.1% if the property has been held five years or more. If less than that period, then Specific Business Tax at 3.3% will apply instead of stamp duty.

Furthermore, there is a withholding tax on capital gain depending on the number of years hel.d. The amount can be ascertained first from the Land Department

IThe SET peaked in Jan 1996

for what it's worth, I think that was Jan 1994

Misty,

You are right. On Jan. 4, 1994, the HIGHEST closed at 1753.73 with a p/e of 31.

Thereafter, the LOWEST was at 207 on Sept. 4, 1998.

That tells you that the SET can make you or break you within a period of five years if you go in with wild idea or based on hearsays.

Looks like another tough day on the SET, with the 800 being breached. Looks likely that it will be heading down to test the 780 support with all the foreigners selling up. Long term is still good thou or is it? With all the talk of the SET heading to 900-1000 this year a couple of weeks ago, is this going to be cancelled. Does anyone have a clue? As Im still a newbie when it comes to all this stuff, and I still have a hand in a few stocks that have taken a hit.

The brokers say its a correction/US prime mortgages have had an influence on the world markets. Surely we can be affected too much with our undervalued stocks here. Better to stop loss or ride it out and hang in there?

My strategy is simply to watch the subprime situation in the States and Europe whether is a temporary problem or affecting the credit system of the Western world. If you read and listen to CNBC or Bloomberg lately, it could be either way. Because of the European Central Bank has come out to support the liquidity of the money market, other central banks could follow. At the moment, I tend to hang on to the holdings. But once there is any sign of the seriousness of the meltdown or crash landing, I may change my stance very quickly.

The survey is done among just over 5000 persons (how many did actually travel to Thailand ?) and it says nothing about if or when they shall travel to Thailand.

Still Sweden is 9000 km away from Thailand and for the first year ever 2006 was the year when Thailand became the most popular vacation country. Many years in a row Gran Canaria has been the most famous place to travel for Swedes. Now Thailand is the most popular country to spend the vacation among international countries. Nearly 5 % of the Swedes travel to Thailand 2006 and 2007 !

Is Thailand that great despite the coup, foreign business act, etc.?

Irene - you are one of the most edifying members of this forum. Thanks for all your useful insights -- keep 'em coming.

thaigene2,

Just to say thank you for your encouraging words. Whenever I feel disheartened by some of the comments, I will always remember your words. Irene

Thailand is number one with Aussies

That was a big surprise. I never thought Thailand has ever been in the Aussies' book as a favourite.

We have all chosen to be here, for better or worse. I have learned to be a bit more spry and hang on to my place in line, if I care that much. Most of the time I accept Thais "improper behavior" as part of the package for great food, cheap prices, and good looking ladies :-)

Nice way of looking at it but it does not the Thais to better themselves!

DegenFarang,

My comments are in bold type:

"Why would anyone buy somthing off plan when there are plenty of finished condos here."

Buying property off plan has always been the practice in Thailand even right now. Only after the Thai financial crisis that there have been a few exceptions. This was led by Land and House developer who introduced the concept of sales of "finished houses". Needless to say, this pioneering company has been so successful with this new concept.

With regard to this though, it is my understanding that you'll save money by doing it this way. As in you get a bargain to what you would get if the property were finished today. Is this not accurate?

It depends. If it goes as planned, yes, it is nice way of buying a property. But while paying your 30% portion, you should be praying all the time that the developer will complete the products otherwise you have to sue the developers for the refund of your payments. By then, the developers may have already gone bankrupt. Unlike the US, the 30% is deposited in an escrow account until the project is finished otherwise it shall be refunded to the customers.

In addition, they are only asking for 10% down, then another 15% in monthly installments over the next 18 months, then the remaining 75% at transfer.

If the market keeps appreciating the way it is, I could likely have made over 100% of my investment (the 10% down, plus payments) back by the time I have to fork over the remaining 75%. I could also sell the place at a tidy profit before I have to turn over the money, is this not accurate?

This is a common practice now especially condominiums at the prime area. There is a group of speculators who follow this practice. If the finished property turns out hot, then there will be phone calls from the estate agent asking whether you want to sell. But if it turns out at bad time like in 1998-2000, then the speculators would be searching for buyers or allowing the forfeitures of your past payments. The developers love these speculators because they form as part of a group of committed buyers that is an essential statistic to allow the developer's bank to extend the credit line. Furthermore, the project would be viewed as successful right from the opening day with more than 50% "sold".

If it goes as planned, the buyer could earn a potential capital gain of over 100%. As an example, two and a half years ago, I committed to buy one condo unit near to Emporium as my normal property investment for rental, it is now completed and due for transfer. The agreed value was 9 million baht. I already paid the deposit and all instalments in a total sum of 3 million baht. Now there are offers for 13 million baht on the unit. If I accept the offer (which I won't), I will get a profit of 4 million, 133% gain. In another situation, I was a buyer from the first buyer and allowed him a profit of the similar sum. Todate, I have a potential profit of 20% on this property. It does not look rosy in all cases. It depends very much on your correct judgement. There could be many sad stories as well for the first buyer of off-plan properties.

Thats how its done in the states and I'm seeing a lot of potential for that here as well...though I'm not aware what the buyers side of this equation is. Am I the only poor schmuck down here looking to buy? lol

It is quite well known already here. There is of an exclusive group of speculators and some of them had the bad experience already between 1998-2000 and learnt their lessons in selecting a right property to speculate on. They don't "buy" one or two units, they "buy" a dozen. The near-Emporium-condo I referred above, two years ago one speculator could not pay his instalments of fifteen units and offer to sell his rights at cost, being an investor and not a daring speculator, I declined. Now all I got is a regret.

DegenFarang,

My comments to the questions I have an opinion of (in bold):

-Strengh of the Baht: I'm an American and this one is quite important to me. Since I came to Thailand about two years ago I have lost over 20% of my purchasing power. If the Baht should rebound in the near/semi-near future, I'll instantly lose a great deal of equity. I obviously want to avoid this. The government appears bent on stopping the Baht's appreciation, but so far it is not working...it just keeps getting stronger. Any merit to waiting this out for another six months or a year to see what happens with the Baht?

The world's imbalance of trade and reserves will not be reverted to the equilibrium quickly in the shortterm. Therefore, the weakening of the US dollars will continue which shall strengthen the baht. The promise of intervention etc. from the Thai authorities has a few days effects but longterm-wise it will go on strengthening. Thailand is most vulnerable because of its floating system while China and Malaysia are fixed. So, if you invest with the exchange of 33.7, in the longterm you could end up with 32, a nice gain of 5%. But if the Thai authority drops this floating system and stick to a fixed band of exchange like China, then you could have a loss of exchange. Currently, the authority has said that they will never do that.

-Foreign investment: Would it be wise to wait this out until the government figures out what they are doing with regard to foreigners investing? Is now the time to snatch up bargains while there is likely be an uncertainty discount built into the purchase price?

If you are only interested in a condo, then you are not affected by the coming Foreign Business Act.

-Thai Economy: How is the Thai economy now? Is it down and thus a good time to buy? Is it in some type of bubble where it is better to wait it out for the market to downward correct?

Currently, Thai economy is pretty strong despite the export industry (70% of the Thai GDP) having to suffer on exchange losses. The past economists who a few months ago gave Thailand less than 4% growth in 2007, now say it shall be above 4% growth. The only area one needs to watch out is the failure of the baht interventions like in 1997 and the exchange rate sliding down to 31. This is mainly caused by foreign hot money coming in for relatively inexpensive stocks for capital gains and exchange gains (coming in with 33 rate and going out with 31 rate). The exchange gains are due to self-fulfilled prophecy through their own actions of speculating on thai stocks with onslaught of dollars to Thai exchange market. Thailand is ripe for this double-dip gains which is natural for the hedge funds to focus on.

I know thats a lot to ask and I'm not expecting anybody to reply to it all. Feel free to reply to any question there or add anything else you find relevant.

Your questions are so comprehensive and a model for risk management on investment. However, at the end of the day, one erroneous factor could bring you down. You have to pose one final question whether you have any fallback situation if you face some of that errors. Charlie Munger, Warren's close friend, relies exclusively on this question i.e. if everything goes wrong, will I be able to survive to ride over this misfortune.

Rempler,

Your wife is very lucky to have you as a husband. You are so thorough and concerned with your wife even when you are not in this planet.

Similarly, you are also lucky to have such a wife who has a simple want.

Your English is Ok, no apology is required.

The land office told us that the law states that "said land can only be sold if a Judge rules that it is in the interest of the child without outside influences".

We have done so for one of our children and plan to also do so for the other two also. It is my desire, as I remember the squabbling, when my Father and then my Mother died. I do not wish my kids to go through that and want them to know up front what is to become theirs.

Thank you for sharing with us your experience. Can you tell us how long it take to get the court order and the fees involved.

After all, it is their country and I'm just a very grateful guest

this has nothing to do with the self centredness and assertiveness of westerners , but all to do with decency and good manners in a crowded environment , something the thais are usually very good at.

there is a world of difference between inviting someone buying a single item go in front of you and your fully laden shopping cart , and that person pushing in front of you uninvited .

but lying down weakly in complete surrender and allowing people to walk over you only encourages the proliferation of the bad manners that we see everywhere these days , in every country and from people of every colour , creed and background.

would you let a falang in a hurry push in front of you , of course not , you would accuse them of being assertive and demanding , and just another falang who arrived in the country after you , i.e. one of the "too many" , whom you think should be back in manchester , michigan or moscow getting more tattoos and not invading your space here.

some people take the " its their country and we are so grateful and thankful to be allowed to breathe the same air , " philosophy to ridiculous extremes........queue jumping , as described in the posts here , is rude and ill mannered , and no body should have to put up with it... no point in being so generously allowed to live here and share the air if we are to be walked over at every opportunity. might as well be an aboriginee in australia , or jewish in syria as a falang in thailand.

it annoys thais in the queue as much as it does falangs in the queue , and i have seen thais get mad when it's done to them.

its bad manners pure and simple , and should not be tolerated.

shop staff should be trained to ignore them , but the class system here ( worse by far than the old british system) precludes that , although i do sense a slow change in society here.

taxexile,

An excellent response to mdeland. I could not believe reading mdeland's meekness of host and guest relationship. Good manner is good manner whether you are a host or a guest.

However, I don't think class system here is that predominant as the british. Unlike a certain neighbouring country, most Thais are not that protective of their original race otherwise you would not have many Chinese Thais sitting in the cabinet. The society is ruled more by money than your pedigree. It used to be worse than the brits before 14 October 1973 until a group of students without realising it broke the tradition of high class and military rule.

I have seen this behavior before. What is up with that?

Some people have told me it is because this man thought that he was of a higher class than myself. Others tell me that some Thai people automatically think that they are of a higher class simply because they are Thai and you are not. Is this true? is this normal behavior?

No, not so. To the eyes of most Thais, this type of high-class is always viewed as despicable. High class has dwindled a lot since the uprising on 14 October 1973 (students' revolt) when sense of equality has become a norm.It is not the question of nationalism. They just push their ways through and see how far they can get away with. They are all taught in a classroom on the importance of queueing but once they are out of school, everyone is for themselves in boarding a bus.

Yet, when waiting for a motor cycle at a soi, one can always see an orderly queue of passengers and motor cycles. There has not been any announcement on the rules of queueing for a transportation, it is only a question of survival in each environment in this unruly country.