Property Tax

[Misty]

I've read several threads that give examples on how to calculate the taxes due upon the sale of real property. Please can anyone verify that I'm calculating the example below correctly?

An individual person sells a condo he has owned for 8 years for Bt20m. For simplicity's sake, let's assume the official government price = the sales price. The following taxes are owed upon the sale:

1) Transfer fee of 2% of Bt20m or Bt400,000

2) Stamp duty of 0.5% of Bt20m or Bt100,000

3) Withholding tax at the variable progressive rate, calculated as follows:

Bt20m * (1-0.50) = Bt10m

Bt10/8 years owned = Bt1.25m

Tax on Bt1.25m calculated from progressive tax tables = Bt180,000

8 years owned x Bt180,000 = Bt1.44m withholding tax

So the total taxes owed upon the sale of the condo would be:

Bt400,000 + Bt100,000 + Bt1.44m = Bt1.94m or 9.7% of the sales price?

Does that look correct?

Many thanks in advance,

Misty

[Misty]

Need to correct the math, should be as follows:

Withholding tax calculation:

Bt20m x (1-.5) = Bt10m

Bt10m/8 years owned = Bt1.25m

Tax on Bt1.25m at progressive rates = Bt215,000

8 years owned x Bt215,000 = Bt1.72m withholding tax

Total tax = Bt400,000 + Bt100,000 + Bt1.72m = Bt2.22m or 11.1% of the sales price

Please can anyone say, is this correct? Or at least is the methodology correct?

Edited February 16, 2007 by Misty

[nitram]

Yes Misty, your maths look good to me.

I think thats why everyone who sells, always goes with the Land dept valuation as the "sale price"...so that the taxes are reduced.

There is a good web site that works out all the taxes for you but I cannot list it here as it will be classified as "advertising"

[chiang mai]

Yes Misty, your maths look good to me.

I think thats why everyone who sells, always goes with the Land dept valuation as the "sale price"...so that the taxes are reduced.

There is a good web site that works out all the taxes for you but I cannot list it here as it will be classified as "advertising"

Having just sold my condo I realize now that there is no such thing as a Land Office valuation and I previously thought there was. The fact is that the Land office goes with whichever price they are told as long as it is not lower than the previous sale value. If you think about it the Thai's would have to have a pretty slick system to have current valuations for all properties hence they rely on either the buyer, seller or a lawyer to give them a figure.

[quiksilva]

Its all in Thai but Government appraised values are found here www.dol.go.th but just like the UK's rating valuation system they are typically 5 years out of date, so they rarely align with open market values.

Edited February 20, 2007 by quiksilva

[dave111223]

I (and my Thai wife) went in the housing department just the other day to ask about the taxes, and they gave her the following calcuation:

1) Transfer fee 2% or 0.01% if you have lived there more than 1 year X Government Price

2) Income Tax (about) 0.8% X Government Price

3) "Business Tax" 3.3% or 0.5% if you have lived there more than 1 year X High of Government Price and Real Price

Why does this look so different from the calcuation above?

P.S

Having just sold my condo I realize now that there is no such thing as a Land Office valuation and I previously thought there was. The fact is that the Land office goes with whichever price they are told as long as it is not lower than the previous sale value. If you think about it the Thai's would have to have a pretty slick system to have current valuations for all properties hence they rely on either the buyer, seller or a lawyer to give them a figure.

When i went in there they had a big book with all the condo buildings in it, they looked up my condo building and had the standard price per meter listed for each floor. Maybe your condo building just wasn't in the book?

[Misty]

Thanks for the input on this one Nitram, Chiang Mai and Quiksilva.

Dave111223, I think one big difference in our figures is the withholding tax calculation or what you're call Income Tax. From what I can tell, this figure can vary wildly in percentage of sale depending on how high the sales price of the unit is and how many years you've held it. The example I used assumed a high sales price and a long holding period. If you use a lower sales price and shorter holding period, the % calculated will be much lower.

Cheers, Misty

[dave111223]

Thanks for the input on this one Nitram, Chiang Mai and Quiksilva.

Dave111223, I think one big difference in our figures is the withholding tax calculation or what you're call Income Tax. From what I can tell, this figure can vary wildly in percentage of sale depending on how high the sales price of the unit is and how many years you've held it. The example I used assumed a high sales price and a long holding period. If you use a lower sales price and shorter holding period, the % calculated will be much lower.

Cheers, Misty

According to the woman Income Tax (or Withholdings tax) gets lower [percent] the longer than you've been living there.

Surely the percent for 8 years would be less than say 2 years? I thought the income tax element was there to cash in on those buying and sale property as a business?

[nitram]

There are a couple of web sites that I have seen that either explain how the taxes work or work out the taxes for you.

http://www.acuterealty.com/calculator.asp

http://www.p-property.com/transfer_fees.html

[Misty]

According to the woman Income Tax (or Withholdings tax) gets lower [percent] the longer than you've been living there.

Surely the percent for 8 years would be less than say 2 years? I thought the income tax element was there to cash in on those buying and sale property as a business?

Remember the total tax and fees owed on property transactions is more than just the withholding tax. The portion of the total property tax meant to cash in on short term holders appears to be the "business tax" element which is 3.3% for the first 5 years, but then changes to a stamp duty of 0.5% after 5 years.

But the withholding tax portion of the property tax is another thing altogether. It appears to be structured to tax a notional straight line capital gain which increases in size the longer you hold the property. The good news is if that amount is quite high, you can also calculate your actual gain (versus the imputed one forced on you) on your personal income tax and take a deduction for the withholding tax paid at the time of the transaction. Also I'm told if you meet certain requirements and purchase a new property within a year, you don't owe the withholding tax at all.

But I'm definitely not an expert on these things, best to check with Sunbelt Asia, a real estate agent, or someone with professional experience in this area.

Cheers, Misty