Selling a condo for dummies

[Suradit69]

I've read through several real estate and legal websites concerning fees and taxes when selling a condo and let's just say I did not experience an Aha !! moment. So I would appreciate some simplistic guidance on how to arrive at a ball park estimate.

 

IF:

1. a condo is owned by a farang in his own name, not by a business,

2. the condo has been owned for more than 10 years.

 

how would taxes and transfer fees be calculated when the owner sells.  I realize that some fees might be shared between buyer and seller, but am interested in finding how the total of taxes and fees is calculated  regardless of who ends up paying,

 

Using a simple example with nice round numbers, let's say the condo was purchased for Baht one million and will be sold for around Baht 2 million.

 

I would appreciate it if we didn't go off topic on the joys and woes of ownership.

 

Your sage advice is appreciated.

 

 

 

 

[KittenKong]

I find the subject incomprehensible, like most Thai economics. It is not helped by the way that they decrease the tax rates temporarily from time to time, presumably in order to increase sales. I think that we were in such a period recently but I'm not sure if we still are. Also not helped by the fact that they take the highest of either the declared price or the assessed price as the basis for calculations, yet none of these prices are made public.

 

This site gives an explanation (which may or may not take account of current tax rates) and personally I always just assumed that fees and taxes probably add about 5%. Either way it's not a huge amount.

 

https://www.samuiforsale.com/real-estate/condominium-transfer-tax-and-fees.html

 

Apparently the Land Office will give you an estimation of the taxes and fees on a potential sale, if you ask them.

[Caine]

10yr old condo and it’s still of interest to a buyer, now that is a rare animal.

[Pattaya46]

20 hours ago, KittenKong said:

// and personally I always just assumed that fees and taxes probably add about 5%. Either way it's not a huge amount.

Not huge, right, and 5% is still way more than real for a condo 

 

Example of a condo I sold in May at Pattaya, owned for 10 years :

- declared selling price : 2'500'000 B

- buyer taxes : 27'160    (1.09%)

- seller taxes : 46'367   (1.85%)

- total taxes : 73'527    (2.94% of declared price)

The Land Office give you a clear document with details (in Thai) of taxes.

 

Buyer and I agreed to share taxes 50/50. (Frequent practice in Pattaya)

[Pattaya46]

2 minutes ago, Caine said:

10yr old condo and it’s still of interest to a buyer, now that is a rare animal.

Absolutely not! 

My last condo was 25 yo and no lack of potential buyers.

Oldest condos were there first and choose the best locations 

Oldest condos usually have bigger units and rooms 

Oldest condos were built better than new one. No paper thin walls by example

Now living in an old condo facing the sea...

[khunPer]

21 hours ago, Suradit69 said:

IF:

1. a condo is owned by a farang in his own name, not by a business,

2. the condo has been owned for more than 10 years.

 

how would taxes and transfer fees be calculated when the owner sells.  I realize that some fees might be shared between buyer and seller, but am interested in finding how the total of taxes and fees is calculated  regardless of who ends up paying,

 

Using a simple example with nice round numbers, let's say the condo was purchased for Baht one million and will be sold for around Baht 2 million.

Often, or normally, seller pays tax at the Land Office, and buyer pays transfer fees, but it a question of negotiations, and can be stipulated in the sales agreement. (See SamuiForSale link in a post above).

 

The personal income tax for selling, if the price is 2 million baht, and the property owned 8 years and longer:

Sales price 2,000,000 baht

50% deductions, i.e. -1,000,000 baht

Amount for taxation 1,000,000 baht.
Divide with holding of 10 years, each year equals 100,000 baht

First 100,000 baht, 5% = 5,000 baht.

Total personal income tax is 5,000 baht x 10-years = 50,000 baht

 

There is a link here, "Property Transfer Tax and Fee", with further details, and here is a "property transfer and tax calculator" that states your total taxes, fees, and income tax could be 100,000 baht.

????

 

[Suradit69]

15 minutes ago, khunPer said:

The personal income tax for selling, if the price is 2 million baht, and the property owned 8 years and longer:

Sales price 2,000,000 baht

50% deductions, i.e. -1,000,000 baht

Amount for taxation 1,000,000 baht.
Divide with holding of 10 years, each year equals 100,000 baht

First 100,000 baht, 5% = 5,000 baht.

Total personal income tax is 5,000 baht x 10-years = 50,000 baht

Thanks.

 

If I jiggle the numbers a little ... let's say the condo was owned for 20 years ...

 

So the amount for taxation would still be Baht 1,000,000.

I divide by 20 which would be 50,000. 

5% of 50,000 would be 2500.

Multiply by 20 to get tax of 50,000, which is the same as above.

 

Interesting that length of ownership doesn't change the result.

 

I would have thought the gain or loss i.e. the difference between what was paid originally for the condo and its current sales price would be what would be subject to tax. In some cases ... most cases ??... you would be taxed in part on money you originally paid for the condo, not just the "profit."

 

Thanks for the information. I think I understand the calculations now if not the logic behind them.

 

 

 

 

 

 

Edited November 16, 2018 by Suradit69

[Suradit69]

1 hour ago, Caine said:

10yr old condo and it’s still of interest to a buyer, now that is a rare animal.

Quality of original construction and maintenance as well as location, location, location make all the difference.

[watcharacters]

4 minutes ago, Suradit69 said:

Quality of original construction and maintenance

 

That may have been the point of the poster as these two items can be a rarity in Thailand, especially in tandem.

 

 

[Suradit69]

8 minutes ago, watcharacters said:

 

That may have been the point of the poster as these two items can be a rarity in Thailand, especially in tandem.

 

 

Oh I very much agree, but newness alone doesn't guarantee what's on offer is necessarily a better deal. If you end up in some new but flimsy condo located in the midst of karaoke bars on a soi miles from shopping, the beach, etc it wouldn't,  or shouldn't anyway, attract more buyer interest than an older building with stable occupancy, solid walls and other features, with sea views, good management and in walking distance from shopping, etc.

 

Anyway that's all academic. The condo I might sell is in an older building and I have interest from someone I feel is reliable and who would easily pay me about twice my original cost in baht terms and at a greater gain in US$ terms.

Edited November 16, 2018 by Suradit69

[khunPer]

17 minutes ago, Suradit69 said:

Interesting that length of ownership doesn't change the result.

No change, it's the same 5% tax-rate when under 100,000 baht in a year – i.e. 1 to 100,000 baht is taxable with 5% – so 10 times 5 of 100,000 is the same as 20 times 5% of 50,000...????

 

You need to trade some much more expensive properties, to obtain tax benefits for longer ownership...????

 

18 minutes ago, Suradit69 said:

I would have thought the gain or loss i.e. the difference between what was paid originally for the condo and its current sales price would be what would be subject to tax.

Probably – my speculation – to easy to get around; and at the other hand, lots of properties was before transferred on low dummy amount, i.e. the appraised value by the land office, instead of the real sales price. Where I live, a 5+ million baht plot, in sales price, would 10-15 years ago be transferred at value 500,000 baht at the land office, and therefore only taxed 1/10th or less of the real price; and no income tax withheld. Reselling with the profit method might be bad karma...????

 

It changed over time, so the land office insist on seeing proof of sales agreement, and use the highest price for taxation...????

[khunPer]

23 minutes ago, Suradit69 said:

1 hour ago, Caine said:

10yr old condo and it’s still of interest to a buyer, now that is a rare animal.

Quality of original construction and maintenance as well as location, location, location make all the difference.

I use to say, "don't consider buying property in Thailand as an investment". Many a house or villa loose in value over time – my Thai friends calculate with 10% reduction a year, but perhaps not the first 2-3 years, i.e. after 10 years the house is worth around 50% – whilst the land normally increase, so be happy if you get your money back after taxes and fees. However, there are exceptions, and that's mainly location, but partly also materials and maintenance...????

[Suradit69]

9 minutes ago, khunPer said:

my Thai friends calculate with 10% reduction a year, but perhaps not the first 2-3 years, i.e. after 10 years the house is worth around 50% –

Interesting from the point of view of a bank lending money for purchase and from the person making monthly mortgage.

 

If you have a 20 year mortgage, after 10 years you've probably only paid the equivalent of what's been lost in value from depreciation.

 

If you're the bank, if someone walks away from the property, you'll be lucky to find a buyer who will pay something equal to the outstanding balance on the original loan.

 

 

[khunPer]

5 hours ago, Suradit69 said:

Interesting from the point of view of a bank lending money for purchase and from the person making monthly mortgage.

 

If you have a 20 year mortgage, after 10 years you've probably only paid the equivalent of what's been lost in value from depreciation.

 

If you're the bank, if someone walks away from the property, you'll be lucky to find a buyer who will pay something equal to the outstanding balance on the original loan.

However, the land under the house will in most cases increase in value, or at least keep it's value...????

 

If you think of that land double in value during every 10 year period, and for example buy for 1 million land, and build a house for 2.75 million, and take up a 30-year mortgage of 80% of 3.75 million, i.e. 3 million; after 10-years with fixed monthly payments your remaining mortgage debt will be 2.5 million (due to interest). However your building might be worth only half of initial cost, or about 1.5 million, but land might have doubled up in value to 2 million; so the total value after 10-years is around 3.5 million baht, or even full 3.75 million.

 

After 20-years the same example will have a mortgage debt around 1.5 million, house worth in the area of 1 million or less, and land value at up to 4 million.

 

If you're thinking of property in Thailand as investment, think land; in some areas the value has increased four times up in 10 years...????

[KittenKong]

10 hours ago, Pattaya46 said:

Not huge, right, and 5% is still way more than real for a condo 

 

Example of a condo I sold in May at Pattaya, owned for 10 years :

- declared selling price : 2'500'000 B

- buyer taxes : 27'160    (1.09%)

- seller taxes : 46'367   (1.85%)

- total taxes : 73'527    (2.94% of declared price)

The Land Office give you a clear document with details (in Thai) of taxes.

You mention taxes but you dont mention fees. Presumably you are counting the two together.

I was basing my estimation on the full tax rate which will presumably come back into force at some point if it hasn't already done so. Your figures appear to be based on a lower rate.
Also when estimating I find it preferable to always allow a bit extra as that way there should be no bad surprises when the final bill comes in.

[newnative]

11 hours ago, Pattaya46 said:

Absolutely not! 

My last condo was 25 yo and no lack of potential buyers.

Oldest condos were there first and choose the best locations 

Oldest condos usually have bigger units and rooms 

Oldest condos were built better than new one. No paper thin walls by example

Now living in an old condo facing the sea...

Totally agree.  My partner and I are also now living in an old condo facing the sea.  Beautiful ocean view on a wonderful piece of property; condo is appreciating nicely but we have no interest in selling.

[Pattaya46]

10 hours ago, KittenKong said:

You mention taxes but you dont mention fees.

Presumably you are counting the two together. //

Yes. These were figures on the document given by Land Office.

This include everything. Buyer and I each paid half of total. Nothing else.

(and BTW no "brown envelope" required )