Sale Of Property

[Lazy Sod]

I've been searching this forum and the internet for clarification of the applicable tax if selling a house. Some people on this forum quote around 6% total tax payable, but this seems high according to agent web sites I've checked (see italics below taken from a typical agent web site). Can someone please clarify?

Also, how do they calculate the "Income Tax" percentage (below it says between 1-3% but doesn't say how they determine the actual percentage)? Is the income tax only paid on the capital gain portion (if any)? Or on the total selling price?

Property Taxes and Costs

On all purchase/sale of property in Thailand Stamp Duty is payable at 0.5%. In addition, a Transfer Fee of 0.01% is charged and a Business Tax of 0.11%, which is levied against an owner who has been in registered possession of the property for less than 5 years.

Income Tax

This is usually between 1.0 and 3.0% on property is the comparable replacement to capital gains tax. There are no established rules regarding who pays the income tax while this is simply another part of the bargaining process during purchase, as are all other costs relating to the transfer of ownership.

[Sunbelt Asia]

I've been searching this forum and the internet for clarification of the applicable tax if selling a house. Some people on this forum quote around 6% total tax payable, but this seems high according to agent web sites I've checked (see italics below taken from a typical agent web site). Can someone please clarify?

Also, how do they calculate the "Income Tax" percentage (below it says between 1-3% but doesn't say how they determine the actual percentage)? Is the income tax only paid on the capital gain portion (if any)? Or on the total selling price?

Property Taxes and Costs

On all purchase/sale of property in Thailand Stamp Duty is payable at 0.5%. In addition, a Transfer Fee of 0.01% is charged and a Business Tax of 0.11%, which is levied against an owner who has been in registered possession of the property for less than 5 years.

Income Tax

This is usually between 1.0 and 3.0% on property is the comparable replacement to capital gains tax. There are no established rules regarding who pays the income tax while this is simply another part of the bargaining process during purchase, as are all other costs relating to the transfer of ownership.[/i]

In addition, a Transfer Fee of 0.01% is charged and a Business Tax of 0.11%, which is levied against an owner who has been in registered possession of the property for less than 5 years.

This is outdated info. These are the current rates:

Specific Business Tax is a flat rate of 3.3% on the selling price.

Transfer Fees are a flat rate of 2% of an official appraised price.

Stamp Duties are a flat rate of 0.5% of an official appraised price.

Income Tax is a flat rate of 1% of a selling price for a juristic person or a progressive rate on a selling price for a natural person.

Income Tax (Withholding Tax)

The above income tax will be imposed on the recipient of taxable income from the sale of real estate property. This income tax will be withheld by the land office upon the registration for transfer of the land. The recipient can be either a natural person or juristic identities that are limited companies, limited partnerships, condominium juristic management associations, general associations and foundations etc.

For the transfer of real estate property with the Land Office (land only or land and building), a seller or owner of the property will have to pay:

Natural Person Taxpayer

A natural person is subject to all taxes prescribed by law. The tax rate will be under the progressive rate as per the schedule under the Revenue Code with a maximum tax of 37%.

Juristic Person Taxpayer

If the recipient of taxable income is a juristic person, the tax will be calculated with a flat rate of 1%.

The income tax for both a natural and juristic person is based upon the actual selling price which cannot be lower than the official appraised price. If it is lower than they go with the appraised price.

How to calculate the Income Tax

If the company is the owner, then the tax is 1% of the actual selling price, which cannot be lower than the official appraised value.

If the seller is a natural person, you have to look at the income in the schedule of the progressive rate under the Revenue Code of Thailand:

not more than 100,000 - 0%

more than 100,000 - 500,000 - 10%

more than 500,000 - 1,000,000 - 20%

more than 1,000,000 - 4,000,000 - 30%

more than 4,000,000 - 37%

The method of calculation is as follows:

You need to first calculate the amount of tax to be paid under the progressive rate. The gross amount of income will be first deducted by deductible allowance, with the percentage according to a number of years the owner owns the land.

1 year - 92%

2 years - 84%

3 years - 77%

4 years - 71%

5 years - 65%

6 years - 60%

7 years - 55%

8 years - 50%

For example, if you sell the land you own for three years for the price of 4,000,000 baht, you may first deduct the allowance of 71% for the rate of 4 years (2,840,000 baht). The sales price of 4,000,000 baht deducted by 2,840,000 baht is 1,160,000 baht.

The deducted amount of 1,160,000 baht will be divided by 4 years which has the result of 290,000 baht per annum.

290,000 baht will be used as the base to calculate the progressive tax rate being:

0% for the amount not more than 100,000 baht being 0 baht.

10% for the amount of 190,000 baht being 19,000 baht.

The result is 19,000 baht.

The amount of 19,000 baht must be multiplied once again by the number of years the seller owns the land. In this case it was 4 years.

The amount of tax to be paid is therefore 76,000 baht.

Specific Business Tax

Specific Business Tax is a flat tax rate of 3.3% on the actual selling price, and is collected if the seller owns the land for not more than 5 years. It does not mater if the seller is not subject to the Specific Business Tax, the stamp duty of 0.5% will still apply.

If the owner has lived in the house for more than a year, then the 3.3% charge is waived and 0.5% will still be charged. The Seller must have proof of house registration for at least one year.

Transfer Fees and Stamp Duties

Government fees for the transfer of land of 2% on the official appraised value are collected on the registration of transfer with the land office.

The stamp duty of 0.5% is always collected.

You should always negotiate hard with the seller and put this in the sales and purchase agreement on who pays the tax. We charge 15,000 baht to negotiate on behalf of our clients (who have found a house, land or condo on their own). If they don't save at least 25,000 baht from the seller's final price (which they have negotiated by themselves), then the professional fee is waived.

We strongly advocate that the Income Tax and Specific Business Tax is the responsibility of the seller as he is getting the income.

In most cases, we are able to convince the seller to split the transfer tax and stamp duty if the seller was exempted from paying Specific Business Tax.

Most sellers will want the buyer to pay for everything as they claim this is "standard". Nice try! This may be more than 6% of the selling price while with our negotiations, in a number of cases, it meant that only 1% tax was payable by the buyer.

Capital Gains Tax

The annual corporate income tax for an SME is 15% from the net profits on the first million baht in net profits, 25% tax from 1 million to 3 million in net profits and over 3 million baht in net profits incurs a rate of 30%. An SME is a company with registered capital lower than 5 million baht.

www.sunbeltasiagroup.com