Lease 30years Tax

[katom]

Just a question..

Me and the wife made a lease contract for 30 years and paid the 1% tax for do it in the land office.

Now the tax office sent us letter about her need to pay tax.

Is it normal?

I thought we paid in at once as the tax has been paid when we register the lease relate to the future income for the 30 years.

Ur advice pls.

[quiksilva]

1% is the leasehold registration fee, its quite seperate from income tax, which is payable on the rental income received.

[monty]

Something often forgotten is the fact that on the income derived from a lease, tax has to be paid.

If the lessor is a person, the amount received has to be declared to the revenue department, so personal income tax can be calculated. Depending on what exactly has been rented out a deduction of between 10 and 30% is allowed...

If the lessor is a company, the lease amount has to show up as income in the accounting...

The 1% (+0.1% stamp duty) is only a registration fee!

If the revenue department finds out that the income has not been declared, pretty hefty fines can be levied!

[quiksilva]

Also bear in mind that Property Tax (also referred to by some as Household and Land Tax) is payable on annual rental at 12.5%.

This is why so many landlord's divvy up the gross rental amount into 2-3 agreements, e.g. rental, service and furniture hire. The reason being is that only VAT at 7% is payable on the latter two.

Its not strictly kosher, mind, so do not misconstrue this as a recommendation, its merely an observation of market practice.

So if you do opt to do this bewarned that you could get more than a wrap on the knuckles for it if you get caught out.

[LoveDaBlues]

Also bear in mind that Property Tax (also referred to by some as Household and Land Tax) is payable on annual rental at 12.5%.

This is why so many landlord's divvy up the gross rental amount into 2-3 agreements, e.g. rental, service and furniture hire. The reason being is that only VAT at 7% is payable on the latter two.

Its not strictly kosher, mind, so do not misconstrue this as a recommendation, its merely an observation of market practice.

So if you do opt to do this bewarned that you could get more than a wrap on the knuckles for it if you get caught out.

Question (directed to anyone with knowledge). I'm pretty sure the leasehold registration fee is paid up front and for the total amount owed. Example: 30 year lease (on land only; no structures) at 12,000 baht per year = 360,000 baht for the total lease payments. So the leasehold registration fee is paid based on 360,000 baht.

But what about the income tax due from the lessor? Surely that's paid every year based on the actual lease money (income) collected?

Also, in this example would the rate be 12.5% for the income tax?

And lastly, I think I read somewhere that gross income by a Thai of less than 200,000 baht per year and the Thai didn't have to pay any income tax???

Edited March 21, 2007 by LoveDaBlues

[quiksilva]

Whilst I would need to check, I believe you are correct regarding tax payable on gross annual income.

In the case of a long lease with the rental paid 100% upfront, the taxes can be deferred ino annual payments over the term of the lease.

So it might be possible to get away with no paying income tax if the equivalent annual rental revenue and any other income is less than the 200K pa threshold.

Income tax is progressive and varies from 0-37% depending on amount earned. (Im not sure about the levels though)

In any event property taxes @ 12.5% of rental are fixed and payable regardless of the amount.

[katom]

So how much need to pay tax on yearly income of the wife(as she lease me the house for 30 years) of 48000 baht a year (4000 a month).

?

[LoveDaBlues]

So how much need to pay tax on yearly income of the wife(as she lease me the house for 30 years) of 48000 baht a year (4000 a month).

?

When the tax office sent you a letter they didn't state the amount owed? Strange. How about having the wife call or go to the tax office and ask them what the rate (%) is and how much she owes. Please post findings.

Also, is your wife actually leasing you the HOUSE or is the lease on the LAND?

[katom]

the lease on the land.

Virtually I paid her in at once for this "30 years lease falang thai routine".

she went there and its the city/commercial tax something like this.

So it seems its not about the lease but the location of the property that in business area.

Another question..how farang in my situation protect his ownership in case want to take loan (that as you know will allow only to the wife..)Is that means I need to break/cancel the lease?

;)thanks for all the answers you r great .

[katom]

by the way the tax thing is just a 1050 baht.

But I want to be ready for the future coming surprises..