We are proposing to buy a building. The seller agreed to pay 50% of all taxes associated with this deal at settlement in the land office. 

 

Is the tax based on the selling price? Or is based on the land office valuation of the land and building?

 

Thanks for any opinions

MOVED to real estate forum

My mrs pays 8 baht a year land tax for the land our house is on and 9 baht a year for our small piece of farmland, absolutely outrageous costs..

17 hours ago, ubonr1971 said:

We are proposing to buy a building. The seller agreed to pay 50% of all taxes associated with this deal at settlement in the land office. 

 

Is the tax based on the selling price? Or is based on the land office valuation of the land and building?

The transfer tax is a % of the selling price OR the land office valuation - whichever is higher. If the seller has owned the property for less than 5 years there is another tax to be paid. 

You can take a copy of the chanot to the land office and they will calculate the tax due based on their valuation. Most people declare a selling price similar to the valuation price so they pay the lower tax (you don't have to show the real sell/ buy agreement to the officials. The process of title transfer includes signing such contract at the land office and they put in it the price you tell then) 

Most Thai do not bother to [ay their land tax, usually a ridiculoisly small amount. The debt accumulates over years, and becomes noticeable or even substantial. The chanote cannpt be transferred until the unpaid taxes are cleared. It is a matter of negotiation between vendor and purchaser as to who pays. If a farang is involved, guess who pays.

To the OP.

All above posts to your question are either wrong, off subject or inaccurate.

This is the information you require.

There are four (4) transfer fees and taxes to be paid when land is transferred from one owner to another.

Usually the buyer and seller agree to pay 50/50, but this is up to them, not the government. But in reality all taxes, other than the transfer fee, are the sellers cost, unless the 50/50 (or any other private agreement) is agreed between parties.

Most properties now have government appraisals, and this is the price the land office will use for the transfer. In the past the seller nearly always declared a low selling price to reduce taxes. This is not possible now (unless for some reason they wish to have a higher price than the appraisal).

Also on a more increasing basis, the land office is asking for the Agreement or contract to be shown at the time of transfer, so probably good to have it with you at transfer time.

 

I will lay out the applicable fees/taxes below:

 

Transfer fee:	2% of the registered value of the property (MUST be paid)
Stamp Duty:	0.5% of registered value. Only payable if exempt from business tax
Withholding tax:	1% of the appraised value or registered sale value of the property (whichever is higher and if the seller is a company). If the seller is an individual, withholding tax is calculated at a progressive rate based on the appraisal value of the property.  Obviously the higher the selling price/appraisal, then the higher the tax due. NOTE:  this tax is lowered on a % basis, depending on how long the seller has owned the property ie: max 50% deduction if owned more than 8 years.
Business tax:	3.3% of the appraised value or registered sale value of the property (whichever is higher). This applies to both individuals and companies. NOTE: If the land has been owned for more than 5 years there is no Business tax to be paid, but Stamp Duty must be paid.   Hope this has helped you.

The tax mentioned in Post #3 is nothing to do with the transfer of property at the land office, it is a land tax (usually payable yearly), which most people neglect to pay, but the new 'land and Building tax regulations' come into effect on the 1st Jan 2020, so there will be proper accountability, although the amounts of tax will still be quite small. This tax will be paid directly to the local Tessaban.

23 hours ago, ubonr1971 said:

Is the tax based on the selling price? Or is based on the land office valuation of the land and building?

Normally seller pays all taxes, and buyer pays transfer fee (p.t. 2 %) – and probably also the amount for stamps, which is 0.5 % – at the Land Department upon transfer of title deed.

 

Fees are based on actual sales price – be prepared to show documentation of sales agreement – or the land department's appraisal price (valuation), whichever is highest.

 

Tax is based on a calculation of seller's profit based of length of ownership and purpose of use, and as such not something a buyer should pay.

 

If seller is a company, or the property has not been used as private home for a certain length of period, there is an additional 3.3 % business tax.

 

You can find a property sales/transfer tax-calculator here.

 

Sometimes transfer fee and stamps are shared 50/50.

 

Are you sure you have agreed to share taxes, and not transfer fees?

 

I would not accept to pay half of sellers tax on profits...????

2 hours ago, thainet said:

To the OP.

All above posts to your question are either wrong, off subject or inaccurate.

This is the information you require.

There are four (4) transfer fees and taxes to be paid when land is transferred from one owner to another.

Usually the buyer and seller agree to pay 50/50, but this is up to them, not the government. But in reality all taxes, other than the transfer fee, are the sellers cost, unless the 50/50 (or any other private agreement) is agreed between parties.

Most properties now have government appraisals, and this is the price the land office will use for the transfer. In the past the seller nearly always declared a low selling price to reduce taxes. This is not possible now (unless for some reason they wish to have a higher price than the appraisal).

Also on a more increasing basis, the land office is asking for the Agreement or contract to be shown at the time of transfer, so probably good to have it with you at transfer time.

 

I will lay out the applicable fees/taxes below:

 

Transfer fee:	2% of the registered value of the property (MUST be paid)
Stamp Duty:	0.5% of registered value. Only payable if exempt from business tax
Withholding tax:	1% of the appraised value or registered sale value of the property (whichever is higher and if the seller is a company). If the seller is an individual, withholding tax is calculated at a progressive rate based on the appraisal value of the property.  Obviously the higher the selling price/appraisal, then the higher the tax due. NOTE:  this tax is lowered on a % basis, depending on how long the seller has owned the property ie: max 50% deduction if owned more than 8 years.
Business tax:	3.3% of the appraised value or registered sale value of the property (whichever is higher). This applies to both individuals and companies. NOTE: If the land has been owned for more than 5 years there is no Business tax to be paid, but Stamp Duty must be paid.   Hope this has helped you.

 

I don't believe your final comment is correct. I have dealt with many commercial properties up to 25 years old and all of them have been required to pay Specific Business Tax. Possibly if the property is owned in a private individual name rather than a corporate entity, i deal mostly with corporate and never seen the SBT been not necessary.

3 minutes ago, smutcakes said:

 

I don't believe your final comment is correct. I have dealt with many commercial properties up to 25 years old and all of them have been required to pay Specific Business Tax. Possibly if the property is owned in a private individual name rather than a corporate entity, i deal mostly with corporate and never seen the SBT been not necessary.

Just sold one house last week..owned 7 years (wife's name of course).

NO business tax applied after 5 years..just stamp duty in lieu.

Company could be different..I don't know about that, but will research it just for curiosity sake.

3 minutes ago, thainet said:

Just sold one house last week..owned 7 years (wife's name of course).

NO business tax applied after 5 years..just stamp duty in lieu.

Company could be different..I don't know about that, but will research it just for curiosity sake.

I think its a relatively new law in the sake of individuals to try and prevent flipping of property, encourages them to hold for 5 years. Corporate no different if they hold for 5 years or not, SBT levied either way.

23 hours ago, thainet said:

The tax mentioned in Post #3 is nothing to do with the transfer of property at the land office, it is a land tax (usually payable yearly), which most people neglect to pay, but the new 'land and Building tax regulations' come into effect on the 1st Jan 2020, so there will be proper accountability, although the amounts of tax will still be quite small. This tax will be paid directly to the local Tessaban.

hi. Thanks for this info.

 

If we are currently renting a building and have a registered lease at the land office 2 yrs ago... who will be liable for this new tax. I dont think its in our current contract. 

 

If the landlord suggests that we have to pay for this is this something we can perhaps negotiate 50% deal? Surely the owner should pay this tax....

On 12/18/2019 at 9:49 AM, ubonr1971 said:

hi. Thanks for this info.

 

If we are currently renting a building and have a registered lease at the land office 2 yrs ago... who will be liable for this new tax. I dont think its in our current contract. 

 

If the landlord suggests that we have to pay for this is this something we can perhaps negotiate 50% deal? Surely the owner should pay this tax....

Property Tax is a landlord tax, although in practice the market standard is for the burden to be placed on the tenant. The local Or Bor Tor don't care if its paid by the landlord or tenant.

 

Just see what you can do negotiating with the landlord when they raise it. You sure there is no catch all clause in the lease?

 

If the property is multi let then the landlord will have to handle, and you would be justified in requesting to see the breakdown on how the tax was split between occupiers.

Split the total fees/taxes down the middle regardless of who is supposed to pay what.....sold hundreds of properties this way....just make sure its clear to both parties