Misstating Condo Sale Price

[Fortunateson]

Sellers of a condo we are negotiating on want to register the sale price at the Land Office as 35% less than actual, I assume to lessen income tax payable for capital gain. Explanation is that everyone does this and the Land Office said it was okay to do.  I have no intention of doing this, regardless of whether it is a common thing

[retarius]

Personally I would cancel the sale. I bought some land last month and the seller did nothing like this.

[OneMoreFarang]

It seems the fact that they want to do it doesn't mean it is possible to do it.

The land office might tell you that they don't accept a certain price.

 

I would consider agreeing to this if you think you have a good deal. Would you prefer to pay a couple of 100,000 THB more and have the correct number registered?

[richard_smith237]

This is extremely common, its to cut down on the transfer tax - we've done it on a couple of properties...  No biggie at all.

 

I'm not sure why the Op wants to make things awkward for himself and the seller. 

 

[Negita43]

This was also the common practice in Spain until the government cracked down on it and then those who accepted the understatement encountered large capital gains when they sold - don't do it!

Edited November 9, 2023 by Negita43

[Negita43]

27 minutes ago, Negita43 said:

those who accepted the understatement encountered large capital gains when they sold - don't do it!

You think the same can't happen here???

[Topprofile]

It's done in almost every transaction to minimize taxes and fees... If you want to lose the deal because of it, go ahead.. but it's an every day occurrence

[KhunLA]

2 houses, 4 lots we sold, they (Udon Thani) didn't even ask the sale price and simply taxed them at their accessed price, which was considerably below the sale price.

[Fat is a type of crazy]

Delete  Someone stated same.

Edited November 9, 2023 by Fat is a type of crazy

[BKKKevin]

So someday when you go to sell will your basis for tax purposes will be the lower deflated price?… 

Edited November 9, 2023 by BKKKevin

[ezzra]

The correct way is that the land department has its own values of what all properties are worth, in thai they call it Raka parmoon, meaning 'estimated market price' and according to that scale the calculate the transfer fees... so just follow the guide of the land department and pay what ever they fix it to be...

[newnative]

2 hours ago, richard_smith237 said:

This is extremely common, its to cut down on the transfer tax - we've done it on a couple of properties...  No biggie at all.

 

I'm not sure why the Op wants to make things awkward for himself and the seller. 

 

Agree.  Very common practice.

[OneMoreFarang]

2 hours ago, richard_smith237 said:

I'm not sure why the Op wants to make things awkward for himself and the seller. 

I think many of us, who come from civilized countries, like to have things correct when we spend a lot of money.

 

And I think it's smart to enquire about things like that. Because it could be some scam and then it's nice when other members point out that it's wise to be careful. In this case I don't think it is a scam, just a common way to do things in Thailand.

[Crossy]

2 hours ago, KhunLA said:

2 houses, 4 lots we sold, they (Udon Thani) didn't even ask the sale price and simply taxed them at their accessed price, which was considerably below the sale price.

 

Yeah, that's our experience too, the land office already have numbers in mind.

[NoDisplayName]

4 hours ago, Fortunateson said:

Sellers of a condo we are negotiating on want to register the sale price at the Land Office as 35% less than actual, I assume to lessen income tax payable for capital gain. Explanation is that everyone does this and the Land Office said it was okay to do.  I have no intention of doing this, regardless of whether it is a common thing

 

Do it!

 

.....and demand a 35% reduction on the sales price, since that's the amount they're putting on the official government documentation.

[ripstanley]

Look at the other side of the coin. They are selling it 35% above the market price because you are a Farang

[Thailand J]

4 hours ago, Fortunateson said:

I assume to lessen income tax payable for capital gain.

the 35% reduction will lower your cost basis but in thailand the cost basis will not be used to calculate  your capital gain tax when you sell in the future.

In Thailand real estate capital gain tax is based on market value and years of possession, nothing to do with your cost basis. The land department will also accept market value instead of actual sales price.

 

[OneZero]

11 minutes ago, Thailand J said:

the 35% reduction will lower your cost basis but in thailand the cost basis will not be used to calculate  your capital gain tax when you sell in the future.

In Thailand real estate capital gain tax is based on market value and years of possession, nothing to do with your cost basis. The land department will also accept market value instead of actual sales price.

 

True.   Land Dept was aware that not everybody here in Thailand would be telling the truth, so they established the transfer tax as described above: Tax "Assessed Value) (not competitive market value) and years of possession.  They will ignore a claimed sales price below Assessed value, but I think accept a claimed sales price higher than market value (which simply increases the tax owed).  So the transfer tax is not based upon any true Capital gain. 

[Thailand J]

If you sell after one year of ownership, 92% of the sales price/land office value is tax free.

After two years it's 84% and so on, as per table below. So dont worry if the seller lowers your cost basis on paper.

[richard_smith237]

4 hours ago, OneMoreFarang said:

7 hours ago, richard_smith237 said:

I'm not sure why the Op wants to make things awkward for himself and the seller. 

I think many of us, who come from civilized countries, like to have things correct when we spend a lot of money.

 

And I think it's smart to enquire about things like that. Because it could be some scam and then it's nice when other members point out that it's wise to be careful. In this case I don't think it is a scam, just a common way to do things in Thailand.

 

Absolutely agree... but then there is this... (from the Op, who seems to intend to make things awkward for himself).

 

7 hours ago, Fortunateson said:

I have no intention of doing this, regardless of whether it is a common thing

 

[kwonitoy]

Agent did this to me on my condo sale in 2019, without my knowledge by the way, I found out at the land office during the transfer.

Selling price of condo 12 million baht, 

Selling price of condo on the land office official receipt 8.5 million baht

I got two bank drafts from the buyer, 8.5m and 3.5m, so the first was for the condo and the second was for the interior furnishing (fully furnished)

 

So I got my price, the taxable amount at the land office was lower and everybody thought it was win win

Except when I go to transfer the money out of Thailand I can only transfer 8.5 m in one go as that is what is on the official Land Office receipt

Some additional trips to the bank to transfer  the rest out so in the end no damage done but more hassle 

 

So your officinal price to buy will be a lower price, less tax but you will be stuck with that number when you sell and try repatriate your money  

Edited November 9, 2023 by kwonitoy

[scubascuba3]

Op you'll have an agreement between you and seller to show real price anyway.

 

Land office will use the official value anyway, available from condo office or land office, schedule available for all condos in the block 

[LukKrueng]

18 hours ago, Negita43 said:

This was also the common practice in Spain until the government cracked down on it and then those who accepted the understatement encountered large capital gains when they sold - don't do it!

I think the op is buying a condo in Thailand, not in Spain

[CecilM]

Don’t do it. As a foreigner I wouldn’t do anything fishy even if everyone else does it.

Trade off is that you might lose the seller.

If you’re really set on buying, you can offer to pay the tax for the seller. 

[brianthainess]

My experience was much the same as many here, registered at lower price, 1.6m land office tells you the price, owner paid 50% of the land tax. it is the NORMAL way in Thailand. I saved about 150,000Baht from memory on a 2 million deal, owner wanted 2m I got it for 1.7m. The Owner had had it for 20yrs.

[Negita43]

19 hours ago, Negita43 said:

This was also the common practice in Spain until the government cracked down on it and then those who accepted the understatement encountered large capital gains when they sold - don't do it!

For you poor confused souls who placed confused stickers - I know this is not Spain but is Thailand.

The point being made is that, whatever solicitors, sellers say now, if the Government sees a way of collecting more taxes then they can clampdown on the practice or introduce gains taxes and if you own  a property with a valuation already stated (below the real valuation) then when the property is sold that is the base line for any taxation and this may well mean you have to pay more tax.

[Celsius]

18 hours ago, newnative said:

Agree.  Very common practice.

 

No, it is not. The bank guy will be at the land department closing the deal with you.

 

Another odd post from someone who apparently made a killing selling real estate in Thailand.

 

Of course, if farang mug is paying cash for the property he is probably paying well above the market price which will be noted at land department, so that little scam on a seller side will be possible.

Edited November 10, 2023 by Celsius

[Brick Top]

Just go with the land office appraisal value which will almost definitely be much lower than the sale price , normally at least 50% lower , otherwise your going to end up paying a lot more in transfer tax if your contributing to that in the contract such as 50/50.

 

[newnative]

7 hours ago, Celsius said:

 

No, it is not. The bank guy will be at the land department closing the deal with you.

 

Another odd post from someone who apparently made a killing selling real estate in Thailand.

 

Of course, if farang mug is paying cash for the property he is probably paying well above the market price which will be noted at land department, so that little scam on a seller side will be possible.

    Yes, it is very common, as you have seen from other posts.  No, there will not be 'a bank guy' from any bank 'closing the deal' with me.  Never has been. Many foreigners here, including me, pay cash for property purchases and don't get mortgages, which is also very common.  

[Fortunateson]

On 11/9/2023 at 1:47 PM, OneMoreFarang said:

Would you prefer to pay a couple of 100,000 THB more and have the correct number registered?

Yes,

200,000 baht is nothing compared to the price of

 the condo