How Much Money Need To Get From The Outside To Show To The Land Department?

[justbob]

For example, i buy condo for 1.2 , but owner of the condo said that i only need to show 1mil from outside because land department have self price of that condo - 1mil, then other part i must give him in the cash. Contract for 1.2 mil . BTW owner said that he pays taxes from only for 1 mil. Is that correct?

[backflip]

Let's take the second question first. The buyer and seller report the sales price to the Land Department. Although some buyers and sellers collude to report a fictitious low selling price, to lower taxes, it is illegal. Is the first thing you want to do is to buy a condo and break the law? The tax is low and setting yourself up for criminal action for under reporting a sales price is foolish. The fact that the seller wants to do this should raise a red flag. Now the first question: as a foreigner, you must show that the entire purchase price was funded from money transferred from outside of Thailand. Again this is very silly of you to try to cut corners. If you transfer too much money for the condo purchase, you can use the excess for living expenses.

[donx]

I agree with backflip on this one even though my wife went ahead and purchased land that was reported to the land office at a lower price than the actual sale. Neither my wife nor I were comfortable with this but the request to report a lower price came the day of the transfer and my brother-in-law convinced my wife that this was a common practice.

As for your situation, explain to the seller that you are willing to pay the tax on the additional 200,000 baht. That way there is no need for him/her to report a sale of 1 million baht. I assume that the seller is currently expecting to pay all of the tax. That was the case for the land my wife bought.

[backflip]

"As for your situation, explain to the seller that you are willing to pay the tax on the additional 200,000 baht. "

Excellent suggestion.

[Irene]

It is sad for me to say that under-declaring a selling price is common. As far as I am aware of, there have not been any ill-effects in so doing. The reason is mainly that when a buyer sells that property eventually there is no requirement for him to refer to the old purchase price since taxes would be calculated for an individual based on a new declared price or the benchmark price of the land department whichever is greater. Then instead of using the old purchase price, they use a standard deduction rates depending on the number of years of ownership. The net sum is the taxable amount.

This practice does not apply to a corporation which has to rely on the actual purchase price.

[jrbkk64]

Very common practice and I would assume this happens at least 50% of the time. There is really no need to be worried about it. Everybody, incl. the officials at the LD, know about it too. It is the "typical" thai way that applies to so many situations in this still wonderful country.

[WilliamJarvis]

The reason I would not agree to that is because it would increase my capital gains tax exposure when it cam time to sell the place.

[Irene]

The reason I would not agree to that is because it would increase my capital gains tax exposure when it cam time to sell the place.

If it is for that reason, then it is correct for a corporation but not an individual. For an individual, pursuant to the tax law, there is no reliance on the previous purchase price if you sell the property thereafter. They go by an assumed profit. That is the sale value less a standard percentage deduction, i.e. 50% to 92% depending on the number of years of ownership. Then the net sum is annualised and subject to tax rates at 5% to 37%, then the sum thereof shall be multiplied by the number of years of possession. That sum shall be the amount of tax payable. Because of the annualisation, the amount is normall not prohibitive.

For a corporation, you should insist on the true cost of purchase because that will be the basis of determining the gain.

[WilliamJarvis]

Irene - thanks for that, somewhat, complex explanation. Net result though, looks like I'm paying tax for doing a bloke a favour?