Transfer Fee

[alyx]

Hey everyone

As you know new regulations took effect on April the first (although only one out of three percentage is usually mentionned)

Today we went to the land department to proceed with the purchase of a condominium

As expected the fees were as follows:

1) 0,01 % of the value of the land department

2) 0,50 % of the amount declared (Duty stamp)

These two fees are correct

But I was choked is when I was asked to pay

3) 2,50 % of the land department's value

A receipt was issued with the above figures so no tea money involved

I really don't understand these 2,50 % as the condo had belonged to the seller for 23 years

Does anyone know whether this is standard ?

I have read that it should be around 1% but no further details?

Thanks

[tangoll]

I am not a lawyer so my knowledge is based only on what I have read here on this forum as well as other articles written by lawyers and/or accountants on this subject. Because the property in question has been owned by the seller for 23 years, I believe the fee that you are questioning is the income/withholding tax, which is a tax computed based on an assumed cost of the property and based on the number of years held. I think you need a good translation of which fees you are being asked to pay.

The second point is that the specific business tax and the income/withholding tax is assessed on the seller of the property. Who pays for it is often negotiated during the negotiations on the sale of the property and should be noted in the sales and purchase agreement. Why are you being presented with the bills to pay all the taxes and fees? Had you consented to pay all such taxes, including the actual transfer fee?

A lawyer might shed better light on this, but this is my reading on your problem.

[dave111223]

I'm no expert, but i thought the 2.5% was for "business tax", ie if you are in the business of real estate and then buying/selling on a quick turn around. But i thought that if you owned the property for more than a year or so then you don't have to pay this tax?

Maybe the seller owned it for 23 years, but maybe it was never their primary residence?

[alyx]

Thank for the answers

Regarding who pays the transfer fee we have decided to split 50/50 of all taxes so there is no surprise there

We are not paying business taxes as neither of us are working in real estate business (On the top of it he is retired and I am not currently working in Thailand)

For sure there is a tax to pay (other than the 0,50% duty stamp and 0,01 transfer fee) which is calculated on the number of years the condo has been owned but it seems to me that it is nearing the 3% business tax

Anyone familiar with the matter?

Thanks

[alyx]

Maybe the seller owned it for 23 years, but maybe it was never their primary residence?

Yes it was his primary home

[Farma]

The information “Fees, Stamp duty and Tax” at the bottom of the page on this link may help.

http://bia.serverbox.net/011.html

[alyx]

Hey everyone

Thanks for trying

I jaust had someone call the Land Department (I know I should have though about it before bothering anyone but better late than never....)

Transfer fees are as follows:

1) 0,01 % of the value of the land department (usually lower than the selling price)

2) 0,50 % of the amount declared (Duty stamp)

3) 2,50 % of the land department's value (in thai it is called Passi Ngung Daï)

I think that should be more advertised as most of us believe that there is only one tax to be paid on top of the duty stamp

Of course if the owner sells before the 5 year term a further 3% business tax has to be paid as well (this one has been reduced to whatever figure)

I hope that shed some lights

[alyx]

The information "Fees, Stamp duty and Tax" at the bottom of the page on this link may help.

http://bia.serverbox.net/011.html

Thank you Farma

Quite exhaustive description but I guess this not accurate as it is different from the informations from the Land department (which we called on 3 different occasions and obtained the same answers)

This is the part in the link

Fees, stamp duty and tax The fees, stamp duty and taxes that arise on the sale, lease, or mortgage of land, buildings and condominiums are described below:

Transfers of land, buildings or condominiums The land transfer fee for transferring ownership to land, buildings or condominiums is 2% of the assessed value, no matter what amount is declared. In addition, there is stamp duty of 0.5% based on the amount declared or the assessed amount, whichever is higher. For those who sell land or buildings held for less than five years (less than one year, if the owner has his registered domicile at the place being sold) there is a specific business tax due of 3.3% (inclusive of municipal tax) of the declared amount. But if this tax is paid, then the 0.5% stamp duty referred to above is not payable.

an this is what I have been confirmed with

1) 0,01 % of the value of the land department (usually lower than the selling price)

2) 0,50 % of the amount declared (Duty stamp)

3) 2,50 % of the land department's value (in thai it is called Passi Ngung Daï)

[Farma]

No problems alxy, maybe you could contact Bangkok International Associates who publish the Thailand Business and Legal Guide and ask them to update their online information.

[bazookaa]

i am not ok with you

if you consult Revenue Depatment you have NEW RULES

http://www.rd.go.th/publish/37765.0.html

Please note that the following tax measures to stimulate the economy are now effective: 1. Personal income tax exemption on the first 150,000 baht (from tax year 2008) 2. Tax exemption on the first net profits of 150,000 baht for SMEs with paid up capital on the last date of the accounting period not exceeding 5 million baht 3. Specific Business Tax cut from 3% to 0.1% on commercial or profitable sale of immovable property 4. Fee reduction to 0.01% for the transfer (previously 2%) and mortgage (previously 1 %) of property and condominiums, residences and commercial buildings in accordance with 3 Notices of the Ministry of Interior dated 24 March B.E.2551.

[dotcom]

Go ask the land office. 2.5% sure sounds right to me. It is not a tax on profits - it is a tax on transferring ownership.

Seller supposed to pay but that can be negotiated. Doesn't matter one whit how long the seller has owned the property. 2.5% is assessed on thier fair value - not what the unit trades hands for. Very transparent & very reasonable. The bad old days are gone.

[alyx]

i am not ok with you

if you consult Revenue Depatment you have NEW RULES

http://www.rd.go.th/publish/37765.0.html

Please note that the following tax measures to stimulate the economy are now effective: 1. Personal income tax exemption on the first 150,000 baht (from tax year 2008) 2. Tax exemption on the first net profits of 150,000 baht for SMEs with paid up capital on the last date of the accounting period not exceeding 5 million baht 3. Specific Business Tax cut from 3% to 0.1% on commercial or profitable sale of immovable property 4. Fee reduction to 0.01% for the transfer (previously 2%) and mortgage (previously 1 %) of property and condominiums, residences and commercial buildings in accordance with 3 Notices of the Ministry of Interior dated 24 March B.E.2551.

Well it is your right not to be OK with me but I doubt you were with me on Tuesday May the 20th when I had to pay the 2,5% on top (of course equally shared)

What you are talking about is what has been modified and I have seen nowhere (in any article) any mention of the 2,5% which is calculeted on the lenght of ownership

I can tell you this as well: when I asked the officer the reason of this amount he explained to me that as the condo had been owned for more than 10 years the calculation was not based on the full amount

I hope that this will clear any doubt as I experienced it first hand yesterday

[tangoll]

For anyone's interest, here is one calculation done for me by an experienced real estate agent on the sale of a condo unit held less than one year, 84 sq meters, using the Land department's estimated price for that unit at baht 63,700 per sq. meter. Total sales value at estimated price, 5.35 million.

Fees payable on transfer of ownership:

Transfer Fee 0.01% baht 535.08

Duty stamp 0.11% 5,885.88

Revenue tax 37,806.40

Total 44,227.36

This total is what the Land department will assess you if buyer and seller declare the sale at the estimated value. If you declare a higher (or actual) amount, the figures will of course be different. Depending on the Land Dept official handling the transaction, they may or may not want to see the actual Sales and Purchase Agreement to see the sales price or they may be satisfied with the declared value of the sale, which probably should be somewhat higher than the estimated value.

[alyx]

For anyone's interest, here is one calculation done for me by an experienced real estate agent on the sale of a condo unit held less than one year, 84 sq meters, using the Land department's estimated price for that unit at baht 63,700 per sq. meter. Total sales value at estimated price, 5.35 million.

Fees payable on transfer of ownership:

Transfer Fee 0.01% baht 535.08

Duty stamp 0.11% 5,885.88

Revenue tax 37,806.40

Total 44,227.36

This total is what the Land department will assess you if buyer and seller declare the sale at the estimated value. If you declare a higher (or actual) amount, the figures will of course be different. Depending on the Land Dept official handling the transaction, they may or may not want to see the actual Sales and Purchase Agreement to see the sales price or they may be satisfied with the declared value of the sale, which probably should be somewhat higher than the estimated value.

Well this only confirms what I wrote but you should be aware that the figure you are announcing for the revenue tax depends on the location and the number of years the property had been owned by the seller. Having said that I think that the 0,7 % assessed by your real estate agent comes down to no number I have ever seen.

But I am only talking of experience where I had to pay 2,5% for the taxes last week

On the other hand we might not be talking about the same taxes . The one I am referring to is called Passi Ngung Daï and might be different from the revenue tax

Thank you to follow up on this one

[importford]

I have some legal problems with the new law:

4. Fee reduction to 0.01% for the transfer (previously 2%) and mortgage (previously 1 %) of property and condominiums, residences and commercial buildings in accordance with 3 Notices of the Ministry of Interior dated 24 March B.E.2551.

But my accountant told me that this translation is not accurate.

He told me that the fee reduction for the transfer of land (from 2% to 0.01%) is only valid if there is a private residence built on the land.

Only companies that are registered real estate companies can have the tax reduction to 0.01%

If your company is not a real estate company (we have an export company);

we can only enjoy the tax reduction to 0.01% IF THERE IS A residence house build on the land.

Is this true??????

He told me that in the law they are talking about : " Tee Yoo ASAI "

According to him this means that there has to be a residence built on the land included with house book and house number.

Is this possible?

Because we have land on the name of the company of my wife.

She wants to transfer the land from the company to her private name.

There is nothing built on the land (1Rai).

According to my wife and our accountant, we will have to pay 2% and NOT 0.01 % transfer fee because there is NO residence address on the land (no house book, no house number). Even more, the land is empty.

Can somebody check the translation with the original law, because this will make a big difference for us. Thanks guys...

Edited May 26, 2008 by importford

[tangoll]

alyx, the revenue tax is the passi ngung dai. For the calculation of the condo shown in the example, held less than one year, then sold, the revenue tax is calculated as follows:

For property held less than one year, the cost of sales is set at 92%; meaning profit of 8%. 8% * 5.35 million = 428,000 baht

Profit 428,000 divided by one year held = 428,000.

tax on 0 - 100,000 = zero

tax on 100,000 - 500,000 = 10% of 328,000 = 32,800 baht

tax on 500,000 - 1,000,000 = 20% of zero = zero

etc.

Thus, the revenue tax (passi ngung dai) on this transfer of ownership of a condo held less than one year, at the declared value of 63,700 baht * 84 sq. meters is, baht 32,800.

I do not know what the cost of sales % is for a property held over 20 years, but the land department should have a table showing this.

This is my understanding, but you have better get a lawyer to confirm any calculation relevant for your specific case.

[alyx]

alyx, the revenue tax is the passi ngung dai. For the calculation of the condo shown in the example, held less than one year, then sold, the revenue tax is calculated as follows:

For property held less than one year, the cost of sales is set at 92%; meaning profit of 8%. 8% * 5.35 million = 428,000 baht

Profit 428,000 divided by one year held = 428,000.

tax on 0 - 100,000 = zero

tax on 100,000 - 500,000 = 10% of 328,000 = 32,800 baht

tax on 500,000 - 1,000,000 = 20% of zero = zero

etc.

Thus, the revenue tax (passi ngung dai) on this transfer of ownership of a condo held less than one year, at the declared value of 63,700 baht * 84 sq. meters is, baht 32,800.

I do not know what the cost of sales % is for a property held over 20 years, but the land department should have a table showing this.

This is my understanding, but you have better get a lawyer to confirm any calculation relevant for your specific case.

Thank you Tangoll for these details. So we agree on the terms

I bought a 48.10 m² last week. The assessed value was 38.500 per m² and 46.316 baht were paid in revenue taxes (I am not going to state the two other taxes as we all agree on these) and it is 2.5% of the assessed value (the declared value is irrelevant)

As I said earlier this percentage depends on the location (Silom in my case)

Before making the purchase I had made a call to a friend of mine whose wife works as a real estate agent: she gave me the same figures but for the revenue tax she told me that it could go from 1 to 3 % and was not sure about the exact amount.

This is the reason why I called the land department afterwards (on 3 different occasions on that day....you know to make sure) and evrytime I got the same answer

I guess that this tax vary from one distric to another. In any case if you know a thai you can ask him/her to call the land department who willl ask the details needed for the calculation and will answer you on the spot

If anyone is interested let me know I will provide you with the phone number of the land department

After all, they are the one to know about it and they are quite nice people (especially over the phone)

[alyx]

For the calculation of the condo shown in the example, held less than one year, then sold, the revenue tax is calculated as follows:

Hey Tangoll

Then again we are talking about less than a year

Does this mean that one has to pay this tax on the top of the business tax (keeping in mind that the duty stamp is included in the latest)?

[alyx]

In answer to your post on Transfer fee Condo

These are the exact figures (I had to go through thye process a month ago and it is still on until April next year

1) 0,01 % of the value of the land department ( of the assessed value, no matter what amount is declared)

2) 0,50 % of the amount declared (Duty stamp)

3) 2,50 % of the land department's value (in thai it is called Passi Ngung Daï)That usually the previous owner who has to pay this amount In your case I guess you won't have to

[tangoll]

Hi, I just completed transfer of ownership on my condo held less than one year, declaring a sales price of baht. 7.25 million. Total taxes and fess computed by land office and paid by me was baht 45,362. This included revenue tax, specific business tax, stamp duty and transfer fee.

Hope this is of help to anyone buying or selling a condo.

[jitagon]

I've been toying with the idea of transferring the land, which belongs to my company, to my spouse. I own the house on it, and so added security against any plottings (for the paranoid) to eject me. I bought the land two years ago for 600k. Anyone can advise what would be the transfer fee if I were to take this step? Thanks in advance

[alyx]

I've been toying with the idea of transferring the land, which belongs to my company, to my spouse. I own the house on it, and so added security against any plottings (for the paranoid) to eject me. I bought the land two years ago for 600k. Anyone can advise what would be the transfer fee if I were to take this step? Thanks in advance

The best you can do is calling the land department who will give you the exact figures

[jitagon]

I've been toying with the idea of transferring the land, which belongs to my company, to my spouse. I own the house on it, and so added security against any plottings (for the paranoid) to eject me. I bought the land two years ago for 600k. Anyone can advise what would be the transfer fee if I were to take this step? Thanks in advance

The best you can do is calling the land department who will give you the exact figures

Anyone else. Please?