Taxes In Thailand

[jonik]

I am planning starting a condoe renting buisness.After my calculating this is 3-4 times more profitable than in my homeland.For about 400 000bt you get a 40qm flat and pull in about 6-5000bt a month.

This makes a downpayment on 6-7 years.In my country the same flat would cost about 7 000 000bt and pull in aprox. 24 000bt month making the downpayment about 24 years.And off this you pay 28% tax.Making it a profit you can use when you pass 94 years of age.

Is there a tax in thail. and if so how much?

Can i reg. this flat in my name and be the owner of it , then renting it out to a buisnessshop in thailand that rents it out to customers.

I've heard that farrangs are allowed to own 49% of a buisness in thail. making a bit of a risk starting it.

Also what is the market like for renting out small condoes with central location to tourists or thai's.

thanks for answer in advance jonik

[Harmonica]

I am planning starting a condoe renting buisness.After my calculating this is 3-4 times more profitable than in my homeland.For about 400 000bt you get a 40qm flat and pull in about 6-5000bt a month.

This makes a downpayment on 6-7 years.In my country the same flat would cost about 7 000 000bt and pull in aprox. 24 000bt month making the downpayment about 24 years.And off this you pay 28% tax.Making it a profit you can use when you pass 94 years of age.

Is there a tax in thail. and if so how much?

Can i reg. this flat in my name and be the owner of it , then renting it out to a buisnessshop in thailand that rents it out to customers.

I've heard that farrangs are allowed to own 49% of a buisness in thail. making a bit of a risk starting it.

Also what is the market like for renting out small condoes with central location to tourists or thai's.

thanks for answer in advance jonik

It is possible --- but only for some shrewd and knowledgeable people.

>>>>>>>After my calculating this is 3-4 times more profitable than in my homeland.<<<<<<<

Replace the batteries and then recompute!

[PeaceBlondie]

I have no idea where you get your figures and don't understand how you're calculating. Maybe I'm slow.

I live in a residential condo that sells 94 square meter flats for 1.4 million baht; they rent for 10K/month if you're lucky, 8,000/month normally.

I've heard the Thai tax on condo rentals is 15%. Is that gross or net?

And of course you're got to calculate vacancy rates, damages that aren't covered by the deposit, condo maintenance fees, legal fees, etc Our units sometimes stay vacant for more than a year. Are you targeting Thais or farang as your tenants? Who will manage, collect rents, make minor repairs? Do you have any idea what you're doing? What city and neighborhood are you thinking of? Who speaks Thai language?

If you don't know anybody you can trust who's a Thai national, how are you going to register the 51!

Doesn't he need a work permit even for this? What kind of visa does he need to do this?

[~G~]

Doesn't he need a work permit even for this?  What kind of visa does he need to do this?

<{POST_SNAPBACK}>

Foreigners can fully own condos in Thailand; but I don't think they can let them (correct me if I'm wrong).

In this case he will have to incorporate a Thai-majority company/limited partnership that will do the letting. If he wants to sign documents in Thailand as the director of the company he needs a work permit. If he wants a work permit he needs non-immigrant visa.

[jonik]

I think my batteries are ok

if your flat cost 1,400000 bt and rent is 10000bt this makes a downpayment for 10 years

Ok a 40m2 condoe at 400000bt and rent is say 4000bt makes a downpayment for 8,3 years.To make 10 years i must go as low as 3300bt.

You always pay more for more.

I've seen central located flats not bigger than 25m2 rented by bargirls paying about 3-4000bt , also they don't rip the paint of the wall.

But that is not the issue , is there a market for renting out small condoes?

Thanks G for the info but do you know if it is possible to be sort of a "silent" partner in partnership with a thai.I mean can i work in Norway while my thaipartner takes care of the buisness in thailand.

I was thinking it's better to go for long term rentingbiz , with a deposit ofcourse.

[chuchok]

You first of all need the correct visa that will allow you to gain income from a rental property.

[PeaceBlondie]

jonik, in standard English, "downpayment' means the first payment you put down to buy the property. In Thailand, a farang puts down 100%. If you want to buy a million baht flat, you pay a million baht plus the closing expenses.

If you buy the flat above me for at least 1.4 million and are lucky enough to rent it out 90% of the time, and lucky enough to get 8,500 baht per month when you rent it out, your gross receipts are about 92,000 baht per year, out of which you'll probably lose - what, I don't know - 20% in condo maintenance fees, repairs, unrecovered damages, legal fees, and maybe taxes. Your net will be no more than 73,000 baht per year on an investment of 1,450,000 baht - barely 5% per annum. And you have the risk of the property values going DOWN because you can't control the management's lack of maintenance, due to other owners not paying their fees, poor management, etc.

But if you rent out tiny studio flats to bargirls in certain parts of Bangkok, who knows. Who really, actually knows?

[jonik]

Well my goal is set for small flats,cause of the lesser maintenace cost.

But how much could it cost to fix a flat something i could do meself.

When i say downpayment i mean how long time it takes to actually take out the profit .You pay off the 400 000 bts invested with rent money.You have no profit before the 400 000bth have been payed off.Normal downpayment in my homeland is 25 years.That's what makes this a good deal.The rule is , If you can pay off something in under 10 years it's an extremely good deal.

[Sophon]

Well my goal is set for small flats,cause of the lesser maintenace cost.

But how much could it cost to fix a flat something i could do meself.

When i say downpayment i mean how long time it takes to actually take out the profit .You pay off the 400 000 bts invested with rent money.You have no profit before the 400 000bth have been payed off.Normal downpayment in my homeland is 25 years.That's what makes this a good deal.The rule is , If you can pay off something in under 10 years it's an extremely good deal.

<{POST_SNAPBACK}>

I think it's very misleading to compare with the situation in your home country. When you compare the amortization period on an apartment in Thailand with one in your home country, you also have to consider capital gains (or losses). In most western big cities you are more or less guaranteed that your apartment will at least maintain or more likely rise in value, and that you will at any time be able to cash in your investment. The apartment building will have been build to last for decades (or centuries), and will also be well maintained.

You are quite right that the maintenance cost on the kind of apartment you are talking about in Thailand (Bangkok?) will be quite low, but that's at least partly because there really will be no maintainance at all. The apartment building will slowly degrade, because there won't be enough money to keep it up. Also the building standard will be sub-par. The result being that in many cases the apartment will have no value at all after 10-15 years. Even if you decide to sell while the building is still in good shape, you will most likely find it impossible to unload your investment (even at a loss). It is very difficult to sell a "used" apartment in Thailand, just walk around any soi in Bangkok, and you will find multiple posters anouncing apartments for sale. Come back to the same soi 6 months later, and you will find most of them still there.

I also agree with what have been implied by others. The numbers you are using in your calculations seem overly optimistic, at least if we are talking about Bangkok. Even though the monthly rent as a percentage of the price are higher on this segment of apartments, I think 1 percent per month is very hard to achieve on one or a few individual apartments. In order to make this a good investment, you need to be in the bulk business, i.e. owning many apartments or preferably whole apartment buildings. And I also agree with other posters that it is a very risky business if you do not have prior practical general experience in this field, as well as a very good knowledge about the specifics of the Thai market.

My comments are specifically made about Bangkok, but I don't think the situation are better anywhere else. I have recently bought a condo in Bangkok myself, but did it with the expectation of probably not being able to sell it again. I did it because I wanted to have a base in Bangkok, and am prepared to loose my investment. Should that not turn out to be the case, it will be an unexpected (and very velcome) bonus.

Then there is of course the matter of a work permit. I believe you would need one for renting apartments, and you would definitely need one for fixing them up yourself.

Whatever you decide, good luck to you. Just don't make any hasty decisions, and don't invest money you can't afford to loose.

Just my opinion, you are of course welcome to disagree.

Sophon

[charles]

I think it's very misleading to compare with the situation in your home country.... The apartment building will have been build to last for decades (or centuries), and will also be well maintained.

The apartment building will slowly  degrade, because there won't be enough money to keep it up. Also the building standard will be sub-par. The result being that in many cases the apartment will have no value at all after 10-15 years.

I've always wondered about the basic quality of construction of apartments/condos in Bangkok. Most particularly, is the basic structural work really inferior to what you come across in Western countries? Or is it more general maintenance work, the more superficial things that is the problem?

I don't know how easy it is to make conclusions on this given that most multi-storey buildings in Bangkok are probably less than 15 years old. One apartment I stayed at in my early days here, Liberty Place on Sukhumivt Soi 22, which I'm sure many posters are familiar with, is I think now about 30 years old. And in actual fact, it seems basically pretty sound and not a lot wrong that a bit of (fairly superficial) interior renovating couldn't fix anyway. Having said that, given my lack of specialist knowledge, maybe someone is about to order its demolition any time now.

I also agree that the sums of the original poster look very optimistic. Where could you buy a 40 sq.m. studio for just 400,000 baht that could rent for 4-6000 baht? Normally, I'd have thought you'd be looking at 800,000-1 million.

[~G~]

Normal downpayment in my homeland is 25 years.That's what makes this a good deal.The rule is , If you can pay off something in under 10 years it's an extremely good deal.

<{POST_SNAPBACK}>

That's the breakeven point. In business investments (not real estate), I consider 2-3 years to return the investment as a good deal.

The fact that the situation is worse in your homeland still does not make it a good deal. The risks in real estate are high (low occupancy rates, high maintenance fees, possible bad management, asset value dropping due to changes in local economy, difficult to sell).

So if after all calculations the expected net profit is under 10%, I believe there is really no point taking this risk for such low yield.

[monty]

Friend of mine has been doing exactly what you are planning... In short he bought 7 studio's and 1 big apartment in the same building (Jomtien). He renovated the studio's to a very high standard, just to outshine all the other units on the market. We're talking full marble floors, fully equiped kitchen with all appliances (even a coffeemaker), computer with unlimited internet access, big tv with dvdplayer,...

Then made up a website, promoted it like crazy and started to rent out the studio's to short term holidaymakers. Rent at 1000 Baht/day...

Started slowly but went steadily uphill because of return visitors.

In his best year he achieved an occupancy rate of over 80%...

This has been a very good investment for him BUT...

He bought cheap, right after the economic crisis in '97...,he lived in the same building so it was easy to collect rents, arange repairs etc...

He is selling right now because occupancy is going steadily down... Reason, more and more places in the same high level of finishing are getting available, internet in the room is not so unique anymore etc... 1000 Baht/night is getting expensive!

Because of this oversupply I don't think its a very high return investment anymore. Also prices of real estate are high right now, they'll probably get a bit higher still but then I'll guess they'll come down, maybe not crashing but down they will go....

[jonik]

So monty do you think the marketprice for small condoes is going down?

I don't understand because it seems that more expencive appartments is selling quite good right now.

I understand that buildingconstructions in thailand is not the same as in my homeland , what is the general age of a building before wreking it.

Does flats come cheaper as the building gets older?

[Dakhar]

I recently had a 7 town house complex built. It was finished and open for occupancy about 6 weeks ago. Total investment, land & building costs.... 80K USD. So far I only have one town house rented. I should have a second by the end of the week. But it has been stressful thinking that the complex can just stand their empty. Granted the complex is paid for..... but really if I wanted to sell the entire complex, I doubt I could.... you need a buyer for that. So although I am not loosing money on interest, I could be loosing 80K$.

The complex is designed for Thais. No water hearter and no AC. Solid walls, 2 floors, 2bdr, 1 bathroom.... I could live there, but I am the type that likes to rough it. The point is, there is not a lot of maintainence for the complex. Yep, a lot of painting, but that is just about it.

[monty]

Jonik,

nobody ever knows for sure if the prices will go up or down.

What I know is what I can see with my own eyes and that's a lot of construction going on right now. As you said the premium places are selling at high prices but with this building boom I can see an oversupply coming!

I have no idea about Bangkok, but over here on the Eastern seaboard the construction is going at an enormous fast rate. Condo's, houses, shopping complexes, you name it.

It's pretty hard to sell your condo right now so there will have to be a price correction before turnover is going to pick up again.

What is selling good are the high priced brand new places. Both condo's and houses. But basically the only ones who really make a profit are the developers. If you buy in at those prices you'll never make a decent return.

In the cheaper price range the slowdown is already noticable. There are so many units up for rent/sale, and this has created a "buyers' market", where the buyer (or renter) can pretty much dictate the price. You don't agree, they'll move on and will sooner or later find a place where the owner will be happy to get it occupied at a low price!

I just can't see the arrivals of long stay tourists / retirees pick up suddenly to fill up all those empty places.

And you can forget pretty much in entering the market for Thai customers. Simply not worth the trouble, most real estate agents are not interested either to manage such places for you. You'll end up yourself begging to get hold of the rent...

At this time I can only see some profit in hunting for bargainpriced units, renovating them and then selling on.

Or you'll have to enter the premium market but this will need a hefty investment...

[wispyerk007]

I would like to elaborate on this post a little.

If I buy a condo for 3 million from a developer the purchase money coming in from a uk bank account ( tor tor 3 ) live in it for a couple of years and then sell it for say 4 million, can I transfer 4 million back to a uk bank account so as to purchase another condo or can I only transfer back the 3 million I originaly started with.

would appreciate some advice.

[wispyerk007]

I forgot to mention in my previous post I am moving to Thailand later in the year undecided about which visa though I am 56 so maybe on a retirement visa.

[monty]

You can send out any amount you brought in....

If you want to send out profits from a sale it's going to be a whole different thing. There will have to be taxes payed on this profit etc...

Sales are registered at the land & house department, mostly for a lower amount then the actual price paid so it'll be hard to proof you got the 4 mill from the sale...

Guess you'll just have to spen the profit

[Wekhin]

Yes, you can do it, Jonik.

However, it depends on whether the leasee wants a receipt or not.

If he does not want it, there will potentially not be a problem for you.

But if he does (to get allowance from his company, for instance), in this case you name will be in his company's payments. So, it wil be a matter of time that Revenue Dept. will spot you.