Tax On Rental Agreement

[Royale]

Six years ago i bought a house with my Thai boyfriend and took out a 30 year lease which was registered on the Chanote paper at the land office. We registered the lowest rental agreement that we could to keep the tax down (the lease being just insurance for me if we should split up). Every year we have paid 3.000B to the local land tax office. Two weeks ago i got the letter telling me to go pay before 28th Feb so today off i went with my usual payment plus payment for the rubbish.

On arrival i was told that there was no way that the rent on our house could be 2.000 a month ( as stated on the lease agreement) and so they have put up the tax, it will now be 15.000

When the lease agreement was first registered on the Chanote paper at the land office and the taxes paid accordingly they never said that 2.000 per month for the next 30 years was not ok, now it seems they have moved the goal posts.

Has anyone else experienced this?

They have given me a paper to give to my boyfriend on which it says he can fight this case,he has 15 days to make his case. Before we do so i would like to know if anyone thinks we have any chance at all in winning.

Thanks in advance.

[oracle]

This tax is based on 12,5 % of the yearly actual rental or assessed rental, whichever is higher. The 2000 baht is maybe to low, you have to pay but maybe negotiate it down a bit. This year this tax will be canceled and ALL house owners in Thailand have to pay land and housing tax depending on the use of the property. It will be max 0,5% yearly over the appraised value of the property if the property is used for commercial purposes, otherwise residential property I believe it is max 0,1 % over the appraised value.

[torrenova]

On that 12.5% basis, the Bt3,000 tax paid would indicate an annual rental of Bt24,000 or Bt2,000 per month. At Bt15,000, it infers an annual rental of Bt120,000 or Bt10,000 a month.

Oracle, can you pleas elaborate on this tax change. If I read you right, all house owners will have to pay Bt1,000 per Bt1,000,000 of assessed property value ?

[katabeachbum]

Lease also has tax to tessabaan, and neither land office or teassabaan will accept 2000 baht a month. They check sqm house according to buildinpermit and size of land and calculate rental value according to this. The value of sqm house and land in your area is set by your Tambor/tessabaan/ Pujai baan/kamnan, and reported to land office each year.

To avoid taxes, I would replace the lease with a usufruct

[quiksilva]

Sorry to hear that your tax bill has gone up, but its still probably much less than what would be payable under open market rental conditions.

What we have here is the reported value being lower than the government's appraised value. Tax is levied on whichever is higher. Usually in open market transactions the government's appraised value is the lower of the two.

Edited January 14, 2010 by quiksilva

[thaihome]

.. This year this tax will be canceled and ALL house owners in Thailand have to pay land and housing tax depending on the use of the property. It will be max 0,5% yearly over the appraised value of the property if the property is used for commercial purposes, otherwise residential property I believe it is max 0,1 % over the appraised value.

Was not aware the proposed property tax act had been approved by the cabinet. Besides, even if it was approved it would not go into effect unitl 2012.

Perhaps you could post a link (from the Nation, of course) on its approval.

TH