Land Office Fees Going Up March 26 (correction)

[Marvo]

It has NOTHING to do with companies. When title to land is sold or transferred taxes and fees must be paid.

The rate at which they are paid however was TEMPORALLY reduced in a promotion which ends March 28th this year, at which points rates go back to their NORMAL levels.

It has NOTHING to do with your nationality it applies to ALL transactions.

quicksilva, can you tell me...

1) How does this new news affect transactions involving the SALE of land BY a company TO a private Thai individual between the dates 2nd March - 28th March? What rates will be in effect?

2) Is the government (0.01%, 0.01, 0.1%) discounted rate for Thai individuals buying land still in effect until 28th March?

Edited February 25, 2010 by Marvo

[featography]

The head of the Chonburi Land Office, Director Vaiyavuth Surapruik, said, "In 2008 the fees were lowered to help the economy. This has stimulated the sale of properties. Since the fees were lowered almost two years ago there has been no slow-down in the number of transactions at the land office in Banglamung which services Pattaya so now fees will go back up in order to increase government revenues."

As far as I recall is that the fees were lowered for 1 year in 2008.This was extended for another year from march 2009 on but since this decision was never properly announced the discount during the second year was not enforced at the land office.

The date in the original article from the Pattaya Times is incorrect. The expiration date of the temporarily reduced real estate taxes is 28th of March, 2010.

The new law was properly approved and announced as anyone can see from any of these multiple references:

http://www.thailandlawonline.com/transfer_tax.html

http://bangkok.angloinfo.com/countries/thailand/intax.asp

http://ezinearticles.com/?Thailand-Real-Es...&id=2387266

http://phuket-post.com/article/thai-tax-ti...reak-ends-march

Also note that this has nothing to do with farrangs -- it affects ALL real estate transactions in Thailand, regardless of the buyer's nationality.

It is not a tax increase -- it is a return to the normal tax rate, which the Thai government was smart enough to reduce to near zero for the last 2 years in order to boost the economy.

The notion that if there was no change in the average number of real transactions (where did the Pattaya Times get this info anyway?), that it means the tax reduction should not be extended is ludicrous on its face. Demand for real estate slowed when the economic crises first hit. In order to increase demand for real estate back up to 'normal' levels, the Thai government lowered the associated taxes. It is a fundamental principle of economics that lower costs (including taxes) for a particular product increases demand. So if the quantity and amounts of the real estate transactions in Thailand over the last 2 years have remained relatively stable, it is BECAUSE OF THIS TAX REDUCTION -- if the taxes were still in place, basic eco-101 teaches that the quantity and amounts of the real estate transactions over the last 2 years would have gone down.

The worldwide and Asean economies are now starting to recover -- if the Thai government is wise, they will extend the deadline for one additional year. Let's please refrain from all the cynical comments -- and remember that they were wise enough to at least reduce it in the first place.

It is a fundamental principle of economics that lower costs (including taxes) for a particular product increases demand." Absolutely right. Now if Obama and Abisit would accept that fact of human nature, and economics!

[ChiangMaiFun]

I was under the impression it ended on the 28th March???

technically yes... but 28th is a Sunday? Land office closes on Friday 26th - so practically that's the last day unless I am missing something?

[craigt3365]

Property transfered between individuals will be charged three percent fees if owned for more than two years by the current owner. If owned less than two years the fee is higher, between five and six and a half percent.

So farang companies are charged double the fees that individuals(thais) are charged, sounds like a baht bus pricing system.

Well you steam-rolled right over the most important part of my original post, the land office may charge double for this particular transfer, actually it's not given that the average falang holds propety for less than 2yrs (something to do with them not managing their finances properly and going home with tail between the legs - don't re-act, it's only for those where the cap fits!) so given that, the 6.5% is the same as individual transfers. now onto my original post, company transfers have it easy, the Land office do not get any revenue from the transfer, only the initial transfer into the company name, so really we got it easy, I can't believe there is 3 pages of whinging on here, when- if you actually own property in this way you are laughing, cos the increase doesn't involve you, and if you buy a property already owned by a company, you won't pay any taxes to the land office.

Yeah, everybody forgot about some of the finer points...just want to rant about how bad Thailand is. I paid NO taxes when I purchased my house. Try that anywhere else. And like another poster said, you are welcome to leave! Try finding somewhere as nice as Thailand....if you do, please let me know!

All these chicken littles truly are missing the bigger picture....they are just reverting to the original rates from several years ago....just like banks everywhere are raising interest rates...things change.

[quiksilva]

It has NOTHING to do with companies. When title to land is sold or transferred taxes and fees must be paid.

The rate at which they are paid however was TEMPORALLY reduced in a promotion which ends March 28th this year, at which points rates go back to their NORMAL levels.

It has NOTHING to do with your nationality it applies to ALL transactions.

quicksilva, can you tell me...

1) How does this new news affect transactions involving the SALE of land BY a company TO a private Thai individual between the dates 2nd March - 28th March? What rates will be in effect?

2) Is the government (0.01%, 0.01, 0.1%) discounted rate for Thai individuals buying land still in effect until 28th March?

1) If the transaction qualifies then, the company will be able to enjoy the reduced SBT, transfer fees, and mortgage registration fees (namely 0.01% , 0.11%, 0.1% respectively), in the example you provide.

2) If it is a qualifying transaction i.e that its :

1. a house under land appropriation law,
   
2. a condominium under condominium law,
   
3. an office building under building control law or
   
4. the transfer is under the debt restructuring plan and provided that the registration at the Land Department is made within 24 March 2009
   

.

Please see this source for more details (as others have previously posted).

Edit: to answer more specifically regarding the acquisition of just land. Then you may find that you are not eligible for reduced transfer fee, but reduction of SBT may still apply. The determination of that will rest with the Department of Land.

In any event the costs will revert to normal levels after March 28th, so whatever your situation its still best to complete that transaction sooner rather than later.

Edited February 25, 2010 by quiksilva

[ChiangMaiFun]

It has NOTHING to do with companies. When title to land is sold or transferred taxes and fees must be paid.

The rate at which they are paid however was TEMPORALLY reduced in a promotion which ends March 28th this year, at which points rates go back to their NORMAL levels.

It has NOTHING to do with your nationality it applies to ALL transactions.

quicksilva, can you tell me...

1) How does this new news affect transactions involving the SALE of land BY a company TO a private Thai individual between the dates 2nd March - 28th March? What rates will be in effect?

2) Is the government (0.01%, 0.01, 0.1%) discounted rate for Thai individuals buying land still in effect until 28th March?

1) If the transaction qualifies then, the company will be able to enjoy the reduced SBT, transfer fees, and mortgage registration fees (namely 0.01% , 0.11%, 0.1% respectively), in the example you provide.

2) If it is a qualifying transaction i.e that its :

1. a house under land appropriation law,
   
2. a condominium under condominium law,
   
3. an office building under building control law or
   
4. the transfer is under the debt restructuring plan and provided that the registration at the Land Department is made within 24 March 2009
   

.

Please see this source for more details (as others have previously posted).

Edit: to answer more specifically regarding the acquisition of just land. Then you may find that you are not eligible for reduced transfer fee, but reduction of SBT may still apply. The determination of that may rest with the Department of Land. In any event the costs will revert to normal levels after March 28th, so still best to complete that transaction sooner rather than later.

To be clear - its going up to 6.8% total? from 0.001%?

[goatfarmer]

You guys can harp on.

Do you know how much it costs when you buy/sell houses in the UK, and if it's your second property look-out

You'll note that TV kept the Company ownership separate for ease of breaking it down to explain, it doesn't imply only falang prices are going up, although true this is generally the way falang buy property. It then goes on to say that individuals will see an increase as well, I recently sold a house that I'd owned for +2yrs and was charged all in about 2%, this is now going up to 3%, this transaction has nothing to do with falang.

On the plus side (which you are either forgetting or have never purchased in Thailand b4), the land office only charges the tax once on the sale of property to the company, after that the property (ie company) can change hands as often as you like but the land office doesn't get a baht from the transaction, cos the method of transfer is done simply by transferring the company, (1hr in a lawyer's office) the land office doesn't play any part in the transaction.

Stop whinging we're all lucky to be here.

Agreed.

[quiksilva]

Its going back to a maximum of 6.3% of purchase price or government's appraised value which ever is higher, however the actual amount will depend on the circumstances of the seller and whether or not you must pay Specific Business Tax.

From the same source:

Specific Business tax shall be payable if the seller sells the property within five years of the purchase registration date. The transfer is not subject to business tax if the seller is an individual and has possessed the property for more than five years before the transfer. Companies with specific objectives/ business purposes are subject to Specific Business tax irrespective the period of ownership.

If you do not qualify for SBT, then you can rejoice at the fact that you only have to pay Stamp Duty, which is payable at 0.5% of the registered value.

SBT will be 3.3% (from 0.01%)

or

Individuals who qualify for Stamp duty will still pay 0.5% (no change here)

Transfer Fee will be 2% (from 0.11%, for qualifying properties)

Withholding tax is 1% (and remains unchanged)

or

Personal withholding tax at the progressive rate (which also remains the same).

and yes this does not apply to the transfer of shares within a company, it's only for the transfer of title

Edited February 25, 2010 by quiksilva

[Rama]

I checked with a Thai lawyer. It's March 28th. Thai Visa should correct this erroneousness headline and article.

[stingray]

That's one of the reasons to escape europe, but now they start here so to, YEH indeed screw up the farang!!

I never understud why farangs always want OWN houses and land in LOS. As a foreigner, it's forbidden to own Property, unless if it's a condo. Instead of enjoing the cheap rentals, most of foreigners try to "abuse" a set up company, to sneak around the law to be proud to own a House or Land.

Why can't we accept the Thai law? Why have to buy, when rentals are so cheap? If no foreigner would buy any property, the prices would fall down 70% and rentals would be even cheaper. BTW, why put all the savings in a House, which most of farangs lose the property after a couple years anyway? JUST RENT IT. Keep the money in your Bannkaccount and keep the freedom to move anytime, when ever you want. No hassles about taxes, no hassles, because you didn't put in your gf's name, not families moving in, no worries, if the house start crack after a year, etc.

Edited February 25, 2010 by stingray

[NativeBob]

from 1% to 6,5%? from almost free to some small tip for land office. Looks reasonable

[stingray]

So? Go buy a condo for USD30,000 anywhere other than Thailand and if you can, good riddance! If you can feed yourself for USD2 a plate anywhere else, go - sooner the better. And if you want to keep Miss World without attitude then stay. Remember the best lady you would find in your own country would have three kids and looking for another house and payoff within 5 years, not forgetting attitude etc.

6% tax on what? ... on a purchase price your own countries only just remember (well at least you parents - if still living - may remember.)

This is a excellent post! No kidding, that's true!

[al007]

I do from time to time read the posts on Thai Visa.

It appears to my simple soul there are many farangs out there who have nothing better to do than, bash the various authorities, I do not understand why they remain here, are they being held against their wishes

There are many bad stories about the various dislikes in Thailand, I personally love it here, I am building a house, have a Usefruct, over the land to protect my lifetime right to occupy, and can say I have never been happier than I am now at the age of 64 years young

Stop moaning and go home if you do not like it here, you chose to come and live here

Al007

[Naam]

Is simple, they don't want us in their county, so they are pushing everything up in fees to drive us away. ATM fees, Land fees, next it'll be 200% on beer and hotel rooms.

Just wait, the women will be charging us a added tax when we take them away for the evening.

can you read mate? the fees were always that high and only temporarily lowered because of the "crisis"

[Naam]

That's one of the reasons to escape europe, but now they start here so to, YEH indeed screw up the farang!!

I never understud why farangs always want OWN houses and land in LOS.

and i never understood why some people who don't have the financial means to buy anything (quote: "why put all the savings in a House..") put their noses in other people's matter who can afford to build a house according to their liking or buy one (without spending their life saving) and then do as they please, such as knocking down a wall, remodel the bathrooms or kitchen, etc., etc., etc., etc.). hearing "rent, don't buy!" which some people consider rubbish over and over again is quite boring!

[Naam]

Don't you just love these increases whenever farang are concerned?

Not 10% or even a hefty 50% as might be expected, maybe?

But 650%.....!!!!!

(yes, yes, it's "because it was lowered 2 years ago")

where did you do your math... mine works out to about 7.9 %

i don't bloody care to what amount yours "worked" out. i paid in 2005 exactly 6.5% period!

[Marvo]

That's one of the reasons to escape europe, but now they start here so to, YEH indeed screw up the farang!!

I never understud why farangs always want OWN houses and land in LOS.

and i never understood why some people who don't have the financial means to buy anything (quote: "why put all the savings in a House..") put their noses in other people's matter who can afford to build a house according to their liking or buy one (without spending their life saving) and then do as they please, such as knocking down a wall, remodel the bathrooms or kitchen, etc., etc., etc., etc.). hearing "rent, don't buy!" which some people consider rubbish over and over again is quite boring!

Thank you for saying for me Naam.

[Naam]

Thank you for saying for me Naam.

for my professional services you owe me a Chang Marvo!

[lensta]

That's one of the reasons to escape europe, but now they start here so to, YEH indeed screw up the farang!!

I never understud why farangs always want OWN houses and land in LOS. As a foreigner, it's forbidden to own Property, unless if it's a condo. Instead of enjoing the cheap rentals, most of foreigners try to "abuse" a set up company, to sneak around the law to be proud to own a House or Land.

Why can't we accept the Thai law? Why have to buy, when rentals are so cheap? If no foreigner would buy any property, the prices would fall down 70% and rentals would be even cheaper. BTW, why put all the savings in a House, which most of farangs lose the property after a couple years anyway? JUST RENT IT. Keep the money in your Bannkaccount and keep the freedom to move anytime, when ever you want. No hassles about taxes, no hassles, because you didn't put in your gf's name, not families moving in, no worries, if the house start crack after a year, etc.

Foreigners can legally own a house, they just cannot own the land that it is built on.

[oracle]

Heh, hem, yeah I understand reading the Pattaya Times that the sales fee will be 6.5% of Land Office valuation plus all the other fees. So now we have sales fee, withholding tax, business Tax, transfer fees, stamp duty and a 6,5 sales tax. This article sucks more than any article has ever sucked before

[Djaotchou]

It is not a tax increase -- it is a return to the normal tax rate, which the Thai government was smart enough to reduce to near zero for the last 2 years in order to boost the economy.

It's good to read people with a brain, sometimes. About the other ones, you should not leave your favorite bar too long, someone might steal your stool.

[craigt3365]

From the same source:

Specific Business tax shall be payable if the seller sells the property within five years of the purchase registration date. The transfer is not subject to business tax if the seller is an individual and has possessed the property for more than five years before the transfer. Companies with specific objectives/ business purposes are subject to Specific Business tax irrespective the period of ownership.

Not sure if I am 100% clear on this. Does this say that if you hold land in a company and want to transfer (I guess it would be sell?) that property to your wife, the SBT will have to be paid?

Oh, Naam...couldn't agree with you more!!

Edited February 25, 2010 by craigt3365

[Viper]

I stopped thinking about any form of investment in Thailand some time ago - It was all decided for me. They have no idea what so ever.

[dsfbrit]

A simple way to avoid this increase is don't buy a property in Thailand which is heavily loaded against foreign ownership.

At least, a post full of common sense.

Have to agree - I 'own' a house with land in the company name. I love the house and living here, but it was a mistake for sure. I would have been better off renting here in Thailand and keeping the house in the UK and lived off the rent.

If you are going to buy any property - then a condo in your own name is the only half decent option.

As for this tax - it was reduced 2 years ago and we knew it would revert to its previous rate sooner or later - so this is not a shock to those of us who follow these events. Its not 'aimed' at Farang either - its just a tax. Is any tax really considered fair - most taxes have an impact more on one group than another - its just the nature of taxes.

For those that complain about this - perhaps you should look at the taxes in your home countries - 'Stamp Duty' on houses in the UK is a real howler...

[craigt3365]

I have met so many people here in Thailand that have made big money off real estate (heck, that should say everywhere, not just Thailand). And more will do so in the future. These are tough times. Here AND in the UK. To many of us, it is not just a financial decision, it is a lifestyle decision. I do NOT want to rent from somebody. I want my own property. So I can do whatever I want...win or lose. I retired early due to my investments in personal real estate. I would still be working otherwise.

So for those who say "Rent!" No way. In the long run, I will be money ahead...and master of my future (good or bad). Property will rise here. It is not such a bad time to buy. If you have a long horizon...which many of us do.

[Naam]

I stopped thinking about any form of investment in Thailand some time ago - It was all decided for me. They have no idea what so ever.

some people (like me) do not consider buying a home an investment to produce yield. if i wanted yield i'd invest the money i've spent for my home and live in a thatched hut.

[Naam]

From the same source:

Specific Business tax shall be payable if the seller sells the property within five years of the purchase registration date. The transfer is not subject to business tax if the seller is an individual and has possessed the property for more than five years before the transfer. Companies with specific objectives/ business purposes are subject to Specific Business tax irrespective the period of ownership.

Not sure if I am 100% clear on this. Does this say that if you hold land in a company and want to transfer (I guess it would be sell?) that property to your wife, the SBT will have to be paid?

Oh, Naam...couldn't agree with you more!!

if that is the case one transfers the company in the name of the wife. wife closes the company down and pays to close down (depending on the value of the property) a fraction of the land transfer fees. land office has nothing to do with companies being bought and sold. land office is of course involved if the property is sold from one company to another one.

having said so the afore-mentioned is based on my uneducated logical thinking. a proper lawyer might (most probably might not ) know better.

Edited February 25, 2010 by Naam

[mogoso]

That's one of the reasons to escape europe, but now they start here so to, YEH indeed screw up the farang!!

Didn't the present leadership announce that the goal was to be a socialist country in a few years. If that's the case shouldn't you expect steadily increasing taxes on both Thai and farang. more on farang) So I can't understand why Europeans would be bitching as it's their preferred economic system to live under.

[robinhill]

Gosh - hot topic this one!

So far as I am aware Friday 26th is the last possible day for transfer of ownership at the Land Office in order to still qualify for the reduced fees, but if you leave it until the last day and the office is too busy to process your application then you could have a problem.

The fees at present :

- Transfer fee = 0.01% (based on the Land Office's Assessed Value of the property)

- Stamp Duty = 0.5% (based on the Sale Price declared at the Land Office, and applicable only if SBT does not apply)

- Special Business Tax (SBT) = 0.11% (based on the Sale Price declared at the Land Office, and applicable for the first 5 years of the condo/house being built)

- Withholding Tax = same as before*

(Note that the reduced fees do not apply to undeveloped land)

The fees after March 26th 2010 :

- Transfer Fee = 2%

- Stamp Duty = 2%

- Special Business Tax (SBT) = 3.3%

- Withholding Tax = same as before*

* The Withholding Tax is calculated on the Assessed Value and against a sliding tax scale, and is also based on the number of years of ownership :

1 year : 92% mitigation

2 years : 84%

3 years : 77%

4 years : 71%

5 years : 65%

6 years : 60%

7 years : 55%

8 years : 50%

Thus, for example, if the property has been owned for 6 years by the present owner/seller, and has an Assessed Value at the Land Office of 1,000,000 baht, then the Withholding Tax is 20,000 baht, calculated as follows...

1,000,000 - (60% of 1,000,000) / 6 years = annual "income" to be taxed

= 400,000 / 6 = 66,666.67 baht per year

Since the first 100,000 baht of such "income" is taxed at 5% this = 3,333.34 per year for 6 years = 20,000 baht

For more details on the calculation of the Withholding Tax get a copy of Rene Phillipe's book on purchasing real estate in Thailand.

You can mitigate the cost of the Stamp Duty or SBT by declaring a Sale Price at the Land Office of less than the true price you pay for the property. This is common practice amongst Thai individuals at the Land Office to minimize fees, but makes little sense if purchasing via a Thai Company.

If you don't wish to purchase via a Thai Company then you can secure rights to land / house via the following :

1. Lease Agreement

2. Usufruct Agreement

3. Superficies Agreement

4. Habitation Agreement

4. Loan / Mortgage Agreement combined with Lease Agreement

The local Land Offices are restrictive about what rights you can register, and the rights of Superficies, which allow you to OWN the buildings and constructions on and under the land, can not be combined with a Lease Agreement for the same buildings / constructions. Technically you should be allowed to Lease the land only and own the buildings by way of Superficies, but in practice whilst this may be allowed for a Thai, it will most probably be denied for a foreigner at the Land Office.

Usufruct Agreements can be combined with a Lease Agreement, but only if the Land Office does not deny such (it varies from office to office).

You can have renewal rights for the Lease Agreement, a Long Lease Agreement being 30+30+30 years, but such "non-lease" rights are not guaranteed since they are a promise between the Lessee and the present land owner and are not transferable under Thai law should the land owner sell the land to another Thai National or Thai Company, or should another person obtain the ownership by way of inheritance....

So look out all of those who have been given reassurances which may not hold water under Thai law.

So, how do you make the land owner, or future land owner comply with his promise to renew?

If you make a loan to the the land owner to the value of the property, and also make a Lease Agreement with that same land owner, arranging things such that the annual interest payments on the loan equate to the annual lease payments, then after 30 years the land owner will still owe the money you lent him and this is a good reason to renew the lease. Once again, the official at the land office has to have no objection to such an arrangement.

For anyone who wants to know more, read the relevant sections regarding property and so on in the Thai Civil and Commercial Code (TCCC) which gives you a good understanding of what you 'should' be able to do within Thai Law.

I know I have strayed off the subject with the above, but I thought it may be useful reading since it relates closely to the topic of discussion.... the transfer of ownership of property and associated fees.

[robinhill]

Another point worth noting about Superficies rights :

If you are leasing land on which you wish to build, then if you acquire Superficies rights then you will OWN the constructions you build above and below the land for the duration of the lease (eg. 30 years).

At the end of 30 years if/when the land transfers back to the Thai, you have the right to request he pay you the market value for the building(s), and if he declines then you knock it/them down and restore the land to its original form. In practice it is likely that a compromise which is beneficial to both parties will be reached.