Income Tax On House Sale

[gregchambers]

Thai girlfriend thinking about selling house for 770,000 baht and I realise there is approx 6 percent in transfer tax, stamp duties etc which are due to be reduced by the govrn but also read that the whole sale sum may be subjected to income tax under current rules - not the profit on the sale. Obviously if this were true, even though she has no other income, it would take too big a bite out of the sale price. Anyone know the score?

[Firefan]

Greg; I think you have understood the current rules correctly. I am sure others will jump in with more info. Cheers!

[Thetyim]

I think ( note only think) tax is due if you sell it within two years of purchasing it.

[Dragonman]

Thai girlfriend thinking about selling house for 770,000 baht and I realise there is approx 6 percent in transfer tax, stamp duties etc which are due to be reduced by the govrn but also read that the whole sale sum may be subjected to income tax under current rules - not the profit on the sale. Obviously if this were true, even though she has no other income, it would take too big a bite out of the sale price.  Anyone know the score?

<{POST_SNAPBACK}>

Income tax is payable on a formula basis. The most recent figures I have is 1 year ownership 8%, 2 years 16 %, etc. until a max of 50% is reached. This percentage of the sale price is then taxable on normal income tax rates. So approximately if she has owned property for 8 years on 770,000 baht sale she will pay 33,500 income tax. Do you have a lawyer to check it out with?

In Thailand it is normal to negotiate this figure into the sale price so purchaser pays.

[gregchambers]

No she has only owned it for a year.

Are you saying that the taxable income is 8 percent of 770k? (Or 92 percent?)

Which would be approx 62k.

She has no other income so would the tax on this then be less 30k personal allowance and five percent or 1500 baht or some flat rate specifically for property.

Not too bad put like that if true... is it paid at the land dept office on transfer.

I did see 1 percent withholding tax for income tax quoted somewhere which would be 7700 baht and presumably refundable in part so hard to get the purchaser to pay!

Weird bloody tax system here prob down to inability of governments to abolish old laws or something

[gregchambers]

Some one else post a Herald Tribune link on buying property where they quote capital gains tax at 27 percent of profit whereas recent local newspapers quote that there is no capital gains tax.

http://www.iht.com/articles/2005/09/15/news/rebuy.php

[Heng]

Note: you can set the sale price to be lower than the "actual" sale price, to save a little on the transfer tax. As long as you're not setting an outrageous difference and it's not below the land department appraised value, they'll take your (and the buying party's) word for it.

[bkk_mike]

Note:  you can set the sale price to be lower than the "actual" sale price, to save a little on the transfer tax.    As long as you're not setting an outrageous difference and it's not below the land department appraised value, they'll take your (and the buying party's) word for it. 

<{POST_SNAPBACK}>

Sounds just like Spain - taxes on transfer are so high that people lie to the government about the price...

[Heng]

Here, even the clerks at the land department will often recommend doing the same. Friendly bunch really if you get to know them.

[Dragonman]

No she has only owned it for a year.

Are you saying that the taxable income is 8 percent of 770k? (Or 92 percent?)

Which would be approx 62k.

She has no other income so would the tax on this then be less 30k personal allowance and five percent or 1500 baht or some flat rate specifically for property.

Not too bad put like that if true... is it paid at the land dept office on transfer.

I did see 1 percent withholding tax for income tax quoted somewhere which would be 7700 baht and presumably refundable in part so hard to get the purchaser to pay!

Weird bloody tax system here prob down to inability of governments to abolish old laws or something

<{POST_SNAPBACK}>

No capital gains tax.

Your position; 770kx8%=61,600x5% income tax=3080 baht. The records I have state nothing about the personal allowance being taken into account. But it's not a bad amount anyway.

[jackjack]

I believe taxes are down now. I recently purchased land and the sellers paid the taxes, if they added it to the selling price, who cares, that was the asking price and if it included the taxes, we will never know, but usuall the seller pays. Although having said that, thais will try to get away with it if they can and either pass it onto you or negotiate a 50/50 deal.

It is the resposibility of the seller to pay.

I also believe the tax is now 2.5%.

I was also advised by lawyers that there is no capital gains tax, but then again a tax lawyer said there was, so not really sure until I'm sure.

[gregchambers]

In this instance, the buyer has agreed to pay all taxes but from reading the newspapers I got the impressions that income tax was due on the whole amount, which I doubt if they would have been amused at. 3k isn't a problem either way, though. Looks like the six percent tax on sales has effectively been halved as long as the vendor's name in the house registration book has been there for a year - bringing the tax down from 42k to 21k (business tax at 3.3 percent if you have not owned the house for five years) plus income tax.

[gregchambers]

Yes, you can quote a lower figure but may have problem if there is something wrong at the land office and the deal does not go through.

Also some of the taxes are based on the assessed land value not the sale price.

Would have been much better if they had eliminated all taxes on sales under a certain value (say one million?) as that would help the poorer end of Thai society get on the housing ladder.

[Heng]

Yes, you can quote a lower figure but may have problem if there is something wrong at the land office and the deal does not go through.

If you're already at the land office quoting the sale price, the only reason why the deal would not go through is if the land dept building catches fire.

[Heng]

Would have been much better if they had eliminated all taxes on sales under a certain value (say one million?) as that would help the poorer end of Thai society get on the housing ladder.

If one wanted to help the poorer end of Thai society get on the housing ladder, a good move would be to restrict motorcycle, automobile, liquor, and mobile phone sales to those who already own homes.