Consequences Of Under Declaring

[bkkexplorer]

Hi All,

I'm looking at purchasing a new home. The seller wants to under declare the sale price.

I'd like to get some info on the consequences of under declaring a piece of property with house (in bangkok). From my understanding you have to declare the land valuation price or selling price,.. whichever is higher to the land office when selling a piece of property. Ultimately, this means paying less tax when you put in the lower figure.

My query is for the future, in the event I sell. From my understanding, if the seller under declares now and I sell years on later, I will be taxed (withholding tax) the difference between my buying price (todays declared price to land department) and my future selling/ declared price. Is this correct? Is there anything else I am missing?

Actually, I would want to declare the actual price and keep it above board as i don't want problems later on. Any advise appreciated.

thanks.

[PattayaParent]

When you sell you under declare the sales value and then there's no problem, or offer to pay the tax for the seller now.

Remember that the tax is on the assessed land / property value. So if you are purchasing a furnished property the land office are not interested in tax on second hand furniture.

[Jebhead]

I've just been thru this, bought a condo 5M, declared it at land office 3M to keep taxes down - still 220K!!

JH

[vont]

If I were you,

I would insist on declaring the actual purchasing price and not one sartung less.

Otherwise, you would always have something that someone, if desires, could always bother you later.

I would rather sleep well each and every nite

in my new paradise, won't you rather?

Congrats. :jap:

[PattayaParent]

^who's going to bother you?

Remember it's the seller that pays the taxes, not the buyer.

[bkkexplorer]

Is my understanding of how the taxes work correct? Will I, in the future be taxed on the difference mentioned on the original post? This was my initial question.

Is there anything else I am missing?

[PattayaParent]

There's no capital gains tax so you won't be taxed on the difference in values.

The tax will be based on the land office assessment or the declared sales value, whichever is higher.

So if you sell the property for less than the land office assess the value you will still pay tax on the higher land office value.

Obviously if the seller underdeclares the sales value and you declare the full sales value when you sell in the future then you will pay a higher tax.

And it all depends on how long you've owned the place as to what the tax is.

[yankee99]

Is the house owned by a thai? Are you thai? My question is the house in a company name? If so the selling price is moot...

[briley]

"There's no capital gains tax so you won't be taxed on the difference in values."

I have always believed that you pay income tax on the capital gain of property when it is sold?

So under declaring does carry a potential problem when you sell.

[PattayaParent]

http://www.siam-legal.com/realestate/thailand-property-transfer-tax.php

this calculation is based only on the government assessed value and not on the actual sales value.

[donx]

There's no capital gains tax so you won't be taxed on the difference in values.

The tax will be based on the land office assessment or the declared sales value, whichever is higher.

So if you sell the property for less than the land office assess the value you will still pay tax on the higher land office value.

Obviously if the seller underdeclares the sales value and you declare the full sales value when you sell in the future then you will pay a higher tax.

And it all depends on how long you've owned the place as to what the tax is.

Agreed. And just to clarify it a little more, whether the seller underdeclares the sale value or not will have no affect on what you will pay in taxes when it is your turn to sell the property. The tax calculations don't take into account your "basis" as is commonly the case when paying taxes in western countries.

[MikeyIdea]

Perfectly normal to underdeclare, everybody does it and so did I

[bkkexplorer]

Thanks for the responses...

I now understand the capital tax gain issue (there is none)

But I'm still not clear about which price the land department uses. In a previous response it was said that the highest recorded price would be used by the land department to calculate taxes. In the link PP posted (there's a property calculator there, thanks for that), they use the land valuation price even when the selling price is higher. Which price do they use? Does anyone have an official link to the details?

I'm also not clear as to how they calculate withholding taxes. Could someone please elaborate on that.

The home I'm looking at has been registered to the owner for 2 years (with blue book). In this case I believe you only pay transfer fee, stamp duty and witholding tax. I can calculate the first 2 but am not sure what the witholding tax comes up to.

thanks again for the replies.

[PattayaParent]

I was under the impression that tax was based on the declared sales value if higher than the land office assessment, otherwise why is there a need to underdeclare if the Land Office aren't interested in the sales value.? But I would assume that Siam Legal know better than me unless another lawyer can prove otherwise.

I assume you've agreed to share the tax costs? Otherwise the witholding tax is a levy on the seller and shouldn't concern you.

[bkkexplorer]

I've agreed to share transfer and stamp duty costs but am not sure about how witholding taxes are calculated so have not agreed to that. Is this a personal tax? How is it calculated?

Also, I think the witholding tax is based on the higher price, selling or valuation. Not the same as transfer fee and stamp duty which uses the valuation price.

This what i believe as of now. Still learning more...

[haveaniceday]

Anyone have a list of who normally pays what taxes?

[PattayaParent]

^it may be on that Siam Legal website or maybe Samui for Sale.

I kow I've read it somewhere but can't remember where.