Would You Buy A Proprety In Los?

[Dawn]

Scamp,

Just thought I'd let you know what we plan to do in a few years time (when we've paid off our debt and can escape the UK!).

We bought our house in Newcastle about 11 years ago and the equity we're going to release when we sell it is just too good to turn down (about £90 - £100k). If we rent the house out, by the time we've paid the mortgage and then the agent we won't make anything on a monthly basis. Plus, the rental market in our area is totally saturated and properties are staying empty for months and months on end. Then there's the problem of finding reliable people to rent the property out to. So, we're selling and buying in another part of Europe that's cheaper.

We've got friends living in an area of Tuscany where you can still buy a large townhouse for about £70k (ready to move in, just needs a lick of paint, 4 bedrooms with attached barn that can be converted to more bedrooms at a leter date). Then, because it's 'Tuscany', you can ask for between £400-£500 a week in rent to the holiday market. There's plenty of agents in the area who, for a small fee, will find you a key holder who will take deposits from the holiday makers at the beginning of the holiday and who will clean up before the next lot of holiday makers arrive. The cost of cleaning is included in the rental cost.

So, we're selling the house in the UK to release plenty of equity, buying in Tuscany and with the left over money we'll be buying land on an island in Thailand and we'll have enough left over to build a basic wooden house - which is exactly what we want. We're buying land in Thailand by setting up our own limited company.

The rental money from Tuscany will give us enough money to live very comfortably in Thailand but we'll have savings to see us through for a while as we have to give the property in Tuscany time to 'take off' if you like - hopefully we'll rent to family and friends in the first few years and fill the gaps by using the agents in Tuscany. Plus, somewhere like Tuscany doesn't really have a 'season' and you can make decent rent from it all year round.

We'll also be able to 'potter' in Thailand as we'll have our work permits (through our limited company) and we've a few ideas about how we'd like to occupy our time and make a bit more money (but we won't have any of the pressure we have over here in the UK as we'll have the rental cash coming in from Tuscany and prices in Thailand are so low).

Then, if the s**t hits the fan in Thailand we'll have the property in Tuscany to fall back on - it's paid for outright and we won't have to pay a mortgage on it.

Prices here in the UK are now stable but it's so expensive to buy anything decent. Then the rent just covers the mortgage and you're not making anything on a monthly basis. We've gone through a load of plans trying to figure out how we can use the equity we're going to release to our advantage and this is the plan we're sticking to. I guess it'll work anywhere in Europe if the prices are still cheap and you can ask for a decent weekly rent.

Dawn

[pnustedt]

with the left over money we'll be buying land on an island in Thailand and we'll have enough left over to build a basic wooden house - which is exactly what we want. We're buying land in Thailand by setting up our own limited company.

As long as you are aware that YOU are not buying anything. A company within which you are a minority shareholder is.

[Buff-horns]

you might not want to live in UK right now ,and at some time in the future you might not like living in LOS for various reasons. taken over 10-20-30 years you could expect to see phenominal growth in the price of a UK property .You only invest in LOS what you can afford to walk away from and laugh it off. who knows what the future holds ?global warming , bird flu , terrorism. I know from guys i know who sold up UK and moved to LOS years ago ,they have lost enormous sums of cash on the property they sold .

when they should have rented it out ,and still retained the property.

[Belfastboy]

sounds good dawn...but bear in mind a hefty captial gains tax levy.....

[The Gentleman Scamp]

fall back on

Those are the key words here aren't they Dawn.

[Digger]

So, we're selling the house in the UK to release plenty of equity, buying in Tuscany and with the left over money we'll be buying land on an island in Thailand and we'll have enough left over to build a basic wooden house - which is exactly what we want. We're buying land in Thailand by setting up our own limited company.

We'll also be able to 'potter' in Thailand as we'll have our work permits (through our limited company) and we've a few ideas about how we'd like to occupy our time and make a bit more money (but we won't have any of the pressure we have over here in the UK as we'll have the rental cash coming in from Tuscany and prices in Thailand are so low).

Dawn

<{POST_SNAPBACK}>

Dawn you might want to revisit your strategy - its somewhat flawed.

For a company to provide you with a work permit, it needs to be trading and VAT registered. Presume when you mention work permits that you will be trying to obtain two of them or more. Therefore your company has to be generating an income in excess of approx: 1,500,000 baht per annum in order to be able to pay two salaries for expats at 50,000 baht per month per expat, you also need to consider what requirements you have for employing Thai staff - for a yearly extension on your work permit, you need at least 4 Thai staff for each work permit holder. So if your company is owning the house, basically you need to be paying it rent of some 120,000 month to live in that place and then pay 12.5% tax based on that 120,000 baht in rental income tax for the company, before corporation taxes kick in. All of this assumes that the work permit office agree that the business is a valid one where two farangs are worthy of a work permit.

Now its not all over yet, for your VAT registration, you need to be paying VAT assuming an income of some 600,000 baht per annum from memory but that may be wrong. Therefore you also have to be paying VAT to the tune of some 50,000 baht (or whatever 7% VAT is of the current threshold).

Its not as easy as you describe.

[The_Moog]

You sound like you've seen too many of those Channel 4 'Place in the Sun ' afternoon television shows Dawn.

[mrbojangles]

Now its not all over yet, for your VAT registration, you need to be paying VAT assuming an income of some 600,000 baht per annum from memory but that may be wrong.    Therefore you also have to be paying VAT to the tune of some 50,000 baht (or whatever 7% VAT is of the current threshold).    

Digger, you seem to be fairly knowledgeable. Could you maybe help out any, on this subject, that i have posted?

http://www.thaivisa.com/forum/index.php?sh...88entry524388

Edited October 26, 2005 by mrbojangles

[SiamOne]

yes, the Tuscany thing sounds good, but is not as easy as you make it out to be. Friends of ours do rent their villa, but don't make much money in the end

my hubbie has two properties in London, one rented out, his daughter looks after the other

the amount of increase in value of these over the last few years has been enormous, even without any rent they would have been worth keeping

so think carefully before burning your boat

[phibunmike]

fall back on

Those are the key words here aren't they Dawn.

<{POST_SNAPBACK}>

Several people have referred to "if things go wrong in Thailand", then the need to go back to UK. If things "went wrong" for me in Thailand, UK would be very low on my list of "bolt holes". Certainly some people will want to have an investment property somewhere with a more buoyant market than Thailand, but it does not have to be somewhere you would want to live yourself. Just a thought...

[Nam Kao]

>>>>Pick a few good stable mutual funds and sit back and relax

said the fox to the hen

[sua yai]

Any investment in propery has to be planned long term. I bought my place in London 14 years ago for 53,000 pounds. It's now worth about 300,000. Whilst I was doing well working, I put any savings I had into the capital debt with the building society. The mortgage is now only 30,000 - 165 pounds a month. Rental income therefore only needs to cover this amount, some endowement policies and letting fees (incidentally I pay 16%. !0% letting and 6% management), income tax liability which is negligible if you know what you're doing and of course saving for a rainy day - void rental periods and maintenence. Then there has to be enough to get by here. I've never found it easy to make ends meet, but I'm still doing OK 7.5 years in los later.

When I reach 50 (in a couple of years), I might consider selling. Someone else mentioned CGT. Currently, the way around this in the UK is to go back and live in your property for2-3 months (some have suggested shorter to me, but I think the above would be safe). Pay your utilities, council tax and get on the electoral register again. That way, when you sell, you claim the property as your primary residence and there's no CGT.

As I've got no pension coming to me, considerations such as tax liability on the sale are vital as the lump sum and the interest it attracts will be the only income I'll get.

[haha]

someday I might buy. but my mindset right now is that it is better to rent.

a story..

I met this older guy who complained bitterly about his experience with condos here in thailand.

he told me he lost money on a condo he sold.

evidently, he bought a studio condo for about a million baht. but for whatever reason he decided to sell it about 8 months later. during that eight months, the property went up in value.

well, as it turns out. he told me that if you don't own the property for more than 5 years, you can't keep any of the profits you make on the property. you have to give it ALL to the thai government.

not only did he have to give ALL his profits to the thai government. he also had to pay some fees amounting to 65k baht to process the money he paid to the government. ..which is why he lost money on the deal.

I don't know if his story is true. but I would definitely check up on it for those of you who are thinking of speculating on property here in thailand.

[charles]

he told me that if you don't own the property for more than 5 years, you can't keep any of the profits you make on the property.  you have to give it ALL to the thai government.

I think if you sell within 5 years, there is some kind of tax to be paid. Not that you have to "give all your profits to the Thai government" - although depending on your profit that could in effect be what happens. Actually not the worst law in my opinion, at least in theory trying to protect against property speculation, which has of course caused great damage here in the past.

Presumably your friend would have been well served if he'd checked relevant laws BEFORE he bought his property.

[srisatch]

If a man has two wives he loses his mind

If a man has two houses he loses his peace of mind

I think houses are for living in...and the advice is good...in Thailand don't buy it if you don't want to live in it...and, if you do,.. when you are done with living here be happy to throw/give it away...it is unlikely to be an investment....unless you buy some prime property which rich Thais want...or possibly island holiday makers...but the Thais will profit from that more than you.....and you will probably still lose money..

[Noel]

well, as it turns out.  he told me that if you don't own the property for more than 5 years, you can't keep any of the profits you make on the property.  you have to give it ALL to the thai government.

not only did he have to give ALL his profits to the thai government.  he also had to pay some fees amounting to 65k baht to process the money he paid to the government.  ..which is why he lost money on the deal.

I don't know if his story is true.  but I would definitely check up on it for those of you who are thinking of speculating on property here in thailand.

<{POST_SNAPBACK}>

As far as I am aware, if you sell within five years you get hit for a 3.3% Special Business Tax on the Sale Price. After five years I believe it is 0.5%.

I am not trying to shoot the messenger, but the claim the guy made to you that the government takes ALL the profits is just another load of Bar Room bull in my view.

[Noel]

fall back on

Those are the key words here aren't they Dawn.

<{POST_SNAPBACK}>

Several people have referred to "if things go wrong in Thailand", then the need to go back to UK. If things "went wrong" for me in Thailand, UK would be very low on my list of "bolt holes". Certainly some people will want to have an investment property somewhere with a more buoyant market than Thailand, but it does not have to be somewhere you would want to live yourself. Just a thought...

<{POST_SNAPBACK}>

I tend to partially agree in principle.

If for some reason I was no longer welcome in Thailand, UK would actually be the last place I would want to go.

I would almost certainly relocate to elsewhere in the region and start again.

However, as far as having an investment property is concerned, UK is the ideal place for me personally for several reasons.

The fact that I am a British Subject has to be a key factor; the fact that my best mate of many years standing is my lawyer who oversees lettings is another.

I also have a second UK postal address, namely my brother’s house. He also acts as an intermediary for me from time to time.

Other factors include having online banking arrangements with UK banks, online contact with UK insurance companies that I have a long business relationship with, knowledge of local contractors for maintenance, receiving income in Sterling etc, etc.

The ‘bolt hole’ aspect is really only applicable in a Doomsday scenario which could include serious health issues; it is more of a comfort factor.

In summary, I am familiar with the property market in UK and feel far less exposed to potential local tax and fiscal issues plus risks and uncertainties that might prevail in other countries.

All that said, it could well be worth exploring other alternatives for some, but that is a path I doubt I will follow for the above reasons.

[womble]

You can't buy land in Thailand. If someone said you can that means they are BigFatLiar.

You can buy land with or without house by your Gf's name. But if you are in company's name you can rent in under condition for longterm  business using  the land.

You can see lots of Farangs in Thailand they buy house or land but not sign in their name just in the named of wife or girlfriend.

How can you trust your girlfriend, partner or etc...I confirm..You can't trust any, if you want to have land in Thailand should to rent it for longterm using.

<{POST_SNAPBACK}>

Get a good lawyer from one of the best Bangkok law firms (there arn't many good ones), there are ways to own, but make sure you have sound legal advise, and carry out all necessary due dilligence.

Never put property in the wifes name

[OldAsiaHand]

well, as it turns out.  he told me that if you don't own the property for more than 5 years, you can't keep any of the profits you make on the property.  you have to give it ALL to the thai government.

not only did he have to give ALL his profits to the thai government.  he also had to pay some fees amounting to 65k baht to process the money he paid to the government.  ..which is why he lost money on the deal.

I don't know if his story is true.  but I would definitely check up on it for those of you who are thinking of speculating on property here in thailand.

<{POST_SNAPBACK}>

As far as I am aware, if you sell within five years you get hit for a 3.3% Special Business Tax on the Sale Price. After five years I believe it is 0.5%.

I am not trying to shoot the messenger, but the claim the guy made to you that the government takes ALL the profits is just another load of Bar Room bull in my view.

<{POST_SNAPBACK}>

Actually, it's not bullshit.

You forgot about capital gains tax, which is a very tricky animal here in Thailand with respect to property sales. The capital gains calculation has nothing at all to do with gain, oddly enough, at least in the normally accepted commerical use of the term. The capital gains tax is calculated on the gross proceeds of the sale. You are allowed an allowance to reduce the proceeds, but the longer you have owned the property, the smaller the allowance is. In other words, it is quite possible that someone would be forced to pay considerable capital gains taxes on sale of a property when he had in fact lost money on the deal. Strange,but true.

Of course, it's not a problem for any Thai 'of rank' who sells property. For them the matter is customarily handled...uh, 'by negotiation.' Foreigners have a much more difficult time doing that.

Edited October 27, 2005 by OldAsiaHand

[Heng]

Never put property in the wifes name

Unless you trust her. Then you can buy up tens, hundreds, or more rai of land, no worries.

[Noel]

well, as it turns out.  he told me that if you don't own the property for more than 5 years, you can't keep any of the profits you make on the property.  you have to give it ALL to the thai government.

not only did he have to give ALL his profits to the thai government.  he also had to pay some fees amounting to 65k baht to process the money he paid to the government.  ..which is why he lost money on the deal.

I don't know if his story is true.  but I would definitely check up on it for those of you who are thinking of speculating on property here in thailand.

<{POST_SNAPBACK}>

As far as I am aware, if you sell within five years you get hit for a 3.3% Special Business Tax on the Sale Price. After five years I believe it is 0.5%.

I am not trying to shoot the messenger, but the claim the guy made to you that the government takes ALL the profits is just another load of Bar Room bull in my view.

<{POST_SNAPBACK}>

Actually, it's not bullshit.

You forgot about capital gains tax, which is a very tricky animal here in Thailand with respect to property sales. The capital gains calculation has nothing at all to do with gain, oddly enough, at least in the normally accepted commerical use of the term. The capital gains tax is calculated on the gross proceeds of the sale. You are allowed an allowance to reduce the proceeds, but the longer you have owned the property, the smaller the allowance is. In other words, it is quite possible that someone would be forced to pay considerable capital gains taxes on sale of a property when he had in fact lost money on the deal. Strange,but true.

Of course, it's not a problem for any Thai 'of rank' who sells property. For them the matter is customarily handled...uh, 'by negotiation.' Foreigners have a much more difficult time doing that.

<{POST_SNAPBACK}>

The poster to whom I replied was actually quoting that you have to give all profits to the government.

I still maintain that is bull.

Whilst it could well be the case that certain taxes could indeed wipe out any profit in particular circumstances, that is quite different to the assertion that all profits have to be given to the government.

On the subject of Capital Gains Tax, I was under the impression that there is no such separate tax classification in Thailand.

If there actually is a Capital Gains Tax for the sale of property in Thailand, I would be interested in knowing the details.

Would you happen to have a reference?

T.I.A.

[Buff-horns]

my pal moved to LOS ten years ago ,he sold his house and made 250,000 on his house .

he thought he did well . but over 10 years he has lost out on another 650,000 of equity growth in his old house .

[billd766]

Never put property in the wifes name

<{POST_SNAPBACK}>

Unless you trust her. Then you can buy up tens, hundreds, or more rai of land, no worries.

<{POST_SNAPBACK}>

And of course if you do not trust your wife then why did you marry her?