simonphuket Posted October 7, 2011 Share Posted October 7, 2011 Hi all, Ok, I am a total newbie in this area and could nto really find an answer in this forum (too many topics? hehe). For the first time we (my Thai wife and me) will sell a house. The buyers are Thai. Now I am lost in how the procedures and rules are for this. I do know the following (yet, correct me when I am wrong): we as sellers have to pay tax. This is around 3%. I hope it will be 3% of the price that be bought the huse, not the selling price, but most likely an estimated value of the property (estimated by the local government?). Is this correct? Then we will transfer the property to our buyers at the Land Office. Is it there that we have to pay the taxes? We do not have the money at this moment to pay the taxes cash. We are talking hundreds of thousands of baht here! We only have that money once the buyers paid us..... Assuming this is a common issue, how to handle this? Can we write a cheque to the Land Office? Can the bank issuing the mortgage for the buyers transfer the money? (this is actually my BIGGEST issue, the timing gap between the moment we have to pay the sums, and the moment that we receive the money) Any info about the transfer, hoe to handle the money etc is more than appreciated.... Thanks! Simon Link to comment Share on other sites More sharing options...
stgrhe Posted October 7, 2011 Share Posted October 7, 2011 The taxes and fees mentioned below are those that need to be paid, hence the percentage can either be 3.5 or 6.3 depending of whether the seller has owned the land more than five year or not. The registered value is the value Land Office put on the property and it is usually less than the selling price. Transfer Fee: 2% of the registered value of the property Stamp Duty: 0.5% of registered value (only payable if exempt from business tax) Withholding Tax: 1% of the appraised value of the property Business Tax: 3.3% of the appraised value of the property if selling within 5 years. Strictly business thinking, the seller should be responsible for the withholding and business taxes while the buyer should cover the transfer fee and the stamp duty. This is, however, not the common practice here in Thailand and usually the taxes and fees are split 50 / 50 between seller and buyer. It is negotiable of course. Link to comment Share on other sites More sharing options...
simonphuket Posted October 7, 2011 Author Share Posted October 7, 2011 The taxes and fees mentioned below are those that need to be paid, hence the percentage can either be 3.5 or 6.3 depending of whether the seller has owned the land more than five year or not. The registered value is the value Land Office put on the property and it is usually less than the selling price. Transfer Fee: 2% of the registered value of the property Stamp Duty: 0.5% of registered value (only payable if exempt from business tax) Withholding Tax: 1% of the appraised value of the property Business Tax: 3.3% of the appraised value of the property if selling within 5 years. Strictly business thinking, the seller should be responsible for the withholding and business taxes while the buyer should cover the transfer fee and the stamp duty. This is, however, not the common practice here in Thailand and usually the taxes and fees are split 50 / 50 between seller and buyer. It is negotiable of course. The taxes are clear, thanks. I just did some more reading and found very useful websites (eg http://www.sunbeltlegaladvisors.com/Thailand-Property-Registration.php). The most important thing for me is: - we are told we have to pay the fees BEFORE the transfer - we only get the money for selling the house AFTER the transfer - this means we have to pay the taxes (several 100,000's baht) cash at the Land Office? I guess not too many people in Thailand have this kind of money cash sitting around. How is this normally handled? We basically are short on money for just like an hour or so..... Link to comment Share on other sites More sharing options...
Darrel Posted October 7, 2011 Share Posted October 7, 2011 Why aren't you being paid at the moment of the transfer? Link to comment Share on other sites More sharing options...
simonphuket Posted October 7, 2011 Author Share Posted October 7, 2011 Why aren't you being paid at the moment of the transfer? Actually in a way we are paid, however by check. The Land Office only wants to see cash. But, to be precise, we were told we first have to pay Land Office, then the whole process start with signing the documents etc, this takes some time, and then the money checks are being exchanged..Like I said earlier, we are only short on cash for a few minutes basically.... Maybe the person who explained us all this, is misinformed and we are getting worried for nothing? To me it just sounds too weird, but hey, we are in Thailand and stranger things have happened. Thats why I'm really keen to hear how other people handled this, first hand experiences.... Link to comment Share on other sites More sharing options...
Royale Posted October 7, 2011 Share Posted October 7, 2011 Why aren't you being paid at the moment of the transfer? Actually in a way we are paid, however by check. The Land Office only wants to see cash. But, to be precise, we were told we first have to pay Land Office, then the whole process start with signing the documents etc, this takes some time, and then the money checks are being exchanged..Like I said earlier, we are only short on cash for a few minutes basically.... Maybe the person who explained us all this, is misinformed and we are getting worried for nothing? To me it just sounds too weird, but hey, we are in Thailand and stranger things have happened. Thats why I'm really keen to hear how other people handled this, first hand experiences.... Yes you have to pay the cash first. Why don't you ask the buyer to give you how ever much it is you need in cash and the rest by bankers draft at the land office.The tax MUST be paid before the paper work can be completed. Link to comment Share on other sites More sharing options...
simonphuket Posted October 7, 2011 Author Share Posted October 7, 2011 Yes you have to pay the cash first. Why don't you ask the buyer to give you how ever much it is you need in cash and the rest by bankers draft at the land office.The tax MUST be paid before the paper work can be completed. Their bank (Krungthai) refuses to pay until after the paper work is done, according to the buyer. And then only by check payable in cash to us. Not even in real cash.... Link to comment Share on other sites More sharing options...
stgrhe Posted October 8, 2011 Share Posted October 8, 2011 Why aren't you being paid at the moment of the transfer? Actually in a way we are paid, however by check. The Land Office only wants to see cash. But, to be precise, we were told we first have to pay Land Office, then the whole process start with signing the documents etc, this takes some time, and then the money checks are being exchanged..Like I said earlier, we are only short on cash for a few minutes basically.... Maybe the person who explained us all this, is misinformed and we are getting worried for nothing? To me it just sounds too weird, but hey, we are in Thailand and stranger things have happened. Thats why I'm really keen to hear how other people handled this, first hand experiences.... Yes you have to pay the cash first. Why don't you ask the buyer to give you how ever much it is you need in cash and the rest by bankers draft at the land office.The tax MUST be paid before the paper work can be completed. This is a good advice and do not accept a check since you can never be sure of bouncing. A bank draft will avoid that risk. Link to comment Share on other sites More sharing options...
dave111223 Posted October 8, 2011 Share Posted October 8, 2011 (edited) Yes you have to pay the cash first. Why don't you ask the buyer to give you how ever much it is you need in cash and the rest by bankers draft at the land office.The tax MUST be paid before the paper work can be completed. Their bank (Krungthai) refuses to pay until after the paper work is done, according to the buyer. And then only by check payable in cash to us. Not even in real cash.... If neither you or the buyer can come up with the cash to pay the taxes then the transfer cannot go through. Doesn't make sense that the buyer would only have a check from Krungthai as they will only lend you 80% the value of a secondhand home; so where is the other 20%? I suggest you borrow the money from a friend/family member and return immediately after the transfer and the check is paid in (have them come to land department on the day with you if they don't trust you enough). Edited October 8, 2011 by dave111223 Link to comment Share on other sites More sharing options...
simonphuket Posted October 8, 2011 Author Share Posted October 8, 2011 My mistake, it is not a check indeed but a Bank Draft (not my native language, sorry). And Dave, sure the bank will lend only 80%, but 80% of which price ......... (if you get my drift)? Guess I go with the flow and see how things are NOT gonna work out at the Land Office. As both banks will be there for the transfer, I hope that Krungthai will change their policy else we are all wasting our time and have to come back another day Link to comment Share on other sites More sharing options...
Royale Posted October 8, 2011 Share Posted October 8, 2011 My mistake, it is not a check indeed but a Bank Draft (not my native language, sorry). And Dave, sure the bank will lend only 80%, but 80% of which price ......... (if you get my drift)? Guess I go with the flow and see how things are NOT gonna work out at the Land Office. As both banks will be there for the transfer, I hope that Krungthai will change their policy else we are all wasting our time and have to come back another day Krungthai will not change their policy, why would they? It's up to you to find the money to pay the land tax. Krungthai represent the buyer not the seller, until they get their name on the chanote they will not give you one baht and until YOU pay the land tax they can not have their name on the chanote - so it's up to you not to waste everyone's time! As suggested, can you not borrow it from family or friends just for an hour or two? Link to comment Share on other sites More sharing options...
dave111223 Posted October 9, 2011 Share Posted October 9, 2011 My mistake, it is not a check indeed but a Bank Draft (not my native language, sorry). And Dave, sure the bank will lend only 80%, but 80% of which price ......... (if you get my drift)? Krungthai will lend 80% of their own "valuation" which is always a sh*t value. They NEVER overvalue a property (in my experience you have to give the surveyors a backhander just to give a reasonable market value). Unless you are selling your house for a crazy low price (way below the government standardized value) then there is no way they are borrowing 100% of the value from Krungthai. Link to comment Share on other sites More sharing options...
rawhod Posted October 11, 2011 Share Posted October 11, 2011 Why don't you do what the selling agent who sold us our house did... As the seller you talk to the Land Office officer ( not sure how you spell it in English; Tidin ) you don't let the buyer near. You tell the "Tidin" that the buyer has agreed to pay all the tax. The Tidin then issues a bill for the full amount to the buyer who has to pay it before the sale goes through. Then the name is changed and the buyer hands over the Bank draft to you... B******d.......we paid about 16,000 more than we should have because of our naivety. Link to comment Share on other sites More sharing options...
Darrel Posted October 11, 2011 Share Posted October 11, 2011 More commonly the fee is split between both parties and most buyers/sellers know that. Your agent took advantage of you, but that's what they do so nothing new there. As a seller, I doubt that you would be able to pull of the same trick with most buyers. The moral of your story is not to trust agents, and I'm rather surprised that anyone would. Link to comment Share on other sites More sharing options...
dave111223 Posted October 11, 2011 Share Posted October 11, 2011 (edited) You tell the "Tidin" that the buyer has agreed to pay all the tax. The Tidin then issues a bill for the full amount to the buyer who has to pay it before the sale goes through. Then the name is changed and the buyer hands over the Bank draft to you... A ) The land department guy doesn't care who "agreed to pay the taxes" he just hands out a bill and someone pays it (doesn't matter to him if the buyer/seller/or monkey's uncle pays it) The bill does not specify who has to pay it. B ) Only a moron buyer is going to get handed a full tax bill at the land department and agree to pay it. Edited October 11, 2011 by dave111223 Link to comment Share on other sites More sharing options...
simonphuket Posted October 11, 2011 Author Share Posted October 11, 2011 transfer of the house was successful.... The buyer negotiated (few $$) with the Land Officer a lower value of the house We split to transfer fee 50/50 with the buyer. We paid our income tax and SBT. Total was about 100k-150k less than expected. Basically the scenario was: The Krungthai came with 2 bank drafts: one payable into our account, and one we cashed in right after we heard how much the total taxes were we had to pay. After cashing in that bank draft, we rushed bank to the Land Office, paid them, and the deal was done. What you call a happy finish Link to comment Share on other sites More sharing options...
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