Property Investment Company Or Solo?

[mccw]

Hello

I would like to know the opinions of learned and experienced TV members regarding this question.

I intend to buy a portfolio of properties for rental income purposes. Looking at condos and houses. I am married with kids and do not need the warnings about wife's name etc. I am wondering from a tax and legal perspective would I be better off buying condos in my sole name and land plus house in my wife's, or setting up a company to run it all through?

My wife thinks no company and no tax on income unless working for or running a registered business is standard practice and never looked in to. But as a foreigner I'd worry one day they could come and sting me hard. Say 10 years later fines every year plus interest and all the rest of it, nightmare.

If a company how are the costs , taxes etc? We can transfer funds from our joint account in UK to a joint / business account in Thailand maybe so less risk of accusations of her being just nominee.

From a visa point of view a non O visa would seem to be easiest route and then no need for biz; but I don't fancy to have to go back UK every year, can this be extended in country? Alternative would be biz or investment visa and then I'd need a work permit also? I'd like to aim for permanent residence so not sure which way might stand me the best chance when considering the 100 py limit.

I'm not quite 30 yet so I'm looking at the very long term; one day maybe I even come to be Thai citizen

I will study and involve in charity.

At first my portfolio may only yield about 100k bht pm so not sure if all the bother of company is worth it.

I'm also thinking about holiday rentals of my own and possibly starting an agency/ management service; so would involve more work and justify taking on some staff etc.

This is all happening in Chiang Mai but I might look at other locations further down the line.

Thank you for your time.

[mccw]

Also there is implication if I turn some over. ie sell and reinvest. Capital gains tax? , law on buying with money from over seas etc.

thoughts please

Cheers

[Mroovah]

Acually Im planning similar business with my wife in thailand. Probably the best option would be to talk with people who live and do it in thailand. Although this is a good start to ask in here.

A non-resident’s gross rental income is subject to 15% withholding tax, withheld by the tenant. The tax withheld is credited to the non-resident’s income tax liability.

Also have a look on the article below:

http://www.globalpropertyguide.com/Asia/Thailand/Taxes-and-Costs

Im not sure if this is still valid, It might be old. Can somebody verify this and answer to OP's questions?

Edited November 6, 2012 by Mroovah

[mccw]

Hello

Thanks for the link.

It gives me some idea but really I'm not clear on a few things. Like the definition of "resident". I would be resident year after year but "non-immigrant visa" so would these numbers only apply to rentals for people mostly living out of the country and just on tourist visas? A number of days to decide it, like if mor than 90py average for UK? Or it's only at a different / local tax rate once you become a "permanent resident"? Be good to know what the normal Thai rates would be so as to judge between wife or me or joint.

When I next come back I'll get a few accountants perspectives but thought first some info from TV members , those currently doing this business in Thailand, would be a good starting point and help my rough planning rolling in my mind ahead of time.

One interesting thing I saw in that linked piece was the reclaimable amount of 15% for expenses on income from farm land. I thought farm land was considered a bit of a no go area for foreigners and if one did think to getting it then should be just on wife's name and keeping quite.

[mccw]

From the amounts on the link it seems in my case if around 100k pm then after all expenses claimed back should be able to keep it just below the 1million per year threshold, 10% tax is not too bad. If I read it right?

Don't really understand the withholding tax at all. Can some one explain it?

[mccw]

Could the silence be because most TV experts are not declaring their tax properly I wonder....

[IamNotaNumber]

"Properly" or "at all"?

[mccw]

At all

Literally everyone I've spoke to in person says they don't declare

[Khun Jean]

That is what i (we) do.

In my case i am currently only an owner (49%) of the company and no need for a workpermit for that. This is going to change soon as i am now more permanently in Thailand and want to get more involved with it.

Being a tax resident is measured by the amount of days you are in Thailand. 180 days or more and you are considered a tax resident.

A company has the advantage that you can buy and sell more easy, and also the Thai quota for condos will be available. These are often cheaper and more 'abundant'.

Corporate taxes are quit high, so being on a salary and paying income tax can be cheaper. All circumstances differ so you need to calculate what is best in your case. Currently profit is taxed and dividend is paid out.

My main income is from something completely different so this is a good side earner and relatively easy to maintain.

The whole question about declaring or not is not even one to consider. You declare, period.

The consequences for a foreigner if getting caught are so much more severe than for a Thai.

Edited November 8, 2012 by Khun Jean

[cheeryble]

I don't have it to hand but from previous readthrough I believe the "15% withholding tax" in this context is a misreading of the law.

I believe if a foreigner is paid income by an agency such as a government agency, they the agency must withhold.

This withholding is not for the revenue people to withhold, and is not for individuals to offer to pay, nor is it for estate agencies (a different beast) to withhold......estate agencies are essentially just passing on your own money and have no right or obligation to withhold.....because they are not the ones essentially paying you.

As for your suggested rental business I'd call it bad timing.

You have a choice of buying new or in the better bet, one of a few older buildings which meet the right criteria.

In the former case you can buy easily but will get an unattractive return.

If you want to buy into the older buildings you will only pick up really good deals if you know the market like the back of your hand and get a load of contacts.....(you will never get bargains if the units are publicly for sale). This will take time. You will then spend more time than you can imagine renovating. This all assumes you have the skills necessary, such as taste and building knowledge, then are able to run renovations in the Thai language. You ever tried that unending source of frustration?

Yet you say you want 100kpm income?

This means owning at least five, but more probably more like six or eight condos. How long you think that portfolio will take to prepare and rent out? I'd suggest many years.....unless you just throw money at it and receive low returns and scant, or no, capital gain.

All this at a time when so much competition is being built as we speak.

Sorry to rain on the parade.

Edited November 9, 2012 by cheeryble

[sotsira]

I can't speak of Chang Mai, but in Pattaya between April to October it's difficult

to find tenants due to lack of people looking and too much competition.

[mccw]

Thanks for the comments.

I'm airing on to the partnership or company route since I expect when it comes to visas and residency it will be good to show I am employing Thais, paying tax and generally adding to the economy and society at large more than just lying low taking cash from ATM on overseas card (I know this is still help economy with spending but for sure one looks much better than the other.

[mccw]

Cheery bye : it's good you raise this and really opens an important debate about the Chiangmai market and thai future. In my opinion SE Asia generally will maintain reasonable growth levels where as west is locked in to a spiral of stagflationary decline. Chiang Mai specifically I think has some of the best prospects for growth in the whole of Thailand. Bangkok Thais are relocating or buying second homes or increasingly retiring + large numbers of young come from all around to study and stay to work and settle long term; so growth from both sides of the demographic spectrum. This is sustainable internal demand as opposed to hot money speculators like a typical bubble I think but would like to here others counter thoughts. I see new potential demand from the Chinese in coming years since strategic location to Burma and china.

Sure CM is booming now in terms of new developments and land prices have risen dramatically, some would say to bubble levels, but I think there is plenty of run left in yet. The price of older condos seems fairly flat so I'm certainly not thinking I can just ride a wave of capital boom bubble.

This Thai business is not with aim to make my fortune but to have some stable income in bht to supplement and diversify from my main income from UK property.

Your right about the problems facing most people with finding and communicating with Thai trades people and the needed developing skills of the owners as well. But for me the past 5 years my business is property development and rentals in UK and I also have prior experience of renovating my house in Chiangmai and aquiring land and building from scratch a house in Fang. My wife is quite frugal by nature and an excellent deal maker so I'm luckier than most and quite well prepared to take a couple of years to acquire and renovate a few places; but probably also purchase a couple off plan.

Rents are not high but the standard is not either.

[mccw]

My idea for renovating and renting the older condos is to make a quality standard like a Lanna style hotel room only with a western kitchen and bathroom.

Also I have an idea to give a few 1 or 2 bed house or condo for weekly holiday rentals; for families it is much nicer to stay like this than in a hotel and I don't see much on offer. My wife family have rental car business so could link services nicely.

If for long term; Price up a little to cut out the riffraff but not so much to be a rip off. If holidays then a touch cheaper than the equivillant hotel stay. (We stay this kind of accommodation every where we travel in EU now)

Any thoughts on this?

Cheers

[mccw]

Can run like a business but not a company?

I mean wife and I combine our tax allowance and claims for expenses. Expense including self employed staff- cleaners and such. So no need for full company set up and having "official" employees with complicated entitlements.

??

How much hassle is the company rules regulations etc ? How much extra costs for running , legal, accountancy ?

Cheers