owner's agent putting a lower selling price for tax purposes

[fish fingers]

Buying a condo without a lawyer per se altho I have a lawyer friend checking through. Just checking with people at thai visa if there are no problems with putting a lower figure to save fees etc. - I'm sharing all fees 50/50 in this case. The price i agreed was 3.2M and the price they will write down at the registry office will be 2.7M.

The agent has quoted transfer fee at 2%, stamp duty, 0.5%. The income tax amount I have to pay also seems higher than was originally quoted.. does anyone know the going rate?

[BEVUP]

Yes interesting

Why should we & the thais put up with this 50/50 senario when we should be paying only 2.5 perc, but seems to be the norm here in paying some of the sellers fees utta Bu***te

But all they say is let the Amphur work out

PS Can someone help me to display the percentage key

[davejones]

So you've come onto a public forum to announce that you might be about to commit fraud. I hope you're not too easy to track down, as you might be spending some time in the big house.

[fish fingers]

There is no intention on my part to commit fraud at all, its the owner's agent who is proposing this, as stated in the post title.

When I talk to thai friends it seems like the normal thing to do, but I'd rather be above board and do it properly if there is any possibility of repercussions as a foreigner buying abroad etc.

[maxman71]

There is no intention on my part to commit fraud at all, its the owner's agent who is proposing this, as stated in the post title.

When I talk to thai friends it seems like the normal thing to do, but I'd rather be above board and do it properly if there is any possibility of repercussions as a foreigner buying abroad etc.

I dunno Chief...the fact you are aware of it and go along with it may not be taken by the authorities as you may think. I personally would insist the real selling price be recorded. Just not worth the risk. But that's just me.

[davejones]

There is no intention on my part to commit fraud at all, its the owner's agent who is proposing this, as stated in the post title.

When I talk to thai friends it seems like the normal thing to do, but I'd rather be above board and do it properly if there is any possibility of repercussions as a foreigner buying abroad etc.

If you go along with it, then you're also committing fraud. You'd be paying less tax by lying. That is out and out fraud. Just because someone tells you it's normal to break the law doesn't mean you should as well. Maybe you'll get away with it and maybe you won't. Why take the risk to save such a tiny amount of money.

[fish fingers]

"Just because someone tells you it's normal to break the law doesn't mean you should as well."

YES ! Thats why I'm asking these questions on Thai Visa,

DaveJones, when you bought your condo, did the sellers agent suggest this?

Edited December 27, 2013 by fish fingers

[sotsira]

As far as i can remember the 3 taxes usually amount to between 5% and 7%

of the selling price.

The reason it is variable is because the calculation is based on the amount of years the seller

has owned the property.

Here's a link that explains the way it's calculated:

http://www.doingbusinessthailand.com/blog-thailand/doing-business-in-thailand/thailand-real-estate-doing-business-in-thailand/selling-a-condominium-how-is-the-withholding-tax-calculated.html

As for submitting a lower sale price to the land office, has it's pro's & cons.

Bearing in mind that the land office calculates the value of the property with their own formula

and

If the disclosed sale figure is higher than their figure, then i believe they would use the higher of the two,

(although i'm not 100% sure)

This is why lower submitted figures are always given in the hope that it would reduce the tax amount,

although in reality that may not be the case.

You could take the address of the property to the land office and ask them to give you a valuation and tax

calculation before you make the purchase, then you would know what their valuation figure is and whether it would be worthwhile submitting a lower figure or not.

P.S

Don't believe all that your told by agents as most will look out for their own interests,

and most are unqualified in doing this work.

Edited December 27, 2013 by sotsira

[vtjforyou]

So you've come onto a public forum to announce that you might be about to commit fraud. I hope you're not too easy to track down, as you might be spending some time in the big house.

Ridiculous remark.

[vtjforyou]

They will do their own calculation so it is useless even though there is no risk (don't listen to them monkeys).

[fish fingers]

I've already paid a 10 % deposit so its a bit tricky.

what everyone is saying is there is no risk, as the figure is recorded and the Land office and thats that. The Agent already knows the value from the Land office and hence the recorded selling price will be equal or slightly above.

Apparently its very common practice and if so then I may have to accept it. But I still don't know from the agent how long the owner has lived at the property and how much Income tax is owed (agreed a 50/50 split already)

The other question is when i come to sell the condo, will there be any tax based on the difference between the selling price and the bought price? I read somewhere that foreigners may have to pay tax if they sell a property within x amount of years.

Just to repeat, I'm not bothered about saving money and wd rather do it legit, but this is Thailand and its way is the accepted way...

Edited December 27, 2013 by fish fingers

[sotsira]

If you sell your condo within 5yrs the tax is different to selling after 5yrs of ownership

the difference is about 1.5% more within the first 5yrs.

what you need to ask yourself is:

do you trust what the agent is telling you?

or

should you do your own check by going to the land office before you buy and ask for the

valuation and tax calculations yourself.

[TommyUK1960]

Thai's tend to do this in most case's. But Thailand is the land of scam's.

Be careful as you are farlang and if you upset someone in the future it may come back and bite you.

[stoli]

So you've come onto a public forum to announce that you might be about to commit fraud. I hope you're not too easy to track down, as you might be spending some time in the big house.

Ridiculous remark.

I don't understand why you think that this is a ridiculous remark, unless you are the owners agent.

Break this statement into 3 parts:

So you've come onto a public forum to announce that you might be about to commit fraud. I hope you're not too easy to track down, as you might be spending some time in the big house.

The first two are certainly true; not too sure of the last part.

If the buyer is aware that the fraud is taking place, he is just as guilty as the seller. No doubt about that. Why take the risk? When the buyer goes to sell, if taxes are due on the profit, the buyer, now the seller, will pay more on the gain than is actually there.

[thailandbeachisland]

This is stupid because nobody goes to jail for such a thing in Thailand and anyone thinking differently is just stupid and know nothing.

At most you pay a fine but even this will never happen.

[Gulfsailor]

Upon selling your condo, any capital gain on it is taxable as personal income. So let's say in 5 years you sell the condo for 4.2M. Assume you are not working in Thailand, your 'income' upon selling is calculated at 1 million with top bit being into 20% bracket. If on paper you purchased for 500,000 less, your gains will be up by that much, and that is 500,000 in the 25% bracket. Meaning you lose 125,000 baht on this little scam. This can go up to 35% if you have other income in Thailand or your profit on selling is much higher. In any case you are basically giving the seller a bonus of at least Thb 100,000 which you'll need to pay extra upon sale. I would never agree to something like this, unless they offer me a cash discount of at least 30% on the price reduction on paper.

[rayongchelsea]

Why are you paying the income tax element, usually the sellers cost.

[rawhod]

You can calculate the transfer fee/stamp duty/ tax with this on line calculator:-

http://www.acuterealty.com/calculator.asp

[Naam]

There is no intention on my part to commit fraud at all, its the owner's agent who is proposing this, as stated in the post title.

When I talk to thai friends it seems like the normal thing to do, but I'd rather be above board and do it properly if there is any possibility of repercussions as a foreigner buying abroad etc.

if you insist of doing it "properly" the price will go up considerably because then the owner has to pay capital gains tax.

[fish fingers]

I already agreed a price and this little 'scam' has come about after I paid the deposit. I'm not really happy about it at all, and the agent already pulled a fast one on the day of contract by making me agree to sharing everything 50/50 , as the agreed price was v good.

Now the question - does this happen more than not, i.e. is this a normal thing to expect from the seller?

I'm now v tempted to pull out of the sale and get my deposit back based on the fact that they are asking me to do this, seeing as it doesnt really benefit me at all as I'll be stung when i come to sell.

Edited January 1, 2014 by fish fingers

[fish fingers]

Gulf Sailor,

Thanks for the advice - I may be working in Thailand legally by then and married also - what tax wd i be paying then?

[rawhod]

Check the figures with the calculator I quoted in #18.

I'm not sure that married and working in Thailand makes any difference to the figures.

We were similarly conned by a selling agent. They negotiated a discount from the seller only to take a large portion of it back in fees...it happens.

[fish fingers]

I'm a bit confused - if i sell the condo, my income tax is based on the assessed price or the selling price?

[fish fingers]

Upon selling your condo, any capital gain on it is taxable as personal income. So let's say in 5 years you sell the condo for 4.2M. Assume you are not working in Thailand, your 'income' upon selling is calculated at 1 million with top bit being into 20% bracket. If on paper you purchased for 500,000 less, your gains will be up by that much, and that is 500,000 in the 25% bracket. Meaning you lose 125,000 baht on this little scam. This can go up to 35% if you have other income in Thailand or your profit on selling is much higher. In any case you are basically giving the seller a bonus of at least Thb 100,000 which you'll need to pay extra upon sale. I would never agree to something like this, unless they offer me a cash discount of at least 30% on the price reduction on paper.

I'm totally confused now.

I thought there was no capital gains tax on profit from selling a condo i.e. - the personal income tax is purely based on the years of ownership before selling and a variable rate to the amount calculated?

Edited January 2, 2014 by fish fingers

[Gulfsailor]

Personal income tax is seperate from taxes you pay upon transfer of property.

But capital gains (for instance profit you make on selling property) is added to your personal income. And over the total you pay income tax. So by agreeing to lower the price on paper by 500,000 baht, you have raised your taxable income by the same upon selling (providing you don't sell at a loss)

Ask an accountant if you could spread that out over the years of ownership, so that you stay in lower tax brackets, as I am not sure this is possible for a private person.

[fish fingers]

Ok, its just that I can't see any capital gains tax mentioned when selling property, altho it seems applicable on just about everything else. http://www.samuiforsale.com/law-texts/the-thailand-revenue-code.html

[rayongchelsea]

Ok, its just that I can't see any capital gains tax mentioned when selling property, altho it seems applicable on just about everything else. http://www.samuiforsale.com/law-texts/the-thailand-revenue-code.html

There is no capital gains on property. There is an income tax assessment based on a formula , which is somewhat convoluted.

[rawhod]

I'm a bit confused - if i sell the condo, my income tax is based on the assessed price or the selling price?

The transfer tax is based on the appraised value, the stamp duty is based on the selling price.

Quote...

An individual (Natural Person) is taxed in accordance with 3 different calculation methods depending on the location of the property and the mode of acquisition of the property as follows;

Look at this:-

http://lawonline.weebly.com/property-transfer-tax-and-fee.html

And try the calculator I posted in#18

[rayongchelsea]

His main concern is the income tax , he wants to reduce that..he should be paying that..

[fish fingers]

thanks for your help, also asked thai lawyer friend for advice and he'll get back to me and tell me what i need to know - I sent all info last night.

Edited January 2, 2014 by fish fingers