Selling a condo "closing costs"?

[loginwith]

I am wondering about "closing costs" when selling a condo in Thailand. So far I know we would have to pay 6.3% "transfer tax" and 5% realtor fee (negotiable of course to some extent with buyer and realtor).

 

But I am not clear about "withholding tax" (which based on "income tax").

 

Let's say someone (a person and not a company) bought a condo for 10 million baht and sold it after "two years and one week" for 10 million baht, how much would be the withholding tax? Does anybody have an idea?

 

 

And what would the calculation look like if you change the purchase price to 6 million baht (and 10 million sales price). Would that make a difference?

[MichaelJohn]

I think it's all here http://www.siam-legal.com/realestate/thailand-property-transfer-tax.php 

[loginwith]

Thanks, that example was very specific, but the same site has a better example which also contains the "rate tables".

 

http://usa.siam-legal.com/property-thailand/transfer-taxes.php

 

So basically if you sell a condo after 5 years for 12.5 mil baht (which you purchased for 12.5 mil baht) you would face the following "closing costs".

Withholding tax: 600k
6.3% transfer: 787.5k
5% realtor fee: 625k

Total ~2.1 mil baht "closing costs"

 

_{A seller might able to split some of the transfer tax with the buyer and get a better commission rate from the realtor. That would save about 500k.}

 

Is that about right?

[MichaelSong]

And what would the calculation look like if you change the purchase price to 6 million baht (and 10 million sales price). Would that make a difference?

 

Seems like an illegal activity to me 

[loginwith]

@Michael You misinterpreted the question.  I am not selling a property. I am thinking about buying one (see also www.thaivisa.com/forum/topic/741115-buying-condo-from-owner-in-pattaya/), but trying to think ahead - with all the existing and upcoming "unlimited" supply in this area (I anticipate only minor gains - if any - in the future).

 

So just to clarify. This is just about calculating two sales scenarios, one with a capital gain after 5 years and one without.

 

That has been answered. And I am surprised to that the withholding tax is calculated based on the sales price independent of any profit(!). So apparently if you sell a 10 mil condo after 5 years for 10 mil, you would lose 15%-20% ...

 

[KittenKong]

So far I know we would have to pay 6.3% "transfer tax" and 5% realtor fee (negotiable of course to some extent with buyer and realtor).

 

The estate agent fee is 100% negotiable. Personally I think that the oft-requested 5% here is insane. In the UK agents do this job for 1 or 2% at most, and they dont do anything extra here to warrant any extra payment. Money for old rope.

 

Who pays the various fees is also completely negotiable, though some solutions are more common than others.

[KittenKong]

And what would the calculation look like if you change the purchase price to 6 million baht (and 10 million sales price). Would that make a difference?

 

The Land Office use their own figures to calculate the tax (though in theory they will also use your declared figures if they are higher than theirs, though I dont think many people do that).

The withholding tax is really a calculation of what you might have earned in income had you rented the property out. And you pay it regardless of whether you did rent it out or not.

Edited July 12, 2014 by KittenKong

[pattjock]

Is witholding tax really paid if you by and sell in your own name and live there? I thought this was only paid if you buy/sell in company name.

[loginwith]

The estate agent fee is 100% negotiable. Personally I think that the oft-requested 5% here is insane. In the UK agents do this job for 1 or 2% at most, and they dont do anything extra here to warrant any extra payment. Money for old rope.

 

Who pays the various fees is also completely negotiable, though some solutions are more common than others.

 

Correct, at the end of my post I cut those fees in half (2.5%), but you still end up with a big loss.

 

[loginwith]

Is witholding tax really paid if you by and sell in your own name and live there? I thought this was only paid if you buy/sell in company name.

 

"When the property seller is a company, the Withholding Tax is 1% of the sales price or 1% of the assessed value, whichever is higher. After the sale, the company selling the property will need to report the income from the sale on their income tax return."

[KittenKong]

Correct, at the end of my post I cut those fees in half (2.5%), but you still end up with a big loss.

The people touting condos in Thailand as being good investments rarely seem to look at the bottom line, and conveniently manage to forget many of the costs.

Buying property in Thailand is easy. Owning it is cheap. Selling it is neither.

[chris2004]

Thanks, that example was very specific, but the same site has a better example which also contains the "rate tables".

 

http://usa.siam-legal.com/property-thailand/transfer-taxes.php

 

So basically if you sell a condo after 5 years for 12.5 mil baht (which you purchased for 12.5 mil baht) you would face the following "closing costs".

Withholding tax: 600k
6.3% transfer: 787.5k
5% realtor fee: 625k

Total ~2.1 mil baht "closing costs"

 

_{A seller might able to split some of the transfer tax with the buyer and get a better commission rate from the realtor. That would save about 500k.}

 

Is that about right?

 

I never appreciated this. So even if you sell the condo for what you paid you still have a loss of 2.1 million baht. Plus of course other costs like legal costs and if company owned winding up costs.
 

[WillG]

And what would the calculation look like if you change the purchase price to 6 million baht (and 10 million sales price). Would that make a difference?

 

The Land Office use their own figures to calculate the tax (though in theory they will also use your declared figures if they are higher than theirs, though I dont think many people do that).

The withholding tax is really a calculation of what you might have earned in income had you rented the property out. And you pay it regardless of whether you did rent it out or not.

 

This is from Siam Legal website

 

            Rental Income Taxes: Individual property owners have to pay taxes on any rental income their property generates.

            Corporate property owners have to pay annual taxeson all of their real estate holdings in Thailand whether they rent out their property to third parties or occupy              

            the property themselves.

 

From this I assume a person buying a condo in their own name and living in it themselves does not have to pay wothholding tax or am I missing something?

[KittenKong]

This is from Siam Legal website
 
            Rental Income Taxes: Individual property owners have to pay taxes on any rental income their property generates.
            Corporate property owners have to pay annual taxeson all of their real estate holdings in Thailand whether they rent out their property to third parties or occupy              
            the property themselves.
 
From this I assume a person buying a condo in their own name and living in it themselves does not have to pay wothholding tax or am I missing something?

I think that quote relates to actual rental income on which income tax should be paid (and which bizarrely many landlords seem to forget to declare here).

The withholding tax is different, even though it addresses the same thing. The withholding tax and the business tax are both really just capital gains tax under another name.

[chris2004]

 

This is from Siam Legal website
 
            Rental Income Taxes: Individual property owners have to pay taxes on any rental income their property generates.
            Corporate property owners have to pay annual taxeson all of their real estate holdings in Thailand whether they rent out their property to third parties or occupy              
            the property themselves.
 
From this I assume a person buying a condo in their own name and living in it themselves does not have to pay wothholding tax or am I missing something?

I think that quote relates to actual rental income on which income tax should be paid (and which bizarrely many landlords seem to forget to declare here).

The withholding tax is different, even though it addresses the same thing. The withholding tax and the business tax are both really just capital gains tax under another name.

 

 

Is the withholding tax a capital gains tax? It appears that you have to pay it even if you have made no capital gains (or even a loss).

[KittenKong]

The withholding tax is different, even though it addresses the same thing. The withholding tax and the business tax are both really just capital gains tax under another name.

 
Is the withholding tax a capital gains tax? It appears that you have to pay it even if you have made no capital gains (or even a loss).

That's true. So in practice it's more of a capital tax than a capital gains tax. I've never come across a real equivalent to this tax elsewhere. Perhaps it could be called an ownership tax, that you pay cumulatively on sale rather than every year like a council tax or rates or habitation tax?