Taxes

[Nawtilus]

On a sale of a property I know we have 2% transfer tax.

We also have 0.5% duty.

Also apparently we have witholding taxes of 3.5% but only if you have owned the property for less than a year I think ?? not sure on this one...anyone know for sure ?

The duty of 0.5% is not payable if you are paying witholding tax.

So presumably Witholding tax is only payable for properties sold within a year of ownership and this is because there is no capital gains tax, but it is in place to tax people who develop and sell land regularly but perhaps are not real developers.

I have a couple of questions...is the transfer and duty taxes based upon contracted sale price, asset value determined by the land office or ???

If by land office determination, how is it calculated ??

If by contract, how is it determined this is the true contract price ??

If the witholding tax is based upon an income type rather than just a set government standard fee, then is it based upon the profit of the property only or the whole sale price in total. For example a property for sale for 15 million, the land was 5 and house 5, is it calculated on 5 million profit or on the 15 mil sale price ??

I am aware prices are negotiated at the land office and money transfers under the table, just wondering what the official approach is first.

[mynot]

On a sale of a property I know we have 2% transfer tax.

We also have 0.5% duty.

Also apparently we have witholding taxes of 3.5% but only if you have owned the property for less than a year I think ?? not sure on this one...anyone know for sure ?

The duty of 0.5% is not payable if you are paying witholding tax.

The Business tax is 3.3% and you are right that stamp duty is not payable if this tax is paid.

So presumably Witholding tax is only payable for properties sold within a year of ownership and this is because there is no capital gains tax, but it is in place to tax people who develop and sell land regularly but perhaps are not real developers.

As far as I know..... Business tax is paid, if you hold it less than 5 years..... but if you register as living there.... then only 1 year is required. Income tax is also payable.

I have a couple of questions...is the transfer and duty taxes based upon contracted sale price, asset value determined by the land office or ???

Duty is paid on the Land Dept estimation, which the real estate agent should make sure that you get 2 cheques.... one being the estimated price and the other being the difference between the estimated price and the actual price.

If by land office determination, how is it calculated ??

One of the mysteries of Thailand...... altho for a condo the price is based on an empty shell, so there is usually a good sized difference between the 2 prices.

If the witholding tax is based upon an income type rather than just a set government standard fee, then is it based upon the profit of the property only or the whole sale price in total. For example a property for sale for 15 million, the land was 5 and house 5, is it calculated on 5 million profit or on the 15 mil sale price ??

This is getting a little bit tricky now.... I am led to believe that there will be 2 formulas to work out your income tax, one for the land, which you may have owned for 4 years, and then the tax on the house which may have only been erected for the last 2 years.

This is a complicated formula and does not include the calculations to pay the Transfer fees/Stamp duty associated with the sale of the property.

The first thing that you have to understand, is that the number of years ownership is calculated so that each partial year is 1 year. Therefore, if you purchased your property in Dec ’04 and sold it in Jan ’05 (2 months), that is technically 2 years.

Formula A

Each year of ownership has its own percentage rate.

1yr 8%

2yr 16%

3yr 23%

4yr 29%

5yr 35%

6yr 40%

7yr 45%

8yr+ 50%

Formula B

Income Tax Rate

1 -100,000 baht 5%

100,001 - 500,000baht 10%

500,001 -1,000,000baht 20%

1,000,001 -4,000,000baht 30%

4,000,001 -and over 37%

Formula is:

Estimated price (declared by Lands Dept) x number of Years percentage (Formula A)

Divided by number of years.

An example:

If you owned your condo for 4 years and you sold it for 4 million (although the Lands Dept valued it at 2 million)

Formula

2million x 29% divided by 4 = 145,000 baht per year

using Formula B

Tax on 145,000baht is 5000 baht for first 100,000

And then 10% on balance 4,500 baht

Total Tax for each year = 9,500 x 4yrs

= 38,000 baht Income Tax owing for the sale of Condo.

It is my understanding that the Land Dept will issue you a receipt (or may have to ask for a letter) that allows you to transfer only that amount out of the country, that you have paid your taxes on.

So as far as I know, you pay the Transfer Fee (2%) + either Stamp Duty (0.5%) or business tax (3.3%) and then you have to pay Income tax based on the above formula.

Please note: That I have only acquired this info, cos I am selling my Condo. I am not a lawyer nor real estate agent, so there may be some inaccuracies in this

Edited July 28, 2006 by mynot

[Nawtilus]

Thanks.

Only differance I have been told is that the witholding tax and income tax are differant, I was told the witholding tax would only be around 1 or 2% and was told this by a cbre agent, which hopefully should know these things.

Actually not a bad system considering only 38k on 2 mil and considering you can under state the value by considerable amounts lol.

[Pappiklon]

On a sale of a property I know we have 2% transfer tax.

We also have 0.5% duty.

Also apparently we have witholding taxes of 3.5% but only if you have owned the property for less than a year I think ?? not sure on this one...anyone know for sure ?

The duty of 0.5% is not payable if you are paying witholding tax.

So presumably Witholding tax is only payable for properties sold within a year of ownership and this is because there is no capital gains tax, but it is in place to tax people who develop and sell land regularly but perhaps are not real developers.

I have a couple of questions...is the transfer and duty taxes based upon contracted sale price, asset value determined by the land office or ???

If by land office determination, how is it calculated ??

If by contract, how is it determined this is the true contract price ??

If the witholding tax is based upon an income type rather than just a set government standard fee, then is it based upon the profit of the property only or the whole sale price in total. For example a property for sale for 15 million, the land was 5 and house 5, is it calculated on 5 million profit or on the 15 mil sale price ??

I am aware prices are negotiated at the land office and money transfers under the table, just wondering what the official approach is first.

You might find this link helpful in calculating the property taxes: http://www.acuterealty.com/calculator.asp

[Dazzler]

The Business tax is 3.3% and you are right that stamp duty is not payable if this tax is paid.

So presumably Witholding tax is only payable for properties sold within a year of ownership and this is because there is no capital gains tax, but it is in place to tax people who develop and sell land regularly but perhaps are not real developers.

As far as I know..... Business tax is paid, if you hold it less than 5 years..... but if you register as living there.... then only 1 year is required. Income tax is also payable.

Where does an owner have to register?