Selling house under a thai limited company - HELP

[OPG]

I'm helping a friend (farang) who is selling his house, which was built under a Thai Limited Company name. My questions are as follows:

1. Since the house is under a Thai Limited Company name, I have to assume that whoever buys it, is actually buying the company and not necessarily the house and land directly as they are assets of that Thai company, but what are the associated costs in selling the Thai Limited Company that holds the land and house as assets?

If I'm nowhere being correct on my first question, please let me know as I have no clue to what I'm doing and my friend is not in this country, so I'm trying to get a better understanding on this situation.

2. Do we still have to go to the Land Office?

3. What is the typical time frame to complete this transaction in its entirety?

And anything else that you kind people can help me with as I'm lost and can't even begin to muster up more questions.

Thank you in advance.

[robblok]

1) I am not sure that is true as a normal company can sell its assets, so the house can be sold separately, but you can also sell the whole company

2) if you sell the house and not the company I think you got to go to the land-office.. otherwise not as you are selling the company that owns the house

I might be wrong let other more knowledgeable members correct me please.

[OPG]

I know he will not need the company after the sale, so I'm just trying to find out what are the procedures, costs and time frames involved. Thanks for the help though...

[Robroona]

I bought a house via Thai Company 2 years ago. Took one meeting I the vendors lawyers office( mine was also present). Say 30 minutes?

Never visited the Land Office.

All I paid was the lawyers fee ( mine)

[OPG]

Roobrona...do you know what the costs were to the seller? Am I right to assume that it is just the transfer of company to you and that's basically it?

[Sophon]

I know he will not need the company after the sale, so I'm just trying to find out what are the procedures, costs and time frames involved. Thanks for the help though...

He may not need the company after the sale, but if it is a Thai buying they will not want the company. That leaves him with the rather substantial costs of closing the company as well as the transfer costs for the land/house.

Sophon

[OPG]

it's another Farang who may be the buyer

[Anthony5]

When you sell the company, which will include the assets, you just go to an accountant and change the the shareholders and director of the company with your own people. Normally an accountant charge you about 5000 Baht for that.

Like other posters said already, if the buyer is a Thai he will not be interested in the company, and you will have to do the transfer at the land department, which cost about 4 -5 % on the value set by the land department.

After that you will have to close the company, which will set you back about 25 - 30.000 Baht, if you engage an accountant.

[JohnC]

You say the potential buyer is a farang so one presumes he will buy the company, this can be completed very easily with your accountant changing the director to the purchaser, cost are normally split 50/50 and I was quoted 10,000 baht which is 5000 baht each . I was also quoted in excess of 60,000 baht to close the company in the event the buyer didn't want it plus there will be additional costs involved in transferring the assets out of the company.

Easiest and cheapest way therefore is to sell the company.

[Rooo]

Moved to housing & Real Estate.

[Anthony5]

You say the potential buyer is a farang so one presumes he will buy the company, this can be completed very easily with your accountant changing the director to the purchaser, cost are normally split 50/50 and I was quoted 10,000 baht which is 5000 baht each . I was also quoted in excess of 60,000 baht to close the company in the event the buyer didn't want it plus there will be additional costs involved in transferring the assets out of the company.

Easiest and cheapest way therefore is to sell the company.

With quotes like that, I bet your accountant is a rich man by now.

Closing the company doesn't involve much more than announcement in a few newspapers, balance sheet and a trip to the revenue department in Chonburi ( if your company is pattaya based).

I once closed 6 companies by going to the revenue department myself. Because the companies were less than 6 months old it was a very basic balance sheet, which cost me 6000 Baht for the 6 companies together, and nothing at the revenue department. Very helpful people there as well, all cleared in 24 hours.

The lawyer in Soi Post office, who had charged me 150.000 Baht 6 months earlier to set up the companies, quoted me 120.000 Baht for the same thing.

[robblok]

You say the potential buyer is a farang so one presumes he will buy the company, this can be completed very easily with your accountant changing the director to the purchaser, cost are normally split 50/50 and I was quoted 10,000 baht which is 5000 baht each . I was also quoted in excess of 60,000 baht to close the company in the event the buyer didn't want it plus there will be additional costs involved in transferring the assets out of the company.

Easiest and cheapest way therefore is to sell the company.

With quotes like that, I bet your accountant is a rich man by now.

Closing the company doesn't involve much more than announcement in a few newspapers, balance sheet and a trip to the revenue department in Chonburi ( if your company is pattaya based).

I once closed 6 companies by going to the revenue department myself. Because the companies were less than 6 months old it was a very basic balance sheet, which cost me 6000 Baht for the 6 companies together, and nothing at the revenue department. Very helpful people there as well, all cleared in 24 hours.

The lawyer in Soi Post office, who had charged me 150.000 Baht 6 months earlier to set up the companies, quoted me 120.000 Baht for the same thing.

I once went to close a company and paid the accountant only to find out after a few years it was not closed fully. Had to go to the revenue department and a lot of hassle.. that accountant was of course long gone.

I should have known better but did not assume bad things. I had to go to that guy multiple times. sign this that.. And I am an accountant myself (not here) I found the process strange

[KittenKong]

1) I am not sure that is true as a normal company can sell its assets, so the house can be sold separately, but you can also sell the whole company

2) if you sell the house and not the company I think you got to go to the land-office.. otherwise not as you are selling the company that owns the house

This is correct.

But anyone buying a company to save money on LO transfer fees should remember that when they buy a company they also buy all its liabilities or debts, including any unknown ones. Personally I would not want to get involved with anything so vague and open-ended, especially here where accountancy is not a precise art.

[OPG]

Thank you everybody; I've got my answers.

[puuchai299]

Selling the house by transfer of the the thai companies director will cost about 5000 baht,lawyer /accountant can do this.

If you sell it to a thai person,then the lawyer has to prepare paperwork first,normally around 2 days,

The house can then be sold out from the company,

After which the thai co ltd should be closed.which can cost around 30.000 depending on the lawyer.

Also beware of taxes,(business taxes),

As many lawyers put the house in a company which is in too low a bracket for the price of the house to be held in,

My lawyer put my 7 million property in a 2 million baht company a few years back,when I sold the property out to a thai,I was faced with a tax bill of 800,000 thai baht on top of the price of closing the co ltd.because the business department saw this as a 5 million baht profit over 5 years that I owned the property...

Changing the director to a farang name is the cheapest and easiest way...

[Anthony5]

Selling the house by transfer of the the thai companies director will cost about 5000 baht,lawyer /accountant can do this.

If you sell it to a thai person,then the lawyer has to prepare paperwork first,normally around 2 days,

The house can then be sold out from the company,

After which the thai co ltd should be closed.which can cost around 30.000 depending on the lawyer.

Also beware of taxes,(business taxes),

As many lawyers put the house in a company which is in too low a bracket for the price of the house to be held in,

My lawyer put my 7 million property in a 2 million baht company a few years back,when I sold the property out to a thai,I was faced with a tax bill of 800,000 thai baht on top of the price of closing the co ltd.because the business department saw this as a 5 million baht profit over 5 years that I owned the property...

Changing the director to a farang name is the cheapest and easiest way...

You have been had my friend, the value of company has nothing to do with the assets the company can own. If you have a 2 million company that owns a house valued at 7 million, the company "borrows" 5 million from the company director.

By the way, you have to own a Châteaux, for it to be valued at 7 Million by the land department, as that is the value you will be taxed on.

Edited February 20, 2015 by Anthony5

[robblok]

Selling the house by transfer of the the thai companies director will cost about 5000 baht,lawyer /accountant can do this.

If you sell it to a thai person,then the lawyer has to prepare paperwork first,normally around 2 days,

The house can then be sold out from the company,

After which the thai co ltd should be closed.which can cost around 30.000 depending on the lawyer.

Also beware of taxes,(business taxes),

As many lawyers put the house in a company which is in too low a bracket for the price of the house to be held in,

My lawyer put my 7 million property in a 2 million baht company a few years back,when I sold the property out to a thai,I was faced with a tax bill of 800,000 thai baht on top of the price of closing the co ltd.because the business department saw this as a 5 million baht profit over 5 years that I owned the property...

Changing the director to a farang name is the cheapest and easiest way...

In the Netherlands it would have been the same and rightly so. The lawyer thought to help you in evading (fraud) taxes and it came back and bit you in the ass. But you are responsible too.. i mean if you see a 7 million house valued at 2 million you should have asked some questions. (unless you don't know anything then your excused of course)

[jacko45k]

The easiest way is to sell the whole company, if the buyer is receptive to that idea.

For a foreign buyer, that is an easy option, a Thai buyer may not want the company. You would then be responsible for winding up the company, much more effort than selling it.

Even a foreign buyer may prefer to transfer the assets into a different company, he could be wary that your company has outstanding loans, debts and taxes.

In the first instance there is no need for you or the buyer to go to the land office, you should both use lawyers to process everything and it can be done very quickly. You will have to pay your lawyers fees (mine were about 15,000 baht). The purchaser his own, who should change the company ownership.

Don't sign the company over until you have received the full payment.

Edited February 20, 2015 by jacko45k

[crazykopite]

You do a transfer of share ownership ie agree the price of the property which includes the Thai Ltd Company get non refundable deposit 5 % from new buyer , get your lawyer to transfer your 49% shareholding into new purchasers name on final payment if you want payment in another currency rather that baht arrange it with your buyer saves any problems if you want to ship your money out of Thailand your Lawyer should make checks with land office and also checks that the company does not have any debts outstanding payments . I did a property purchase this way it took about 6 weeks as my lawyer found a discrepancy which had to be resolved , hope this helps I didn't a purchase this way a number of years ago .

[crazykopite]

Selling the house by transfer of the the thai companies director will cost about 5000 baht,lawyer /accountant can do this.

If you sell it to a thai person,then the lawyer has to prepare paperwork first,normally around 2 days,

The house can then be sold out from the company,

After which the thai co ltd should be closed.which can cost around 30.000 depending on the lawyer.

Also beware of taxes,(business taxes),

As many lawyers put the house in a company which is in too low a bracket for the price of the house to be held in,

My lawyer put my 7 million property in a 2 million baht company a few years back,when I sold the property out to a thai,I was faced with a tax bill of 800,000 thai baht on top of the price of closing the co ltd.because the business department saw this as a 5 million baht profit over 5 years that I owned the property...

Changing the director to a farang name is the cheapest and easiest way...

You have been had my friend, the value of company has nothing to do with the assets the company can own. If you have a 2 million company that owns a house valued at 7 million, the company "borrows" 5 million from the company director.

By the way, you have to own a Châteaux, for it to be valued at 7 Million by the land department, as that is the value you will be taxed on.

When you had the property built you would have registered the cost to the land office if you failed to give the correct cost ie build cost and land cost let's say 10 million but only declared a total cost of 5 million and then sold it for 15 million you would pay taxes on a 10 million profit I think it is 30% if less than 5 years ,because the land office would have the figure of 5 million that you had submitted some do this to avoid paying taxes but it can come back to haunt you later !! Edited February 20, 2015 by crazykopite

[henkie220358]

You say the potential buyer is a farang so one presumes he will buy the company, this can be completed very easily with your accountant changing the director to the purchaser, cost are normally split 50/50 and I was quoted 10,000 baht which is 5000 baht each . I was also quoted in excess of 60,000 baht to close the company in the event the buyer didn't want it plus there will be additional costs involved in transferring the assets out of the company.

Easiest and cheapest way therefore is to sell the company.

Look for another lawyer this one is to expensive

[Anthony5]

Selling the house by transfer of the the thai companies director will cost about 5000 baht,lawyer /accountant can do this.

If you sell it to a thai person,then the lawyer has to prepare paperwork first,normally around 2 days,

The house can then be sold out from the company,

After which the thai co ltd should be closed.which can cost around 30.000 depending on the lawyer.

Also beware of taxes,(business taxes),

As many lawyers put the house in a company which is in too low a bracket for the price of the house to be held in,

My lawyer put my 7 million property in a 2 million baht company a few years back,when I sold the property out to a thai,I was faced with a tax bill of 800,000 thai baht on top of the price of closing the co ltd.because the business department saw this as a 5 million baht profit over 5 years that I owned the property...

Changing the director to a farang name is the cheapest and easiest way...

You have been had my friend, the value of company has nothing to do with the assets the company can own. If you have a 2 million company that owns a house valued at 7 million, the company "borrows" 5 million from the company director.

By the way, you have to own a Châteaux, for it to be valued at 7 Million by the land department, as that is the value you will be taxed on.

When you had the property built you would have registered the cost to the land office if you failed to give the correct cost ie build cost and land cost let's say 10 million but only declared a total cost of 5 million and then sold it for 15 million you would pay taxes on a 10 million profit I think it is 30% if less than 5 years ,because the land office would have the figure of 5 million that you had submitted some do this to avoid paying taxes but it can come back to haunt you later !!

First of all, you don't declare the value of your property to the land department, they value it by themselves and it is very low, My house was recently valued by Bangkok bank at 8.5 million in forced sale for a mortgage.

Land department values it at 1.52 Million, and you're taxes are calculated on that.

Land in this area goes for 4 million/Rai, but at the land department you pay taxes on 320.000 Baht/Rai.

The buyer don't want it transferred at real value either, because he has to pay part of the transfer costs.

Now look at my comment about the loan. If your property is valued at 7 Million, but your company has only a registered capital of 2 Million, you borrow the remaining 5 M from the director.This is declared in the balance sheet, When you sell the property you will have to pay back the loan, hence there is no profit.

By the way, special business tax is 5%, not 30%, in the first year and declines 1% each year to be 0% after the 5th year.

Edited February 20, 2015 by Anthony5

[wowfactor10]

here are my thoughts about it :

Some new legal ownership options should come to Thailand regarding house and land and company owning structures for protecting the rights of the foreigr buyers more then what they are doing now !

Example a russian couple or chines couple can only lease 30 years max land with house.so they do not want to invest like this,so they follow the company route but its shady and with many hurdles too

So with shady ownership regulations most foreigner couples are no longer willing to buy house with land and so that market is less buyant as it should have been.

[dotpoom]

The purchaser doesn't have to buy the company, His name simply replaces your friend's name as the main shareholder. I suppose you could say he becomes the Director. Cheap to change the company director, about 10,000 Baht, Can be done in one day at Company House in BKK (not sure about that last piece of information), it doesn't go near the Land Office. However, if A Thai person wishes to buy the house, he most lightly won't be interested in or be needing the company. In that case proceed as you normally would as if selling a condo in a Farang name, which involves going through the land office.

I sold a house the latter way and dissolved the company afterwards (cost almost as much as setting it up in the first place). It had been suggested to me that I could sell the company (it would have no assets) but I preferred to do as I did. I do remember seeing company's like it for sale in the local classifieds, I was just afraid that maybe an unscrupulous person in some way or other might have the ability to land me in all sorts of difficulties as my name would have been associated with it.

Edited February 20, 2015 by dotpoom

[khunPer]

I know he will not need the company after the sale, so I'm just trying to find out what are the procedures, costs and time frames involved. Thanks for the help though...

What assets have been placed in the company’s book keeping and annual statements (balance sheet)...?

Normally the auditor will place assets in the annual statement for the limited company, land ownership may need to be reported separate annually (not sure which, but my auditor asks for status of land ownership every year, preferably copies of land deeds; I’ve been told they need to report it annually).

If the house is not in the books – or separately registered to the company in any other way at Land Office or Tessa Ban (building permission) – then that can be sold separately. Normally it’s the land ownership that is the problem for a foreign investor and therefore need to be in some kind of arrangements, like a limited company. Trading a house outside of company assets may be a benefit for both buyer and seller.

You say buyer don’t need or want the company. If he doesn’t need the limited company he may loose by taking over the shares – keeping a limited company going costs money, and closing it may involve tax and expenses.

When selling a limited company – that means, selling the shares to other shareholders – there is no transfer fees or tax at the Land Office, as the land don’t change owner. There may be a minor fee for lawyer and registration of new shareholders (new prints).

When selling the land out of a company, and after that closing the company, to my knowledge (please verify with accountant/lawyer):

1)

Check the land value at the Land Office, which often/sometimes are lower than the actual trade value. Whenever possible trade the land at that value or not much above that value (the balance can be included in the sum for the house, if that can be sold separately).

2)

Transfer fees and taxes at Land Office are based on either their value or the actual sales price – procedure may vary at different Land Offices, some may wish to see Meeting Report and Sales Agreement.

3)

The limited company now has an income as the sales price of the house minus expenses; like transfer fee, tax, lawyer costs, real-estate agent’s fee, pay out of loans, etc. That income is presumably higher than the book kept buying price (presume value has raised sine the land was bought), and therefore the limited company will end up with a profit for taxation (company tax), before it can be closed. I think there are some deductions depending of how long time the land has been owned, the account (tax accountant) shall know that.

4)

It may require some documents and take some time to close a limited company. The remaining assets, at that time money in a bank account, can then be paid to the shareholders.

I’ve been told that in some areas, where Land Office have a lower price than the actual trade value, property is often or sometimes sold to foreign investors at a lower value, with payment transferred in Thai baht, and the balance (normally the major part) transferred between overseas (offshore) accounts in foreign currency. Don’t know if that is still a going practice.

Your friend will anyway need advice from a lawyer with experience in property deals.

[FritsSikkink]

Do we still have to go to the Land Office?

The owner / director of the company can sell the house. You as a friend can do nothing, you have no power in the company.

[OPG]

Do we still have to go to the Land Office?

The owner / director of the company can sell the house. You as a friend can do nothing, you have no power in the company.

That has always been understood. All I'm doing is getting info so I can help out my buddy when he returns as he is also confused on how it works, but you good people on this thread have certainly provided me with more than enough information and I thank you so very much!