New Condo contract transferred before sale completion - tax question

[drbrit]

A friend has a contract for a NEW condo being bought from the developer. The condo sale has NOT yet completed (due soon), and no chanote or registration with Land office yet.

The friend no longer wishes to buy the condo and wants to transfer the contract to me.

The developer say they will charge 20,000Bt for a new contract to be drawn up, but I am fine with that.

The problem is, the developer now says I would be required to pay "transfer fee" of 4.2%.

It seems they are trying to hit me for specific business tax or witholding tax or the full transfer fee of 2% (I can't tell as they have not broken down where the 4.2% comes from)

As the condo 1st sale has not yet completed, and they will be charging 20K to transfer to my name, the new contract will be between developer and me. So, my understanding is they should only charge me 1% transfer fee. It is not a resale from an individual. Please confirm if that is the case, thanks

(Note: the 4.2% does not include sinking fund, central management etc)

[Delight]

In this circumstance I would go see a lawyer.

As I see it this exercise can be viewed in 2 ways

1) The original buyer sells his contract to you -assuming that this is legally possible and is acceptable to the developer.

or

2) The developer legally cancels the contract with the original owner and then sells to you via a new contract.In this case the original buyer pays the legal cancellation fee..

All the monies paid to date -less this i cancellation fee are then transferred to the original buyer

Either way ,given that no transfer of the Title Deed has actually occurred taken then I can see no case for taxation relating to property transfer.

I can see no case where you should have to pay. anything .-just the price of the condo.

[Delight]

Sorry about duplication

Edited March 7, 2015 by Delight

[drbrit]

Thank you Delight.

It is actually scenario 2) as in the original sales contract it states there is a 20,000bt fee for transfer of contract. I'm done with that.

But if that is the case, as I am the new contract owner with the developer, I should only be subject to a 1% of assessed value land transfer fee.

Not 4.2% which I am guessing they are trying to stuff in a specific business tax and witholding tax in there (usually about 3%)

[Delight]

In my option 2 -one contract ends and another contract starts.

There is no transfer .

Also the series of taxes associated with transfer (that is when the condo is transferred from the developer to you) are levied by the land office -not the developer.,

Who is doing the 'stuffing ' The developer or the Land Office

[drbrit]

Absolutely.. it was on a quote I asked for from the developer.

Yes, agree the transfer tax is land office, not levied on me by developer

Hence asking out to you experts to see if I am missing something...

[KittenKong]

Thank you Delight.

It is actually scenario 2) as in the original sales contract it states there is a 20,000bt fee for transfer of contract. I'm done with that.

But if that is the case, as I am the new contract owner with the developer, I should only be subject to a 1% of assessed value land transfer fee.

Not 4.2% which I am guessing they are trying to stuff in a specific business tax and witholding tax in there (usually about 3%)

I've never looked at it in detail as I'm not the slightest bit interested in buying anything off-plan here, but I always understood that when the chanotes of a new condo building are issued the buyer is indeed liable to business tax and transfer fees.

[Anthony5]

Thank you Delight.

It is actually scenario 2) as in the original sales contract it states there is a 20,000bt fee for transfer of contract. I'm done with that.

But if that is the case, as I am the new contract owner with the developer, I should only be subject to a 1% of assessed value land transfer fee.

Not 4.2% which I am guessing they are trying to stuff in a specific business tax and witholding tax in there (usually about 3%)

I've never looked at it in detail as I'm not the slightest bit interested in buying anything off-plan here, but I always understood that when the chanotes of a new condo building are issued the buyer is indeed liable to business tax and transfer fees.

Business tax should be the responsibility of the the seller, since it is the tax on the profit.

[hhgz]

Most developers add the transfer fee into the sale price, and the developer pays the fee. For lower priced condos, the developer does otherwise. It would behoove you to ask your friend what his agreement was with the developer.

[krisb]

Wouldn't it be written into your friends original contract?

For piece of mind I'd be contacting a lawyer mate. One familiar with property.

[krisb]

Gee even 20k for what is probably essentially a generic contract seems excessive?

[KittenKong]

Gee even 20k for what is probably essentially a generic contract seems excessive?

Developers are not completely stupid. It's easier to make extra money on these fees than it is to sell at a higher price to start with.

[drbrit]

I don't mind paying 20K for having a new contract drawn up because the condo has increased in value in the 3 years since the original contract (and sales price) was drawn up.

The original sellers contract says buyer should pay the transfer fee. This normally means 1% of assessed value (by law) but I hear some developers try to make the buyer pay the full 2%. Even then it doesn't add up to 4.2% they quoted.

I have asked the condo to explain how they came up with that figure, and have been greeted with a week of silence. In the meantime I'm reaching out to you guys in this forum to see where I stand.

(Note: I have not signed the contract until this is resolved)

[Delight]

The general overview of transfer costs relating to condos in Thailand seems to be covered on this website:

http://www.samuiforsale.com/real-estate/condominium-transfer-tax-and-fees.html