Why is in Thailand lying about the sale price at the land office 'normal'?

[Khun Jean]

I often wonder about the need for Thai people to lie about the sale price of property.

The transfer fee is based on the appraised value as is the witholding tax.

Only the stampduty or special business tax use the real sale price.

The stampduty is 0.5% so lying doe snot have much effect.

The special business tax is 3.3% so only there it makes a reasonable difference.

 

But would in most cases this difference not be small compared to the total amount?

Would you lie? Is it worth more for agents/brokers/.businesses?

 

[trogers]

Your accusations are based on the wrong assumptions.

 

You used the term 'appraised value' without it's proper definition. Appraised to what?

 

Has Thailand an army of trained govt appraisers who are sent out to value properties, differentiating between shoebox units that are plainly finished and those with gold plated showerheads and diamond studded door frames?

 

So, when lacking appraisers and not having viewed the interior of the properties, appraised values can only be based on the yard stick of plain finished...with inflation on land and replacement costs.

 

 

 

 

[juehoe]

Thais don't like to pay taxes.

I had to change my lawyer because he wasn't willing to make a tax invoice for his fees.

This lawyer has a business but doesn't pay taxes...


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[Khun Jean]

When at the land office the 'appraised value' can be requested for any chanot. Each four years the value is adjusted. Often the 'appraised value' is much lower then the sale value. The 'lying' is often to use this appraised value or close to it instead of the real sale price.

 

I heard that most of Bangkok is already done per chanot, and in the provinces it is done by grouping chanotes in zones. 

An interesting page is http://rdsrv2.rd.go.th/landwht/landwht06_1.asp and there is a calculator (http://rdsrv2.rd.go.th/landwht/formcal1.asp which has an interesting 'search button' that leads to a page where values of land plots can be searched. (Although it does not work all the time).

 

 

 

Edited April 7, 2017 by Khun Jean

[Morch]

I think the main thing is Thais aren't into paying taxes. There's a similar phenomenon with regard to appraisals/declarations of  income tax. Sure, it may seem like small change for some, but for most Thais that's not the case. A few thousand bahts still counts.

 

The difference between appraisal and actual price paid can also be used to thwart nosy neighbors, dept collectors and family members who feel they didn't get their fair share out of the sale.

 

[renevanb7]

You pay most of the transfer costs over what is higher, the sale/buy price or the price set by the land office/revenue office. It's illegal to mention not the right sale/buy price (but who cares about it). The sale/buy price set by the land office/revenue office is mostly lower.  

[boonchu]

The land office doesnt make valuations on the house or its standard of finish. It is on the land and area that the land is located.

[Stevemercer]

The Government appraised price for land in rural areas is often a quarter to half of the actual sale price. Most government appraisals (in any country) will be well below actual sale prices. I presume the methodology used favours the government in case they have to resume or buy land.

 

Of course, if rates or annual tax is payable (particularly for improved properties),  a different methodology is used to ensure the appraised value is higher than actual sales so as to maximise returns to the government.

[spacebass]

Short answer to the question is : Yes.

[khunPer]

Thais, like most other people, don't like to pay taxes – the difference is, that coming from a "civilized" country, we think 1-3 percent is utterly cheap.

 

Some Land Departments use their appraised value for tax and transfer fee, others wish to see documentation for the actual trade price (that's were some perhaps are lying). In cases when appraised value is used, one part, or a real estate agent, will often check with the Land Office, so everybody is prepared what to pay when doing the transfer; i.e. normal procedure with seller paying tax, and buyer paying transfer fees.

 

I have experienced both types of Land Departments, i.e. use the Land Department's value, and a Land Department claiming proof of trade-price.

 

After Thai Law, to my knowledge, seller shall also pay normal income tax – or company tax – of the sales profit; there are however some deductions for length of ownership, which an accountant can calculate. The income tax, depending of profit level, can be as high as 35 percent...

[Dumbastheycome]

Yes.  Always an attempt  is  made to  specify a  sale price  well below  the actual  in a  vain attempt to  avoid the transfer fee  based  on  same. In the past  it was  accepted  but  now an appraised  value on the land  is  made to establish the  transfer fee basically  because of  the  lies. It  is a  tax rather than a fee so it  can be understood  why there is  an attempt  at avoidance.

[Suradit69]

10 hours ago, juehoe said:

Thais don't like to pay taxes.

That's amazing. Everyone else in the world loves paying as much taxes as they can. Tax havens, cash transactions for tax avoidance,  trillions of dollars not repatriated until tax concessions are enacted, tax evasion ... all those things are actually Thai in origin.

[Dumbastheycome]

Just now, Suradit69 said:

That's amazing. Everyone else in the world loves paying as much taxes as they can. Tax havens, cash transactions for tax avoidance,  trillions of dollars not repatriated until tax concessions are enacted, tax evasion ... all those things are actually Thai in origin.

LMAO ! 

[amjamj]

Hello,

 

Can we go to land office and ask the appraised price of a condo or house ?

 

Thanks.

[Khun Jean]

From what i understand the assessed value of the land is what is used for determining the transfer fee (buyer) and the withholding tax (seller).

The Special Business Tax (seller) or when owned for more then five years the stamp duty (seller) is based on the actual selling price.

When land is owned more then five years the difference in what have to be paid is only 0.5% over the difference between the real and assessed value.

As such it should only be a small amount, maximum in the 10's of thousands.

 

How is income tax determined?

Is it based on profit (difference between the price you bought and are now selling) or just on the assessed value?

 

The withholding tax is determined using the assessed value. This could then be higher or lower then the taxes over the real income and you should be able to get a refund if the withholding tax was too high.

 

 

[trogers]

12 hours ago, amjamj said:

Hello,

 

Can we go to land office and ask the appraised price of a condo or house ?

 

Thanks.

Yes. But only useful for knowing the amount of taxes and duties payable in the event of a sales.

 

The assessment value does not take into consideration the state of the condo or house, nor the interior.

[Dumbastheycome]

On 4/7/2017 at 10:48 PM, Khun Jean said:

From what i understand the assessed value of the land is what is used for determining the transfer fee (buyer) and the withholding tax (seller).

The Special Business Tax (seller) or when owned for more then five years the stamp duty (seller) is based on the actual selling price.

When land is owned more then five years the difference in what have to be paid is only 0.5% over the difference between the real and assessed value.

As such it should only be a small amount, maximum in the 10's of thousands.

 

How is income tax determined?

Is it based on profit (difference between the price you bought and are now selling) or just on the assessed value?

 

The withholding tax is determined using the assessed value. This could then be higher or lower then the taxes over the real income and you should be able to get a refund if the withholding tax was too high.

 

 

Is  the transfer  fee  (buyer), withholding  tax  (seller)  independant  of the  Special Business  Tax and  applied  to  Business  only?

Would  appreciate   being  pointed  to an  English  language  site  that  explains   it  all.

[Khun Jean]

The best site in my opinion is https://www.samuiforsale.com/knowledge/real-property-transfer-taxes-and-fees.html Lots of other ages with solid info.

 

[anon4546543]

My wife earlier purchased some land in a rural area. When the chanote was done and fees paid for, she received the government forms which state the price paid for the land, the government valuation of that land and the tax due based on the valuation.

[John Singer]

What implications could an understated purchase price have for the buyer?

 

Current withholding tax does not take the historical purchase price into consideration. Not reading the news regularly, the government is in the process of revamping land and property taxes. 

Could we see a move to an internationally more common scheme where tax is paid on the difference between selling and historical purchase price?

[trogers]

2 hours ago, John Singer said:

What implications could an understated purchase price have for the buyer?

 

Current withholding tax does not take the historical purchase price into consideration. Not reading the news regularly, the government is in the process of revamping land and property taxes. 

Could we see a move to an internationally more common scheme where tax is paid on the difference between selling and historical purchase price?

I doubt it. As you have mentioned, prices can be still be understated, historical and present.

 

The new tax system would still be based on the assessment value of the Land Dept.

[The Deerhunter]

Simple.  Land transfer taxes, payable by the seller are calculated on the price te land was sold for.  Lie the sale pricedown.  Pay less tax.

[Khun Jean]

4 hours ago, The Deerhunter said:

Simple.  Land transfer taxes, payable by the seller are calculated on the price te land was sold for.  Lie the sale pricedown.  Pay less tax.

Where did this info come from? Land transfer taxes which are normally payable by the buyer is not based on the sale price.

Only the SBT/Stamp duty is based on the sale price. Hence lying about the sale price makes very little difference overall especially when the land was owned by the seller for 6 years or longer.

 

 

[trogers]

Assessment value of land depends on its location, while value of the building is the same nationwide.

 

http://www.ddproperty.com/th/ข่าวอสังหาริมทรัพย์-บทความ/2017/4/151076/location-will-matter-for-land-tax-but-building-tax/?utm_source=pgth-newsalert&utm_medium=edm&utm_campaign=dailynews-21Apr2017&utm_content=links

[The Deerhunter]

On 4/22/2017 at 9:56 AM, trogers said:

Assessment value of land depends on its location, while value of the building is the same nationwide.

 

http://www.ddproperty.com/th/ข่าวอสังหาริมทรัพย์-บทความ/2017/4/151076/location-will-matter-for-land-tax-but-building-tax/?utm_source=pgth-newsalert&utm_medium=edm&utm_campaign=dailynews-21Apr2017&utm_content=links

In our office they ask the vendor how much he sold for and the date of sale.  Of course all sales are years in the past and all at old low low prices.   Anybody surprised????