Sell Condo (Thai Company Name) Income/Profit Tax

[111tingtong]

Hi,

 

Can anyone shed some light on the above tax due to selling a condo in a Thai Company name.

 

The Condo was purchased for 3.4 Million Baht (2008) and Sold for 2.6 Million Baht (2016). My lawyer has informed me that there will be tax due to the tune of approx. 70,000 Baht. Seems a bit excessive considering I actually lost money so there should be no tax from profit? Now the income tax, ok now this might be an income during the tax year but again its actually a loss in the big picture? The lawyer says it will be 15%, but when I try to get a straight answer "15% of what?" I get vague replies. 70,000baht is 15% of 466,666 Baht. Where on earth does that figure come from.

 

I don't mind paying the amount if its correct however if I am about to be ripped off please someone advise what it should be approximately.

 

Also once the balance has been sorted if anyone would like a Thai Company (Free) can contact me. I believe its just a quick change of directors for a small fee (we can share). 

 

Cheers

J

[trogers]

What were the assessed values of the property during buy and sell?

[111tingtong]

1 hour ago, trogers said:

What were the assessed values of the property during buy and sell?

Unfortunately that one I don't know. I bought the Condo new for cash. I did not get it valued prior to the sale, basically lowered the price and hoped for the best.

[KittenKong]

You aren't particularly clear but it sounds as though your company is selling the condo it owns to an individual or another company, leaving you with a company with no assets.

 

If so then property taxes and transfer fees will apply and these generally come to around 5-6% of the declared sale price or the assessed value, whichever is the greater. It makes no difference whether you are making a profit or loss on the sale. This is up for negotiation as to how it is split between the two parties.

 

On top of that you may have some company income tax to pay, though if you are selling at a loss this seems unlikely. And then on top of that you will have either some costs involved in selling the company, or some costs involved in closing it if you dont keep it or sell it.

 

I  have no idea where your lawyer gets that 15% figure from. In fact that's not true: I suspect that he plucked it out of his backside and that it includes some nice commission for him. Who would deal with any lawyer who cant give a straight answer? Not me.

[funandsuninbangkok]

Another Thai real estate investment success story!

 

has to pay huge fees to get out of investment that lost 30%

 

rent in Thailand, buy elsewhere 

[111tingtong]

16 hours ago, KittenKong said:

You aren't particularly clear but it sounds as though your company is selling the condo it owns to an individual or another company, leaving you with a company with no assets.

 

If so then property taxes and transfer fees will apply and these generally come to around 5-6% of the declared sale price or the assessed value, whichever is the greater. It makes no difference whether you are making a profit or loss on the sale. This is up for negotiation as to how it is split between the two parties.

 

On top of that you may have some company income tax to pay, though if you are selling at a loss this seems unlikely. And then on top of that you will have either some costs involved in selling the company, or some costs involved in closing it if you dont keep it or sell it.

 

I  have no idea where your lawyer gets that 15% figure from. In fact that's not true: I suspect that he plucked it out of his backside and that it includes some nice commission for him. Who would deal with any lawyer who cant give a straight answer? Not me.

Hi,

 

Yes as I suspected, ramping up the % for their slice of the cake.

 

These are the lawyers exact words "The tax amount will do when the accountant do the balance sheet or close the company at that time, because the Tax office have to announce what rate of the profit for the time, right now the tax is 15% from the profit"

 

And just to add to this (won't name any names) but this was supposed to be the most reputable property lawyer in Pattaya!!!

[111tingtong]

5 minutes ago, funandsuninbangkok said:

Another Thai real estate investment success story!

 

has to pay huge fees to get out of investment that lost 30%

 

rent in Thailand, buy elsewhere 

Actually I didn't really lose anything due to the GBP rate difference between the date of buy/sell. However you are correct, especially in places like Pattaya, a big rip off where the lawyers/accountants are making the rules up to unsuspecting condo/property owners (like me).

[KittenKong]

18 minutes ago, 111tingtong said:

These are the lawyers exact words "The tax amount will do when the accountant do the balance sheet or close the company at that time, because the Tax office have to announce what rate of the profit for the time, right now the tax is 15% from the profit"

 

That would suggest that you are indeed selling the condo on first (which will incur those 5-6% taxes/charges I mentioned but that he apparently doesnt consider at all) and then winding the company up afterwards (which will cost an unknown amount in tax/accounting fees and a specific but variable fee for closing it).

 

The Land Office can tell you in advance precisely what the taxes/fees for transferring the condo will be but you need to be more clear about what you are actually doing.

 

 

25 minutes ago, 111tingtong said:

And just to add to this (won't name any names) but this was supposed to be the most reputable property lawyer in Pattaya!!!

 

Sounds like "the most credible and re-assuring American businessman" in Pattaya. But he's buggered off back to North Carolina where he is being prosecuted for various misdeeds committed there.

 

For me the credibility rating of so-called lawyers in Thailand is indistinguishably close to zero.

 

[111tingtong]

2 minutes ago, KittenKong said:

 

That would suggest that you are indeed selling the condo on first (which will incur those 5-6% taxes/charges I mentioned but that he apparently doesnt consider at all) and then winding the company up afterwards (which will cost an unknown amount in tax/accounting fees and a specific but variable fee for closing it).

 

The Land Office can tell you in advance precisely what the taxes/fees for transferring the condo will be but you need to be more clear about what you are actually doing.

 

 

 

Sounds like "the most credible and re-assuring American businessman" in Pattaya. But he's buggered off back to North Carolina where he is being prosecuted for various misdeeds committed there.

 

For me the credibility rating of so-called lawyers in Thailand is indistinguishably close to zero.

 

The fee for closing the company is 30K. I might have a buyer for the Company which will cost 10K to transfer the director.

 

I have already sold the condo a year ago and the transfer fees have already been paid. I kept the company going for a further year to see if I could sell /transfer it to someone else. Now its time for the yearly balance sheet (15K), and I was also advised of the 15% tax which would have to be payed before June. This is purely for the Company business income/profit tax (sale of the condo). So don't think its anything to do with the land office now. Must be the tax office wherever that is that I would have to ask however as you can imagine the tax office, land office and lawyers/accountants probably were all on the same substance at university together so I'm probably pissing into the proverbial wind!

 

The law office in question is Thai, no foreign element in it at all.

[Peterw42]

OP, it must come down to what the company "declared" it paid for the condo and what the company "declared" it sold the condo for. There is obviously a profit of 466,666 Baht on paper.

Wildly undervaluing at the land office saves transfer fees but comes back to bite you later.

When you purchased the condo there was probably some creative accounting, a cheque from the company and some cash or personal cheque for the difference.

[KittenKong]

9 hours ago, 111tingtong said:

The fee for closing the company is 30K. I might have a buyer for the Company which will cost 10K to transfer the director.

 

I have already sold the condo a year ago and the transfer fees have already been paid. I kept the company going for a further year to see if I could sell /transfer it to someone else. Now its time for the yearly balance sheet (15K), and I was also advised of the 15% tax which would have to be payed before June. This is purely for the Company business income/profit tax (sale of the condo). So don't think its anything to do with the land office now.

 

If the condo was sold a year ago then the land office taxes/fees would have been paid at that time and the land office is out of the picture completely. So all these costs must be to do with the company itself, as you say. You can forget about the 5-6% etc.

 

30kB is above average cost for closing a company. Other costs/fees/taxes will obviously depend on how much profit the company actually made and how complex its books were. To me it seems that you are paying quite a lot for these, though I readily admit that I have never owned a Thai company and never will, so my knowledge is limited.

[111tingtong]

Update- from previous I was quoted/informed to pay tax to the amount of 70K. This dropped to 40K soon after. Now after a couple of months requesting to see tax documents indicating the amount payable I finally have the correct answer. Basically I do not need to pay any tax. The law office sent me an email, stating "good news for you"!!! And that there is no requirement to pay tax on the sale at they registered it in RD system, whatever that is and that cost 3K. I also received a very unprofessional phone call from the director of the company asking silly questions like "do you not like this company?". 

I can't say for sure but it looks like I narrowly escaped from being ripped off, what a surprise. I can't imagine how much deception these lawyers get away with when dealing with foreigners and most likely Thais with regards to property, however we all know this happens anyway and apart from

being an expert on law matters were normally at the mercy of the lawyers honesty/dishonesty.

[KittenKong]

56 minutes ago, 111tingtong said:

Update- from previous I was quoted/informed to pay tax to the amount of 70K. This dropped to 40K soon after. Now after a couple of months requesting to see tax documents indicating the amount payable I finally have the correct answer. Basically I do not need to pay any tax. The law office sent me an email, stating "good news for you"!!!

 

What a joke this place is. You couldn't make it up.

 

 

57 minutes ago, 111tingtong said:

I can't say for sure but it looks like I narrowly escaped from being ripped off, what a surprise. I can't imagine how much deception these lawyers get away with when dealing with foreigners and most likely Thais with regards to property,

 

It certainly looks like they were trying it on, and presumably had you actually paid the requested 70k/40k/whatever the receipt for it would just have been bundled up with the receipt for legal services.

 

Still, you came out on top so well done.

[Henryford]

On 5/12/2017 at 6:06 AM, funandsuninbangkok said:

Another Thai real estate investment success story!

 

has to pay huge fees to get out of investment that lost 30%

 

rent in Thailand, buy elsewhere 

The fees are not huge and it wasn't an investment. He paid 274 baht a day to live in a new condo. Sounds good to me. Beats renting. If he bought in 2008 with a western currency like Pounds he will make 30% profit converting it back.

Edited August 10, 2017 by Henryford

[inThailand]

The typical and most desired sale of a property in a Thai company is to transfer the shares and directorship to the buyer, those avoiding any Land Dept fees or any personal or company taxes. This was not possible?

[Delight]

 The most basic question is why did you sell the condo seperate to the Company.

 

The regular way is  not to sell the condo-just sell the company!

That costs max 10,000 Baht  as I understand it.

As I   also   understand ,the process it is just a name change.

I know several Farang who have done this and not  one of them made any  reference to taxation.

 

Of course given that I have never actually  done it -then  for certain I could be short of important knowledge.

 

So -why did you sell the condo -not just simply sell the company(and the condo with it)

Edited August 10, 2017 by Delight
Spelling

[KittenKong]

9 minutes ago, Delight said:

The most basic question is why did you sell the condo seperate to the Company.

 

The regular way is  not to sell the condo-just sell the company!

 

Maybe the buyer didnt want to take on a company with unknown debts and obligations? I wouldn't want to either.

 

Maybe some Thai person (or some farang with a Thai partner or family member) bought it?

[Delight]

40 minutes ago, KittenKong said:

 

Maybe the buyer didnt want to take on a company with unknown debts and obligations? I wouldn't want to either.

 

Maybe some Thai person (or some farang with a Thai partner or family member) bought it?

 Plenty of 'Maybe's 'there.

I am aware of 2 Thais who independantly  bought condos via  existing   companies

 

Their motive was that the condo would be easier to sell at some later stage -if it remained in a company.

 

2nd motive -no transfer fees

Hopefully the OP will specify  the the actual motive.

Edited August 10, 2017 by Delight
clarity

[KittenKong]

6 hours ago, Delight said:

Plenty of 'Maybe's 'there.

 

Well, yes. I wrote "maybe" because I dont know for sure. Those were just a couple of possible reasons.

 

[inThailand]

6 hours ago, Delight said:

 Plenty of 'Maybe's 'there.

I am aware of 2 Thais who independantly  bought condos via  existing   companies

 

Their motive was that the condo would be easier to sell at some later stage -if it remained in a company.

 

2nd motive -no transfer fees

Hopefully the OP will specify  the the actual motive.

So true! Other than holding title to the property via a company, the big advantage is when you sell...easy to do and no fees or taxes.

[111tingtong]

12 hours ago, KittenKong said:

 

Maybe the buyer didnt want to take on a company with unknown debts and obligations? I wouldn't want to either.

 

Maybe some Thai person (or some farang with a Thai partner or family member) bought it?

Correct, the buyer did not require the Company as he put it in his Thai girlfriends name...

[Delight]

9 hours ago, KittenKong said:

 

Well, yes. I wrote "maybe" because I dont know for sure. Those were just a couple of possible reasons.

 

 I accept your argument!

[Langsuan Man]

Foreigners think that they are so important that the Thais write laws for their benefit and that is not true.  Thais will pass a law for Thais and then some sharp lawyer will find a way for it to benefit a foreigner

 

Company ownership has always been a tax dodge for wealthy Thais that could afford to set up and maintain the company structure;  farangs came to the table later  

[Senechal]

On 5/11/2017 at 7:17 PM, 111tingtong said:

Actually I didn't really lose anything due to the GBP rate difference between the date of buy/sell. However you are correct, especially in places like Pattaya, a big rip off where the lawyers/accountants are making the rules up to unsuspecting condo/property owners (like me).

Care to share your story? I think it would be enormously helpful to the throngs of users here who don't seem to understand this yet.

[KittenKong]

On 10/08/2017 at 11:05 AM, Henryford said:

The fees are not huge and it wasn't an investment. He paid 274 baht a day to live in a new condo. Sounds good to me. Beats renting.

 

Well, 274B/day was just the capital depreciation. It doesnt take into account the purchase and sale costs of the unit, the yearly accounting fees, and the setting up/closing down costs of the business. Nor does it take into account the lost interest on the capital (5000B/month or more). And he would have been paying the common fees every year, and probably other maintenance costs.

 

274B a day is 8220B/month, which is 50% or more of what you might pay on a yearly lease for some 2.6MB condos. And with that there are no extras at all, apart from utilities of course. Take all the other costs into account and it doesnt look like a very good deal to me.

[KittenKong]

1 hour ago, Senechal said:

Care to share your story? I think it would be enormously helpful to the throngs of users here who don't seem to understand this yet.

 

Did you see the early posts in this topic? The situation with the lawyer was described there.

[tomwct]

On 5/12/2017 at 6:17 AM, 111tingtong said:

Actually I didn't really lose anything due to the GBP rate difference between the date of buy/sell. However you are correct, especially in places like Pattaya, a big rip off where the lawyers/accountants are making the rules up to unsuspecting condo/property owners (like me).

Believe me you lost money! It's very dangerous to buy anything of value in Thailand and make money, but why did you set-up

a company for the condo? You can buy a condo in your name. Have you got the proceeds from the sale? If so, why pay an additional tax. Just leave the country. Since you seem like a nice chap, I won't charge you a consulting fee for this advice!, this time!

[scubascuba3]

 
Well, 274B/day was just the capital depreciation. It doesnt take into account the purchase and sale costs of the unit, the yearly accounting fees, and the setting up/closing down costs of the business. Nor does it take into account the lost interest on the capital (5000B/month or more). And he would have been paying the common fees every year, and probably other maintenance costs.
 
274B a day is 8220B/month, which is 50% or more of what you might pay on a yearly lease for some 2.6MB condos. And with that there are no extras at all, apart from utilities of course. Take all the other costs into account and it doesnt look like a very good deal to me.

Plus he ignored the opportunity cost of not investing the money elsewhere. My investment fund between 2008 and 2016 was up 200%

[111tingtong]

On 8/12/2017 at 1:31 PM, tomwct said:

Believe me you lost money! It's very dangerous to buy anything of value in Thailand and make money, but why did you set-up

a company for the condo? You can buy a condo in your name. Have you got the proceeds from the sale? If so, why pay an additional tax. Just leave the country. Since you seem like a nice chap, I won't charge you a consulting fee for this advice!, this time!

Believe me I made money on the sale purely from the exchange rate as mentioned. I guess you could say I lost out on gaining more money.

 

To have the condo in my name would have cost me aprrox. 1.5M extra. All the condo companies do this con

 

Leave the country to dodge a wee bit of tax? quite happy in the land of corruption thank-you, however it does sound like you have experience....

Edited August 14, 2017 by 111tingtong

[angy]

I'm interested to the topic of this discussion and I saw all the replies but never found the answer to the problem posted at the beginning.

Happy to see that the problem was solved with nothing to pay in the submitted initial post.

Anyone knows the matter about the taxes that a company have to pay when sell a condo? Example when the condo is sold to a thai person.

I'd been told that there is a 10% profit tax on the difference between declared prices with a deduction of 300000 baht on the selling price.

Plus another Special Business tax of 3,3% if the sell was before 5 years of property.

I'll appreciate if someone can confirm or explain because the accountant is making crazy requests.