Personal Income Tax being charged on sale of apartment

[magsandbilly]

I’ve been told it is calculated on selling price. Not valued price.

[magsandbilly]

Hi
This is what we thought but my friend was charged personal income tax based on this calculation.

Amount you bought apartment at divided by the number of days in 30 year lease.
This then gave the baht rate per day.
The baht rate per day was then multiplied by the number of days remaining on lease. This calculation became your deductible.

The deductible was taken off the sale price and the balance left was classed as income and income tax calculated out on that figure. Hundreds of thousands of baht charged to him in Income Tax!

This is what everybody has to pay, no exception:

The Thai government imposes a fixed transfer fee of 2% of the sale figure when purchasing or selling a property. This fee is usually shared between the buyer and seller (at 1% each) with responsibility landing on both parties but is negotiable depending on the terms agreed upon. If the property has been owned for equal to or more than five years, a stamp duty of 0.5% is also imposed on the sale.

This is what is being discussed:

When it comes to business tax upon the sale of a property, a levy of 3.3% of the registered sale price or appraised value (whichever is higher) is handed over through the sale. This amount comprises of Specific Business Tax (3%) and local tax (0.3%), which is applicable to the sale of immovable property or real estate in a commercial or profitable manner. It should be noted that this tax is only applicable on the first 5 years after ownership of the property. If the property was acquired through inheritance, this figure is waived regardless of the time period that it was owned for.

The usual ambiguous Thai wording, and the sale price is NOT considered, so how is it calculated:

Property tax upon the sale of a property is payable by sellers based on a withholding tax structure that is calculated progressively based on the sale price or appraisal value (whichever is higher) of the property in question and the duration that the property has been owned for.

Then this. Where is the "income" when it is a persons home?

The withholding tax is essentially calculated using selling price as gross income then deducting expense from Schedule B (shown in table below) to get net income. One then divides net income with years in possession to get yearly net income. One can use net income per year to calculate tax income per year from Schedule A. The final step is to multiply tax income per year with years that the property has been in possession to calculate total Withholding tax.

As I mentioned previously: I (or my Thai daughter in this case) was not charged any "income tax" on the sale of the house in Hua Hin as far as I am aware, and as she was not present and it was all done with lawyers, it SHOULD of been done correctly.

[malcolminthemiddle]

Hi
This is what we thought but my friend was charged personal income tax based on this calculation.

Amount you bought apartment at divided by the number of days in 30 year lease.
This then gave the baht rate per day.
The baht rate per day was then multiplied by the number of days remaining on lease. This calculation became your deductible.

The deductible was taken off the sale price and the balance left was classed as income and income tax calculated out on that figure. Hundreds of thousands of baht charged to him in Income Tax!

Two things spring to mind here.

1. Your friend was not selling a property but a lease.
2. Depending on the wording of the lease, the lease could be mutually cancelled and a new 30 years lease established between the freeholder and the new buyer resulting in zero days remaining on the original lease.

[magsandbilly]

Ok finally got someone to explain the calculation. It has been a tax law already there but not reinforced until now as taxes are needed to fund the country.

Your buying price is A. Your selling price is B.

You got a lease for 30 years. You divide A by 30 to give your yearly amount for your lease - C.

Calculation of your tax deductible is C x the number of years you used on the lease - D

B-D leaves the figure that you will have to pay tax on when you transfer your lease.