Interesting and informative thread with some knowledgeable posters .
Here is a test case for you .The implications of how it would apply should be obvious .
A Thai national buys land in their own name .Private sale direct with previous land owner .
A house is built on it ,paid for by the new owner .Who laid the blocks is irrelevant as labour costs were paid in full by the land owner to the building company or group of sub contractors responsible for their own taxes .
They live in it themselves for a while and then decide to sell .
The total cost to the land owner for the land was 2m .The build cost for the building was 3m .Total 5m .
They sell the property for 8m, say 2yrs after the original purchase of the land .
Other than taxes at the land office ,what do they owe the government as there are no capital gains taxes in Thailand as such ?
Crazy 88
Selling property
hi crazy,
i'll have a go, dont blame if i got it wrong
land office do not use sellers actual figures, they have their own rates, which are less than actual for farang land/houses
everyone, thai or foreign, has to pay income tax (or corporation tax under limited company) on profits/gains on property
no tax is due if:
gains from sales of residential buildings shall not be included as income if such gains are spent on purchasing a new home within 1 year before or after selling his primary residence
if they do not spend it on new primary residence, it will be seen as a commercial exercise, then they will pay:
3,000,000 profit
----------------------------------------------
16% expenses discount for 2 years owned, incremental increases to max 50% discount for more years owned
2,520,000 taxable
1,260,000 (divided by 2 years owned)
-----------------------------------------------
0 (0 - 100,000 exempt from tax)
40,000 (10% for 100,001 - 500,000)
100,000 (20% for 500,001 - 1,000,000)
78,000 (30% for 1,000,001 - 4,000,000)
-----------------------------------------------
218,000 (for each year)
-----------------------------------------------
436,000 (for the 2 years) = Total Due
------------------------------------------------
based on the way land office value property i reckon it would actually be about 160,000 Baht in total
.
i'll have a go, dont blame if i got it wrong
land office do not use sellers actual figures, they have their own rates, which are less than actual for farang land/houses
everyone, thai or foreign, has to pay income tax (or corporation tax under limited company) on profits/gains on property
no tax is due if:
gains from sales of residential buildings shall not be included as income if such gains are spent on purchasing a new home within 1 year before or after selling his primary residence
if they do not spend it on new primary residence, it will be seen as a commercial exercise, then they will pay:
3,000,000 profit
----------------------------------------------
16% expenses discount for 2 years owned, incremental increases to max 50% discount for more years owned
2,520,000 taxable
1,260,000 (divided by 2 years owned)
-----------------------------------------------
0 (0 - 100,000 exempt from tax)
40,000 (10% for 100,001 - 500,000)
100,000 (20% for 500,001 - 1,000,000)
78,000 (30% for 1,000,001 - 4,000,000)
-----------------------------------------------
218,000 (for each year)
-----------------------------------------------
436,000 (for the 2 years) = Total Due
------------------------------------------------
based on the way land office value property i reckon it would actually be about 160,000 Baht in total
.
SJ- I've got this "ready reckoner" system that has never been far away from the actual tax.
If the property has been owned for less than 5 years the tax will be 5.3% and if it's been owned more than 5 years the tax is 2.5%. Actually using this formula 5.3% of 8 million is 424,000 thb, which is very close to your calculation.
The official taxable amount according to the Land Office is "the price the property is being sold for or the land office appraised value of the property whichever is the highest". The Land Office officials sometimes ask to see cheques and sales contracts to check you are not fibbing. Thats why sometimes its best for the buyer to pay with two cheques
The new temporary law to encourage property sales has reduced land transfer and registration fees to 0.01%
If the property has been owned for less than 5 years the tax will be 5.3% and if it's been owned more than 5 years the tax is 2.5%. Actually using this formula 5.3% of 8 million is 424,000 thb, which is very close to your calculation.
The official taxable amount according to the Land Office is "the price the property is being sold for or the land office appraised value of the property whichever is the highest". The Land Office officials sometimes ask to see cheques and sales contracts to check you are not fibbing. Thats why sometimes its best for the buyer to pay with two cheques
The new temporary law to encourage property sales has reduced land transfer and registration fees to 0.01%
hi jockey,
what i wrote is about the income tax on the gain, as the op asked, ie not the stamp duty or SBT
also not sure how they can say it's 'x%' as there's different percentages, on a sliding scale, from 5% upto 37% (see link) depending on the amount of gain
you're not taxed (income tax) on the 8m, only on the profit of 3m
an 8m sale might have 1m profit, another 8m sale a 7m profit (taking it to the extreme)
this might be of use:
http://www.globalpropertyguide.com/Asia ... -and-Costs
not saying its same for everyone, can only speak for what ive seen
.
what i wrote is about the income tax on the gain, as the op asked, ie not the stamp duty or SBT
not sure what the person that gave you the ready reckoner means, they cant simply say 'less or more than 5 years', as every year upto 8 years has a different percentage of discount (see link)If the property has been owned for less than 5 years the tax will be 5.3% and if it's been owned more than 5 years the tax is 2.5%. Actually using this formula 5.3% of 8 million is 424,000 thb, which is very close to your calculation.
also not sure how they can say it's 'x%' as there's different percentages, on a sliding scale, from 5% upto 37% (see link) depending on the amount of gain
you're not taxed (income tax) on the 8m, only on the profit of 3m
an 8m sale might have 1m profit, another 8m sale a 7m profit (taking it to the extreme)
this might be of use:
http://www.globalpropertyguide.com/Asia ... -and-Costs
ive been a lot of times and they never ask for your valuation, maybe because they think you may under value, they use their own valuesThe official taxable amount according to the Land Office is "the price the property is being sold for or the land office appraised value of the property whichever is the highest". The Land Office officials sometimes ask to see cheques and sales contracts to check you are not fibbing
not saying its same for everyone, can only speak for what ive seen
.
Sorry Joe - my mistake - I reread the post above yours and the question was Other than taxes at the land office ,what do they owe the government as there are no capital gains taxes in Thailand as such ?
I mistakenly thought we were talking about Land Tax dues. Here is my understanding of the land tax which might be helpful anyways!...
The tax's to be paid at the land office when transferring property are normally calculated as such:
The transfer fee is 2% over the appraised value of the property.
The business tax is 3.3% of the registered value or appraised value (whichever is higher)
Stamp duty is 0.5% of the registered value
Withholding tax is 1% of the registered value or appraised value (whichever is highest)
Specific business tax (3.3%) is only payable if the seller sells the property within 5 years of the purchase registration date. The transfer is not subject to business tax if the seller is an individual and has owned the property more than 5 years. Companies must pay business tax irrespective the period of ownership.
If the seller is subject to business tax, then he is exempt from stamp duty.
Withholding corporate income tax is collected at a rate of 1%. Withholding personal income tax in the case of immovable property (house not land) is calculated in 2 ways:
1. Sale of immovable property by way of inheritance or a gift.
2. Sale of immovable property that is acquired by way other than inheritance or gift.
Foreigners can not own land and therefore can not be the seller of the land (only the building upon the land). The method of calculating withholding personal income tax depends if the immovable property was acquired by inheritance or gift or the sale of the property has a trade or profit seeking purpose. Usually this is calculated on a progressive scale depending on the number of years of possession.
My "ready reckoner" in my last post was easier to understand - and as I said - it has always been very accurate.
As I said before also, the good news is land transfer and registration fees will be cut to 0.01% and business tax cut to 0.1% effective over the next year.
I mistakenly thought we were talking about Land Tax dues. Here is my understanding of the land tax which might be helpful anyways!...
The tax's to be paid at the land office when transferring property are normally calculated as such:
The transfer fee is 2% over the appraised value of the property.
The business tax is 3.3% of the registered value or appraised value (whichever is higher)
Stamp duty is 0.5% of the registered value
Withholding tax is 1% of the registered value or appraised value (whichever is highest)
Specific business tax (3.3%) is only payable if the seller sells the property within 5 years of the purchase registration date. The transfer is not subject to business tax if the seller is an individual and has owned the property more than 5 years. Companies must pay business tax irrespective the period of ownership.
If the seller is subject to business tax, then he is exempt from stamp duty.
Withholding corporate income tax is collected at a rate of 1%. Withholding personal income tax in the case of immovable property (house not land) is calculated in 2 ways:
1. Sale of immovable property by way of inheritance or a gift.
2. Sale of immovable property that is acquired by way other than inheritance or gift.
Foreigners can not own land and therefore can not be the seller of the land (only the building upon the land). The method of calculating withholding personal income tax depends if the immovable property was acquired by inheritance or gift or the sale of the property has a trade or profit seeking purpose. Usually this is calculated on a progressive scale depending on the number of years of possession.
My "ready reckoner" in my last post was easier to understand - and as I said - it has always been very accurate.
As I said before also, the good news is land transfer and registration fees will be cut to 0.01% and business tax cut to 0.1% effective over the next year.
Last edited by Jockey on Wed Apr 16, 2008 2:02 am, edited 3 times in total.
Theres the official proper way to do things and the actual real way things are done. In this country 95% of property transactions are conducted the latter way (Thais and Farangs). The Land Office officials hate doing things the proper way (theres nothing in it for them) and theres nothing much we can do about that apart from go with the flow. They have a monopoly on the rules. The more you know the proper way things are supposed to be done however, the less chance of being tripped up, sent back to GO or take a fine!