Transfer fees and taxes of immovable property

Do not pay more fees and taxes than necessary

Transfer tax of immovable property (land, house, condominium)

• Transfer Fee 2% over the appraised value of the property
• Business Tax 3.3% registered value or appraised value (whichever is higher)
• Stamp Duty 0.5% over the registered value
• Withholding Tax for companies 1% registered sale value or appraised value (whichever is higher)
• Personal Withholding Tax is charged at a progressive rate based on the appraised value

Note:

• Stamp duty is exempt if Specific Business Tax is charged.
• Withholding tax; if the seller is a company withholding tax is fixed at 1%, if the seller is a private person it calculated based on income at a progressive rate, find calculator at the Thailand Revenue Department's website.

Lease registration fee

A real estate lease registration fee is charged at the rate of 1 % of the total rental throughout the whole lease term and collected by the land office at the time of registration. Also a stamp duty is collected at a rate of 0.1% of the total rental throughout the lease term.

Which party usually pays which tax when transferring real estate

Unless you are buying from a developer in a licensed housing or condominium development there is no fixed rule for who pays which part of the transfer fees and taxes.

It is part of the overall price negotiation to come up with an appropriate formula for sharing these costs and it can vary from purchaser pays all to seller pays all.

It's most important that you have resolved this in the sale and purchase agreement so the seller doesn't try to force in this provision a week before the transfer or you must work out such details when you arrive at the Land Office. It should clearly exclude the seller's personal withholding tax, because of the wording in the contract it has happened that the buyer was forced to pay the seller's personal income withholding tax, as this is part of the taxes to be paid at the land office when transferring land.

In a private sale of real estate property the following division of taxes and fees is recommended:

Specific Business Tax: the seller's duty
Stamp duty: the seller's duty or shared
Transfer fees: the buyer's duty or shared
Withholding tax: always the seller's duty

When purchasing a condominium of plan or a house in a licensed housing development the developer may only pass on up to 50% of the transfer fee (2%) to the purchaser under consumer protection laws. The developer will be responsible in full for Specific Business tax and Withholding tax and at least for 50% of the transfer fees.

The registration of a land, house, condominium transfer or lease registration in the land office may take up to six hours, depending on how busy the officers or if 'extra money' has been paid to ensure the smooth and quick registration. Usually, for registration of property transfer, extra money varies between 1,000 and 3,000 baht. If the foreign purchaser cannot attend the land office, a proxy can be appointed. In this case, the official Thai script Land Office power of attorney form is required. Other forms of power of attorneys are NOT accepted by the Land Office.

The seller wants the declared price to be less than what I'm going to pay

The appraised value land office value is often pretty much lower than the actual sale price, and in practice the Thai seller tends to insist on declaring and registering a sale price close to the appraised value as this decreases his personal income taxes. This is a known practice but not so common practice as this practice is illegal. The parties are required by law to state the correct true sale price at the Land Department.

In case the purchaser is a company, for accounting purposes the company accounts should reflect the purchase price as reflected in the actual sale and purchase contract (separate from the land office sale agreement). These are the accounts that will eventually be audited and on which and the company tax return will be based. In case a lower price is declared there is a risk that this valuation discrepancy will be caught in the future. This is for Revenue Department comparing the official land office documents with the company accounts. In this case the situation would have to be corrected and a substantial fine to be paid.

Share transfer if the owner is a company

If the owner/ seller is a Thai incorporated holding company selling to another foreigner a share transfer agreement is usually drawn up. The property (land, house or condo unit) sale will look like a share transfers, without the necessity of re-registering the property at the Land Office. It could be deemed a tax evasion to create such legal arrangements. Selling a property naked you will be liable for all of the taxes and fees that were applicable at the time of purchase over the sale amount. The proceeds derived from the sale of property by a company are taxed as corporate income tax.