Do not pay more transfer fees, stamp duty and taxes than necessary
Transfer fees and taxes of immovable property
LAND OFFICE transfer tax of immovable property (land, house, condominium)
- Transfer Fee 2% over the appraised value of the property
- Business Tax 3.3% over the registered (sale) value or appraised value (whichever is higher)
- Stamp Duty 0.5% over the registered value
- Withholding tax;
Note on stamp duty and specific business tax (SBT):
- Stamp duty is exempt if Specific Business Tax is charged.
- Business tax consist out of 3% business tax + a municipal tax of 10% assessed on the amount of the specific business tax (total tax 3.3%).
- If the seller is an individual (not a company) Specific Business Tax does not have to be paid if:
- The seller has possessed the property more than five years before the transfer (the transferred real property has been used as the principal place of residence, and the seller’s name appeared in the house register for not less than one year from the date of acquiring such property).
- The seller transfers the real property to the legal heir or an heir by a will.
- The seller transfers the real property to a legitimate child, but not including an adopted child.
- The seller transfers the real property without consideration to government agencies.
- The seller transfers the real property without consideration to temples, churches or mosques.
Note; Land office transfer fees and taxes are collected when the real property transfer is registered and the Land Office will issue a receipt (sample) for these payments. The appraised value or government assessed value (land valuation) is set by the Land Department and Treasury Department and adjusted every 4 years with the last valuation in 2011 for the period 01-01-2012 to 01-01-2016. The appraised government values on which fees and taxes are based will be higher from January 2012 - read more...
Income Tax calculator: Thailand Revenue Department's website tax calculator (Thai language)
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 fees and taxes 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 land office 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 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 official conveyancing costs to be paid at the land office when transferring property.
In a private sale of real estate property (land, house, land and house, condo apartment unit) the following division of taxes and fees is recommended:
|Specific Business Tax||: the seller's duty|
|Stamp duty||: the seller's duty|
|Transfer fees||: the buyer's duty or shared|
|Withholding tax||: always the seller's duty|
Fees when buying a newly built condominium directly from a builder
When purchasing an off-plan condo or house in an official licensed housing or condo development the developer may only pass up to half of the transfer fee (2%) to the purchaser. Under consumer protection laws the developer is responsible in full for specific business tax and income withholding tax and at least half of the 2% transfer fees charged by the land office for ownership registration.
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 or tea 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 (government assessed) land office value of a property is often pretty much lower than the actual sale price or market value of a property. The appraised property valuations are set by the Treasury Department and the Land Department and adjusted every 4 years. In practice when selling a property the Thai seller tends to insist on declaring and registering a sale price close to the appraised value as this decreases his personal income and transfer taxes. Undervaluing the sale price is a known practice in Thailand but not so common and is an illegal practice. 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 could be drawn up. The property (land, house or condo unit) sale will look like a share transfer, without the necessity of re-registering the property at the Land Office and fees and taxes. 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.