Property Taxes, Your Agreement, and the Tax Calculation
Besides buying from a developer in a condominium development, there is essentially no fixed rule for who pays what regarding the land office transfer fees and taxes. Consider it part of the price negotiation process, and the goal is to find an appropriate way 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 force in this provision a week before the transfer.
Another option is to work out such details before you arrive at the land office. All agreements should exclude the seller’s personal withholding tax, because it has happened that they, the seller, forced the buyer to pay the seller’s personal income withholding tax. When there is no agreement as previously mentioned, a situation like this might happen because the personal withholding tax is part of the official conveyancing costs. And when you transfer a property, you need to pay them at the land department.
Below, we summarise the Thai property taxes and the corresponding calculations regarding the property taxes.
The Property Taxes in Thailand
|Transfer fee||2% of the registered value of the property|
|Stamp Duty||0.5% of registered value. Only have to pay this if exempt from business tax.|
|Withholding tax||1% of the appraised value or registered sale value of the property (whichever is higher and if the seller is a company). If the seller is a private person, the tax department imposes the withholding tax at a progressive rate based on the appraisal value of the property.|
|Business tax||3.3% of the appraised value or registered sale value of the property (whichever is higher). This applies to both private people and companies.|
Tax table of Responsible party to pay
|TAX||WHICH PARTY NORMALLY PAYS||AMOUNT|
|Transfer fee||Buyer||2% of registered value|
|Stamp Duty||Seller||0.5% of registered value|
|Withholding Tax||Seller||1% of appraised value or registered sale value (whichever is higher)|
|Business Tax||Seller||3.3% of appraised value or registered sale value (whichever is higher)|
Note on Stamp Duty and Specific Business Tax:
- Stamp duty is exempt if the tax office imposes Specific Business Tax.
- Business tax consist out of 3% business tax + a municipal tax of 10% (3% * 10% = 0.3%) assessed on the amount of the specific business tax (so total tax of 3.3%).
- If the seller is a private person (thus not a company), they don’t have to pay Specific Business Tax if:
- Seller has possessed the property over five years before the transfer (and the seller used the property primarily as a place of residence, and the seller’s name appeared in the house register for at least one year from acquiring such property).
- Seller transfers the property to a legal heir or an heir by a will.
- The seller transfers the property to a legitimate child which not includes an adopted child.
- any seller transfers the property without consideration to government agencies.
- any seller transfers the property without consideration to temples, churches or mosques.
Property Transfer Taxes
Example of how to calculate taxes and costs:
- Suppose the government’s assessed price is ฿ 50,000 Baht per m²
- All areas are 200 m²
- The total assessed price is ฿ 10,000,000
- Actual selling price is ฿ 16,000,000
- The Seller (private person) owned this property for the last 4 years
The government assessed price = ฿ 10,000,000
Deduction with the expense of possession for 4 years for 71% (see table) = ฿ 7,100,000
|AMOUNT (in Baht)||TAX (in %)||HOLDING PERIOD||DEDUCTIBLE EXPENSES|
|0 – 150,000|
|150,001 – 300,000|
|300,001 – 500,000|
|500,000 – 750,000|
|750,001 – 1,000,000|
|1,000,001 – 2,000,000|
|2,000,001 – 5,000,000|
Balance = ฿ 2,900,000 (฿ 10,000,000 – ฿ 7,100,000)
Divided by the 4 years of possession
Balance = ฿ 725,000 (฿ 2,900,000/4)
Taxation on progression rate (the taxes are gradually calculated):
0 – 150,000 = Exempt
150,001 – 300,000 = 5% (฿ 7,499.95)
300,001 – 500,000 = 10% (฿ 20,000)
500,001 – 725,000 = 15% (฿ 33,749,85)
Total = ฿ 61,249.80 (฿ 7,499.95 + ฿ 20,000 + ฿ 33,749.85)
Multiply by the year of possession = ฿ 244,999.20 (฿ 61,249.80 x 4)
Government Fee for Transfer
2% based on the government assessed price so ฿ 10,000,000 x 2% Balance = ฿ 200,000
In this case is exempt. This is because transaction is subject to the specific Business Tax (possession of less than 5 year before sale).
Specific Business Tax
3.3% for Specific Business Tax based on the government assessed price or sale whichever is higher. In this case sale price is higher than government so ฿ 16,000,000 x 3.3% = ฿ 528,000.
Total Expenses are: ฿ 972,999.20 Baht (A+B+C)
Property lawyers in Thailand can give you excellent advice on your property investment route specific to each client. Please get in contact with us if you have questions or advice regarding the purchase of real estate in Thailand. And of course, Nanna Real Estate can help you find legal representatives that can assist you with your property taxes in Thailand.
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