What Taxes and Costs are Applicable to Buying & Selling Property?
Whenever a property in Thailand is bought and sold or to be more accurate ownership transferred on the title deeds, there are four taxes that need to be taken into account – many buyers, especially foreigners, fail to take these into account. These ‘taxes’ are applied at the local Land Registration Department (for properties in Pattaya, the Land Office is located on Soi 17 Pattaya, South Pattaya).
Land registration (transfer fee) of 2.0% of assessed value of the land.
Stamp Duty/Fee of 0.5% of the assessed value or the sale price – whichever is higher.
Specific Business Tax of 3.3% of the assessed value or the sale price – whichever is higher – this will be applied to all sales by Companies and to any private sales that occur within 5 years of the date of purchase.
There are no hard and fast set rules on who pays for which taxes, although the majority of transfers are shared equally between both parties. It also often is part of the negotiating process, so make sure you discuss it with the agent/lawyer. Income Tax (see below) however is seen as the responsibility for the seller.
Income Tax – this is calculated on a very complex formula based on the assessed value of the property, the
length of time owned and the applicable personal income tax rate. In practice, this often works out to
around 2% of the price for low to medium value properties, and up to 3% for higher value properties.
Because of the local system of taxing property on an arbitrary assessed value as determined by the
Land Department, rather than true market value, these taxes could amount to a considerable percentage of the purchase price. Therefore, if you haven’t determined during the negotiations that the seller will pay the taxes upon transfer, you could get a nasty shock when a tax bill arrives – often some two or three months after the sale is completed.
Here’s a guide as to how income tax is derived: A person earning money from selling property in Thailand is
taxed as follows: A withholding tax (from 0 to 37%) the tax rate varies based on the income of the seller. The
basis of the tax is the government appraised value less a deduction of between 50% and 92%, depending on
how long you own the condo. The longer you own the condo, the lower the deduction from the appraised
value, and therefore your withholding tax liability is higher.
Withholding Tax Rates
Income of 0 to 80,000 Baht : 0%
Income of 80,001 to 100,000 : 5%
Income of 100,001 to 500,000 : 10%
Income of 500,001 to 1,000,000 : 20%
Income of 1,000,001 to 4,000,000 : 30%
Income of 4,000,001 and above : 37%
Specific Withholding Rates
92% if you have held the property for one year;
84% for two years;
77% for three years;
71% for four years;
65% for five years;
60% for six years;
55% for seven years;
50% for eight years or more
So, for example, you have bought a condo 6 years ago with an assessed value of 646,000 Baht and you are selling it today, when the land office has assessed the value at 1,030,000 Baht. This is an increase of 384,000 Baht. Using the lists above; Withholding tax rate for 384,000 Baht = 10%. Specific withholding rates for 6 years = 60%
Therefore we can calculate: 384,000 x 0.1 x 0.6 = 23,040 Baht
If you have any specific questions or would like any assistance in this matter, please feel free to contact our office Tel. 090-723-0800 or come in for a chat.
