Certain taxes are payable upon certain kinds of property whether this be Land, house, Villa or a condominium. These taxes are payable upon sale, purchase or even transfer of property. It is imperative to know what taxes are payable in what cases and when these taxes should be paid. It is also essential to know how much of each tax is to be paid approximately so that you can determine how much is payable at the land office. The various taxes are discussed in each heading of their own and includes all the above mentioned.
A Specific Business Tax of 3.3 % is calculated over the registered value or appraised value, whichever is higher. Specific Business tax shall be payable if the seller sells the property within five years of the purchase registration date. The transfer is not subject to business tax if the seller is an individual and has possessed the property for more than five years before the transfer. Companies with specific objectives are subject to Specific Business tax irrespective the period of ownership.
Calculation of Specific Business Tax:
Purchase Price: 1 Milllion
Assessed Value: 2 Million
Since the assessed value is more than the purchase price, the Specific Business Tax will be calculated accordingly:
2,000,000 x 3.3% = 66,000
In regards to the Stamp duty tax, it stands at 0.5 % over the registered value. If the seller is subject to Specific Business tax the seller is exempt from the payment of the Stamp Duty. Once the Stamp Duty has been imposed, the Specific Business tax is exempt.
Calculation of Stamp Duty:
Purchase Price: 2 Million
Assessed Value by the Land Department: 1 Million
Since the Purchase Price is higher the Stamp duty will be calculated according to that.
Stamp Duty Payable: 2,000,000 x 0.05% = 10,000.
Once you have sold, transferred or are purchasing the land, upon Transfer of the title, Transfer fees are to be paid to the Land Department. The Tax for transfer fees stands at a 2% transfer fee over the appraised or registered value of the property. However at the moment, the Transfer Fees have been deducted to an amount of 0.01%. This will only be effective until the end of July 2010. Please bear in mind that this is subject to change. Appraised or registered value of land is an actual evaluation price of the land which calculated by the land office by reference to each area at which the land situated and some more criteria set out by the Land Department.
Also condominium units have a registered or appraised value based on calculation criteria set out by the Land Department. We also have to keep in mind that in a normal sale and purchase or transfer of property in Thailand there is no fixed rule as for who is to pay the transfer fee, stamp duty or Specific Business Tax. It can vary from purchaser pays all to the seller pays all or divided between the Seller and the Buyer. This is part of the overall price negotiation and must be included in the sale and purchase agreement. In case of an official housing or condominium development there are fixed rules in the law and only the transfer fee may be passed on to the buyer by the developer, however not more than 50% over the total transfer fees.
It is recommended and worthwhile to have your sale agreement reviewed by an attorney or a legal advisor in order to be updated with the current property transfer taxes and to make sure you do not pay an amount higher than required and to avoid being misled.
Withholding Personal Income Tax depends if the immovable property is acquired by inheritance or gift or if the sale and purchase of the property has a trade or profit seeking purpose or not, usually the final Withholding Personal Income Tax income shall be calculated at progressive rate with a deduction depending on the number of years of possession. It is based on the appraised value of the Land Department although in most cases even if the actual purchase price is higher. The withholding tax is generally difficult to calculate beforehand, and is calculated with the land officer, therefore being difficult to retrieve an approximate amount beforehand.
Generally the income tax payable usually varies from 8% to 50% depending on the number of years of possession. The percentage of the appraised value of the property depends on the period of time during which the Seller was the owner of the land, which can be established and determined from the title deed. The result is divided by the number of years in possession. It is further multiplied by the personal income tax that ranges from 5% to 37%.
Also bear in mind that there are two ways of calculating the Withholding Tax, and varies between Land Offices. Please be sure to check with an attorney or the Land Department with regards to the approximate withholding taxes to be paid upon your property.