Phuket Real Estate - Advices

Tax and Transfer fees

Transfer fees and taxes of immovable property:

LAND OFFICE transfer tax of immovable property (land, house, condominium)

Specific Business Taxes:

-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;

if the seller is a company withholding tax is fixed at 1% over the registered sale value or appraised value (whichever is higher)

if the seller is a private person withholding tax is calculated at a progressive rate based on the appraised value of the property

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:

 

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.

Fees payable

Rates

Lease Registration Fee

1% of the total lease consideration or the assessed rental value, whichever is higher

Municipal Tax

0.1% of the lease registration fee

Mortgage Registration Fee

1% of amount declared in the mortgage agreement, subject to a maximum of THB 200,000

 

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.

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.

 

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.

 

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