Transfer Fees and Taxes of Immovable Property
No one wants to pay more transfer fees, stamp duty and taxes than necessary
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;
- 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:
- 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 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. The appraised government values on which fees and taxes are based are usually lower than the purchase price.
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 sale to sale. It's most important that you have resolved this in the reservation agreement so both parties are clear.
In a private sale of real estate property (land, house, land and house, condominium or apartment unit) the following division of taxes and fees are comonly paid by:
|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 condominium 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 hours, depending on how busy the officers are on that day. 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.
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 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.
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. This is for Revenue Department comparing the official land office documents with the company accounts.
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 can be drawn up. The property (land, house or condo unit) sale will look like a share transfer within the company, without the necessity of re-registering the property at the Land Office avoiding fees and taxes. Most property will be liable for all of the taxes and fees that were applicable at the time of purchase.