20 replies to this topic

[TheYenta]

There's been a lot of talk recently about the "downside" of owning a Thai house through the device of a Thai corporation. The military government last year made some nationalistic noises about abuses in this area and the real estate market in houses for foreigners tanked. It has yet to recover.

One of the known costs of doing it through a company is that you pay corporate taxes every year which vary depending on the value of the house and capitaization of the company. Another disadvantage may be that you cannot send the full amount of any sale price received on the property out of Thailand when you sell it because technically farangs can't own more than 49% of the company. That may mean that only 49 % of the sales proceeds can leave Thailand.

I discovered something else about the hidden costs of owning a house through a Thai company in a recent conversation with a farang who has lived here for years. Normally, the house received a bill from Pattaya for sewage services which was normally paid at the house when a kid would come by and ring the bell. It was some minimal amount of about 30 Baht per month.

Recently, however, this farang received a bill in Thai for 3,200 baht which was for some indeterminate period. A visit to City Hall provided the information that houses don't normally get this kind of large sewage bill but, in this case, the bill was being rendered because the farang's house is titled in a Thai corporation. That means it's treated now as a business, not a home, no matter who lives there.

It's still not clear if this is a new policy or one that's been on the books but never enforced. In any event, the farang was told that the billing would now occur regularly so long as the house was held by a Thai company.
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[Harold]

I was reading an article in one of those real estate magazines where this broker was saying that it's illegal for a farang to own land in Thailand BUT that doesn't mean you can't own the building on the land. I'm not sure just what that means. How can you own the building but not the land ?

[Taxi driver]

If what you report is accurate, and it's the first time I have heard about this, then this corporate rate for sewage is just another way to charge farangs more than Thais for the same service - no different than paying 200 Baht to visit a museum when Thais pay 20 Baht.

[Prada]

Simple, you lease the land for 30 years. You built a house on it. The house is yours.
After 30 years you ask for another 30 years lease. I yes its OK if not you demolish your house.
( or sell it to the land lord )

The 30 years lease is the only legal way to own a house in Thailand.

[Gladys]

That may mean that only 49 % of the sales proceeds can leave Thailand.

I'm not sure I underdstand that. I was told that I can take any money out of Thailand as long as it was identified at the Thai bank as for the purchase of real estate when it came in.

[Prada]

You are right Gladdy's if you sell real estate...and you declare the full amount at the land office, you are able to take it out in full.

[TheYenta]

You are right Gladdy's if you sell real estate...and you declare the full amount at the land office, you are able to take it out in full.

Not quite, if the latest reports are accurate. Suppose you buy a 10M house thru a Thai company in which you own 49% of the stock. You bring 10 M into Thailand which are designated "for the purchase of real estate." Under the law, the other 51% of your Thai company must be owned by Thais.

You sell the property for 12M and deposit it in your Thai bank account. You then seek to transfer the money to your foreign bank. According to recent reports, the Thai Bank will notify you that the matter must first be reported to the government and that the most they may allow you to send out of Thailand is 5.9 M, which represents your 49% of the company and its 12 M sale price.

[Spring]

Simple, you lease the land for 30 years. You built a house on it. The house is yours.
After 30 years you ask for another 30 years lease. I yes its OK if not you demolish your house.
( or sell it to the land lord )

Legally, the leaseholder is not the owner of the house. The house is registered in the name of the owner of the land; the house book (tabian baan) shows his name. The name of the leaseholder appears only in the land document (shanood).

[Gene]

Question: You bought a condo in 2001 for 5 Million baht. You have the bank papers showing you brought 5M into thailand to buy the condo.

You sell the same condo in 2008 for 10 Million Baht. Can you take all of the 10 M out of Thailand ......or just the original 5 Million brought in.

Also, do you owe any taxes to Thailand on the 5 M profit made on the sale ?

[Prada]

if you declare the full amount at the landoffice the seller can take his profit our of the country.

[Spring]

if you declare the full amount at the landoffice the seller can take his profit our of the country.

No, he cannot; and there is nothing about declaring the full amount. The land-office takes more or less the value of the condo when it was built and deduces the taxes from it. The seller can transfer back the amount of money he had transferred from a bank abroad as that amount is shown in the bank papers, but not the profit he made on selling the condo.

[Prada]

I think you are wrong !!

If a farang buys my condo for lets say 10 mill. and I bought it for 5 he has to bring 10 mill.in the country to buy my condo officially for 10 mill. We declare at the land office selling price 10.mill.
The land-office doesn't mind if we like to pay more tax as necessary.
So now I have proof that the 10 mill.came in officially, that means I can take them out !!!

I did this already for a few times. So !!! ??


But happy to discuss this matter and learn if the law might have changed.

In that case you have to accept the money for half or more in another country !!

[Spring]

The land-office has no interest in knowing for how much the condo is being sold and how market prices are. That fixed value of the condo is the basis for their taxes, nothing else.
And in this context you are allowed to send out only that amount of money you brought in (via a foreign bank).

[TiTo]

pls delte posted at the wrong topic.

[Prada]

Spring I think you are wrong.


Once again, I did this already two or three times.
The last time was 4 years ago.

end of dicussion from my part !!

[J.Bell]

I am beginning to think that these rules are just like Thai Immigration: It depends on what day of the week and who's in charge of your situation.

[Pttaya Male]

I am beginning to think that these rules are just like Thai Immigration: It depends on what day of the week and who's in charge of your situation.

This might be true since I have just sold a condo and am only being able to take out what I originally sent in and must have the paperwork from the bank that I actually brought in that money.

The person that bought the condo did the tor sam 3 paperwork showing he brought money in, but I can not use that since he needs that to take out his money and I did not bring the money in anyway.

That is what my lawyer explained. Maybe I should change lawyers. Who do you use Prada? It may be worth changing

[B.I.G.]

This might be true since I have just sold a condo and am only being able to take out what I originally sent in and must have the paperwork from the bank that I actually brought in that money.

I was recently told a similar story by a farang who was told by his bank that he could not send any money from the sale of his house which was held by a Thai company because he sold the company along with the house. After some heated conversations, he was told that if he placed the money in a bank CD for six months, there would be no problem sending it out of Thailand after that. Does that make any sense ?

[Birch]

I wonder if the secret is not to try to send millions out at one time but to do it in lesser amounts. As far as I know, you can legally take US $20,000 out of Thailand at any time without even declaring it. I suspect you can transfer the same amount (680,000) baht to a foreign bank with no problems.

I was once told that there are "services" in Thailand that will assist you in any foreign transfer for a small fee. Since we are talking money and Thailand, you can bet the ranch that's true. Whether it's legal is another matter.

Remember, that there is nothing stopping you from withdrawing your money from the bank here in any amounts and converting them to dollars or euros here. After you've got what you need accumulated, carry it with you in a body travel pouch when you fly out. You can legally do this with $US 20,000 ( or more ?) each time.

If all else fails, you can always distribute the funds in 5 different Thai banks and withdraw funds overseas from each account with your ATM cards every day you are out of the country. With five accounts, you should be able to get a tidy amount out in a few weeks.

[B.I.G.]

I found these comments about real eatate taxes on a real estate broker website:

"Fees on transfers of land, buildings or condominiums

The land transfer fee for transferring ownership to land, buildings or condominiums is 2% of the officially assessed land value, regardless of the price declared. In addition, stamp duty of 0.5% is payable, based on the amount declared or the officially assessed value, whichever is higher.

A person who sells land or buildings having owned it for less than five years (less than one year, if the owner has his registered domicile at the place being sold) is also liable to pay specific business tax of 3.3% (inclusive of municipal tax) of the declared amount. But if SBT is paid, then the 0.5% stamp duty referred to above is not payable.

Sale by a company or juristic partnership

Where a company or juristic partnership sells land, buildings or condominiums, there is a 1% income tax withholding payable at the Land Department office. Full corporate income tax (the current general rate is 30%) is payable on the company’s total net income, at the time the seller files its annual or semi-annual corporate income tax return. A tax credit is allowed for the 1% withheld.

Sale by a natural person

A natural person who sells land, buildings or condominiums (but not in the course of a business) must pay income tax on any capital gain at a rate from 0% to 20%, at the time the transfer is made. The tax is based on the assessed value, less a standard deduction based on the length of time that the seller has owned the property.

The usual personal tax rates (currently 10-37%), are applied to the deemed profit, but in any event the tax may not exceed 20% of the gross sale price. When a natural person files his annual income tax return, he can choose to declare the actual profit of loss, or he can ignore the matter, and the tax paid at the registration office will be deemed to be the actual tax.

Fees on lease registration

A natural or juristic person who registers a lease of land, a building or condominium (or other similar right, such as a superficies, usufruct or habitation) pays a 1% fee on the assessed rental value.

In other word, the total monthly or assessed rental value for the lease term is calculated, and the tax is payable on the total amount, In addition, there is stamp duty payable of 0.1% off the above figure, and additional stamp duty of 0.5% based on the receipt of rent or any prepaid rental as referred to in the lease. If there is no prepaid rent, this stamp duty is not due until the rent is actually paid and a receipt given."

http://www.sallmannsthailand.com/info.php?m=4&n=1

[Tony]

A natural person who sells land, buildings or condominiums (but not in the course of a business) must pay income tax on any capital gain ...

When a natural person files his annual income tax return, he can choose to declare the actual profit of loss, or he can ignore the matter, and the tax paid at the registration office will be deemed to be the actual tax.

Anyone know what the heck that means ? What "tax" ( as opposed to transfer fee) is paid at the registration office on the sale of a condo ?