You’ve found a buyer, in this, the most difficult of property markets – congratulations. You’ve received an offer but should you accept or continue negotiating? Are there any other costs you may have overlooked? Have you considered what the transfer fees and taxes will be? This is not a quick and simple calculation. Indeed if you want it to be 100% accuarate I would recommend asking a lawyer to do it for you. But here’s a simple guide that you can follow that will give you a good idea on what you can expect to pay. Please note this blog is intended to help private sellers of re-sale properties.
If you decide to sell your property taxes and expenses will be applicable as well as obligatory transfer fees (which are usually shared 50/50 with the buyer). There are variations, most notably between properties that been held more and less than 5 years.
For a property held more than 5 years
Transfer fee – 2% of the official appraised value
Specific business tax – N/A
Stamp duty – 0.5% of the official appraised value or the contracted sales price (whichever is greater).
Witholding tax – Witholding tax is calculated at a progressive rate based on the appraised value of the property.
For a property held less than 5 years
Transfer fee – 2% of the official appraised value
Specific business tax – 3.3% of the official appraised value or the contracted sales price (whichever is greater)
Stamp duty – N/A
Witholding tax – Witholding tax is calculated at a progressive rate based on the appraised value of the property.
Example 1
The seller acquired the property on May 1st 2014 and sold (transferred) the property to the buyer on April 25th 2019 for 3.5M Baht thereby holding the property for less than 5 years. The official appraised value at the land office is 3,000,000 Baht. In this case the seller will be subject to the transfer fee, specific business tax and witholding tax.
The transfer fee will be: 2% of 3,000,000 (the official appraised value) = 60,000,000
The specific business tax will be 3.3% of the contracted sales price (3.5M) = 115,500
The witholding tax will be:
Number of years in possession – 6
The official appraised value – 3,000,000
Deduct expenses for 6 year possession. Total expenses = 3,000,000x 60%
Total net income = 3,000,000 – 1,800,000 Total = 1,200,000
Divide by the number of years in possession – Total net income per year = 1,200,000 / 6 = 200,000
Personal income tax per year – 5% for the first 300,000 = 200,000 x 5% = 10,000 Multiplied by number of years in possession = 60,000
Total Witholding tax payable = 60,000
Total Taxes and Expenses Payable at the Land Department: 60,000 + 115,500 + 60,000 = 235,500
Remember, it’s only the transfer fees that are shared 50/50.
Example 2
The seller acquired the property on May 1st, 2014 and sold the property (transferred) tp the buyer on May 2nd 2019 at 3,500,000 Baht therby holding the property for more than 5 years. The official appraised value is at 3,000,000 Baht.
In this case the seller will be subject to the transfer fee, stamp duty and witholding tax. The transfer fee and witholding tax are the same as in Example 1 because:
- The contracted sales price and the official appraised value are the same, and
- The number of years in possession calculated for standard deduction of expenses is calculated from year to year, so it is counted as a 6 year possession despite the different date of transfer.
The only thing that changes in this case is that the seller is no longer subject to specific business tax because the number of years in possession is counted from date to date. At the date of transfer, the seller has owned the property more than 5 years, so he/she will be the subject to Stamp Duty instead.
The stamp duty will be 0.5% of 3,500,000 = 17,500
Total taxes and expenses payable at the land department: 60,000 + 17,500 + 60,000 = 137,500
There can also be significant admin fees from the development where you live. The amount depends on whether you doing leasehold to hold or leasehold to freehold (it’s more for leasehold to freehold)
I hope all this info helpful to you. Happy selling 🙂
