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Post by Fletchsmile on Aug 21, 2019 22:25:17 GMT 7
the link on how to calculate it (which I already knew) www.thailandlawonline.com/63-buying-a-condominium/51-selling-my-condo-how-to-calculate-the-transfer-fees-and-taxes... and another sample calc ----------------------------------------------------- Sample calculation The sample is based on a resale condo with a value of 3,000,000 baht with an ownership of 2 years and 6 months. Note, in the sample calculation we assume an equal sale price and government appraised value. In practice the appraised value is often pretty much lower than the sale value and therefore this calculation must only be seen as a sample. For the calculation of personal income withholding tax there is a deduction based on the years of ownership as follows: 1 years = 92% of the appraised value, 2 years = 84%, 3 years = 77%, 4 years = 71%, 5 years = 65 %, 6 years = 60%, 7 years = 55%, 8 years or more = 50%. In this sample calculation the deduction is based on 3 years (2 years and 6 months is 3 tax years) of ownership which comes to a deduction of = 77% x 3,000,000 baht = 2,310,000 baht. Personal income withholding tax will be calculated over 230,000 baht in each year of ownership (i.e. 3,000,000 baht less the deduction divided by 3 (the number of years of ownership). Income tax rates in Thailand are for income less than 100,000 baht are set at a 5% rate, between 100,000 and 500,000 baht the rate is 10%, between 500,000 and 1,000,000 baht the rate is 20%, between 1,000,000 and 4,000,000 baht the rate is 30%, and over more than 4,000,000 it is 37%. In this cases there is a yearly income tax of 18,000 baht (5% over 100,000 baht and 10% over 130,000 baht). The income withholding tax in the sample situation, to be paid for the transfer of ownership at the time of transfer, is 54,000 baht (based on 3 (tax-) years ownership). As the condo is owned by the current owner for less than 5 years specific business tax is charged at a rate of 3% plus a municipal tax of 10% over the amount of the specific business tax making this a total tax of 99,000 baht (3.3% x 3,000,000). Note that specific business tax is applied if the condo is held by the current owner less than 5 years and calculated over the selling price or government appraised value of the condo unit, whichever is higher. The government transfer fee is 2% over 3,000,000 baht making it another 60,000 baht. The total amount to be paid at the land office upon transfer of the condo is approx 213,000 baht. 3- When buying a resale condominium owned by a juristic person the withholding tax is fixed at 1% over the appraised or registered value, whichever is higher, as opposed to personal income tax shall which calculated at progressive rate with a deduction depending on the number of years of possession based on the appraised value of the unit. www.samuiforsale.com/condominium/foreign-exchange-transaction-form.html#i
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Post by Fletchsmile on Aug 21, 2019 22:29:06 GMT 7
It looks to me like this WHT or retention tax must be paid by the seller at the land office on the day.
Whether or not it could be reclaimed if I don't know.
If it were a company it would be only 1% so not too bothered about. The progressive rate for us works out around 4% in our case so is a reasonable chunk
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chiangmai
Crazy Mango Extraordinaire
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Post by chiangmai on Aug 21, 2019 23:42:22 GMT 7
Under other circumstances, FS that amount of research and analysis would earn you an honorary MBA at least!
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Post by Fletchsmile on Nov 25, 2019 12:41:08 GMT 7
Well I'm happy to say we sold our condo and have transferred ownership Although we let estate agents advertise and were prepared to pay the 3% fee (adding into the sales price), in the end we sold privately No lawyer used either: I drafted a contract myself in English based largely on our purchase contract. However, their bank (as they were getting a mortgage) wanted a Thai contract, so my wife did a simplified Thai one. So no middle men leeches of lawyers or estate agents It is worth considering a lawyer though, as it can be useful to have someone familiar with the process. We had some shennanigans at the land office, where I'm pretty sure the buyer (Thai lady) and her bank representative were colluding with the land office staff to fudge the fees to make us pay more, so that the buyer could pay less. As I had done my homework on fee calculations I was able to disagree with the calculation bases that the bank representative said should be paid, and also query the land registry value of the condo which affects the witholding tax paid and transfer fee. Basaically we agreed we would pay stamp duty of 0.5% of sales price (normal), transfer fee 50/50 (very common) and we pay WHT on our "notional income" (normal) I'm pretty sure their various attempts were to increase all 3 taxes, so that they could then redistribute the XS so buyer paid little or no transfer fee and the bank lady and land office person got a nice little backhander. So I disagreed with the bank ladies stamp duty calc ( she said was based on value not sales price with the value being higher of course) and her WHT calc (she tried to say was a flat fee of 5%) and queried the land value amount. The bank lady tried to steamroller things thru. On reflection we should have just flat out said she has nothing to do with us and only the buyer. But initially we thought she was helping with the process as we were unfamiliar. They also tried to get us to pay a lump sum for all 3 taxes combined in cash. I insisted on paying the 3 taxes separately by cashier cheque so we would have a proper paper trail. Plus I know (as an accountant) that they will reconcile line by line where possible so makes it harder to fudge. That seemed to eliminate a lot of their scope for fraud. When I also queried the land registry value, and insisted on paying by cashier cheque, then a couple of hours later there was suddenly a revision by the land office and we got a refund of THB 44,000. I was pretty sure I had pinned down most of the original collusion attempts, but we couldn't do much about the land registry value, so that 44k was just sort of the residual potential rip-off I couldn't pin down. However, apparently a superior had checked (I know they would do that) and picked up a discrepancy in the value . Made easier of course because we segrated the payments. The explanation for the refund given was about the blacony and aircon being at different rates. That is true they are. But the maths didin't work. But I just kept quiet and accepted the refund. Basically the condo value was 500k higher because of this, which affected WHT and transfer taxes To be honest I would have been OK knowing we had minimised the rip-off attempts, as you often expect some in Thailand. But was nice to get a final refund. The bank lady was a bit naughty in keeping all the receipts - my wife and I only realised later when I wanted to check the numbers. So my wife went back next day to land office to get copies. She also checked the land registry value indepedently at a separate land office. So we conirmed the revised lowe rvalue as correct. With a proper audit trail, reviewing the receipts, and a separate independent check. I am now comfortable of the numbers. The point was though, for anyone else, doing this, you need to be on your toes.
Buyer, their bank and land office clerk may collude and try to cheat you. That's maybe where an expert could help. But the amounts involved for us were actually probably about what a lawyer would charge. When I look at their various attempts they were bal park around the 120k+ which approx represented the buyer's transfer fees share If you do get a lawyer of course being Thailand there's a good chance they simply bring the lawyer in on any collusion. But do your homework on calcs and how it all works
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Post by rgs2001uk on Nov 25, 2019 20:29:24 GMT 7
^^^^ first of all, as a mate, on a personal level I am happy for you.
Secondly, it dispels the myths spread by the barstool old china hands and keyboard warriors about thais not buying second hand, and you cant shift property in Thailand these days.
Thirdly, some of the shennanigans involving land sales, have to be seen to be believed, you were lucky to have been given an insight, it aint for the faint of heart, have to wonder how many farang suckers have been ripped off along the ay, and didnt even know it.
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Post by Fletchsmile on Nov 26, 2019 12:14:58 GMT 7
^^^^ first of all, as a mate, on a personal level I am happy for you. Secondly, it dispels the myths spread by the barstool old china hands and keyboard warriors about thais not buying second hand, and you cant shift property in Thailand these days. Thirdly, some of the shennanigans involving land sales, have to be seen to be believed, you were lucky to have been given an insight, it aint for the faint of heart, have to wonder how many farang suckers have been ripped off along the ay, and didnt even know it. Thanks rgs. Glad to be shut of it all. It was a nice condo, but I really don't want to be bothered with physical property in Thailand as an investment. For me buying a place here is for nesting not investing. So when we shifted nest, I was keen to get rid, and invest the money elsewehere
It was a bit slow to sell to be honest. Took nearly a year from placing on the market. Thais do have a bit of an aversion to buying second hand and do prefer new. So while there is a stigma, and it is more difficult to sell second hand here than back in the UK, as you say it is possible. And also as you say, if a decent property you can shift it.
If I look back, as a financial investment only the condo would have been poor value. We averaged just over 1% per yer profit in THB, which is not much at all. Where it really came into it's own were:
- It wasn't really a financial investment as much as an investment in quality fo life, having a family home, knowing the wife and kids have a roof over their heads if anything happened to me. The family home aspect and us owning it made it worthwhile and was the key reason to buy
- Discipline of sticking money away each month for the 3 years we had a mortage, instead of wasting it on rent
- Fixing costs in THB. While we made only as small profit in THB terms, the condo actually doubled in value in GBP terms over the 10 years or so we owned it. So:
1) We weren't subject to FX rate fluctuations on paying rent in Thailand from overseas income. Anyone renting now risks paying double what they did 10 years back in GBP terms even without rent increases.
2) When we came to upgrade to a house, we already had a sizeable chunk of assets. The replacement cost of the condo in GBP was much higher, as was the cost of a new house in GBP terms. Looked at another way, if we didn't have the condo, the house would have cost double in GBP terms if bringing money from overseas, compared to 10 years or so back. Because we had the condo as a THB asset, we eliminated much of the FX risk.
We now have a higher value, better quality place in the house. For a nicer quality of life. Buying the house from scractch would have been more difficult without already having the condo to sell and pay a sizeable chunk. So the condo has also proved to be a step on the ladder, much as it would have been buying a home in UK
All in all I still think it makes sense to buy a home here if you are staying long term. Having a second one as an investment really isn't for me and can come with all sorts of hassle. I prefer REITs and property funds for investment
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Post by rgs2001uk on Nov 26, 2019 20:22:40 GMT 7
^^^, , yet elsewhere the realtor experts from Kalifonia, Florida, the Gold Coast and the UK are telling us otherwise, 5555 I dont know how true it is today, but there was a while back when the property developers were offering finance. As usual in Thailand, you get half a story, eg about Thais not buying second hand, if you buy second hand you need to pay cash, buy new and get in on the never never. You are also correct about the 3% fee, , dont forget the Thai finders fee, ha ha ha, up my way you can ask 4 people the price of a house for sale, and get 4 different answers. I see it all too often, ขายถูก or ขายด่วน, but never a price just a phone number. Other signs I see as I drive around, for condos, อยู่ฟรี1ปี, yeah right, backend loaded.
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Post by rgs2001uk on Nov 26, 2019 21:57:55 GMT 7
^^^ not mentioned, only remembered now, how many are stuck wondering why their property wont sell, all because an agent wont drop the asking price for fear of losing his %
When I bought the house for the mrs, the price was x, I said I will pay y, ask the seller if thats acceptable.
Too cut a long story short, yes was the answer, only because I had agreed to pay the agent the difference in commission in cash in his hand, agent got the same commission, I got a house 500k baht cheaper.
Too this day, he still thinks I ripped him off, 555555.
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AyG
Crazy Mango Extraordinaire
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Post by AyG on Nov 27, 2019 7:42:05 GMT 7
Secondly, it dispels the myths spread by the barstool old china hands and keyboard warriors about thais not buying second hand, and you cant shift property in Thailand these days. Does it really? A few years ago I stayed in an apartment block in Bangkok whilst I was studying Thai language full time. Decent place, but nothing fancy. However, I'd estimate 80% of the apartments were empty, and at least 40% of them (based upon a notice board outside the office) were up for sale. And in my current moobaan in Bangkok around one in five of the houses has "for sale" notices outside, most for years. AFAIK, only two have ever sold, and they've been to people already living here wanting to bring family members to live close by. With a generous supply of new properties I feel the second hand market is pretty moribund.
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Post by rgs2001uk on Nov 27, 2019 20:43:07 GMT 7
^^^ all you say above is true.
Condos for sale, I dont know the location, I do know if you head to Ram, parents will buy condos for their children to live in while they study, then offload them after study complete, no massive profits made, viewed on more as lived rent free for four years.
Moobaan in Bkk, again, I dont know where its located, one things for sure, I would never buy a cookie cutter house on a brand new moobaan. Reasons include, access, flooding and sinkage. Have been in moobaans where proper piling was never installed (its not unheard of to have piles 18m deep in Bkk).
Flooding, proper drainage never installed, or pipes not wide enough to cope, flooding can also include access roads mentioned above.
Sinkage, the two worst ones I see are, extensions fitted on houses that were never tied in and piles never installed, also not mentioned, car port area, again not properly piled, I have seen car ports that have sunk at least one foot lower than the house.
You are correct about new properties, not mentioned location, I know of Thais who will seek out older moobaans (at least 20 to 30 years old) buy the house and knock it down, they are buying a location, these older moobaans tend to have larger land plots and the sois are wider, the buyer also gets to see what he is buying into.
I concur with your last statement, with the rider, if you are trying to offload a cookie cutter house on a new moobaan, you will have problems, not mentioned the flippers etc trying to make a quick buck.
Forgot to mention, what you think your house is worth and what a buyers market thinks its worth are two different things.
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tbv
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Post by tbv on Nov 28, 2019 9:48:23 GMT 7
Well I'm happy to say we sold our condo and have transferred ownership Although we let estate agents advertise and were prepared to pay the 3% fee (adding into the sales price), in the end we sold privately No lawyer used either: I drafted a contract myself in English based largely on our purchase contract. However, their bank (as they were getting a mortgage) wanted a Thai contract, so my wife did a simplified Thai one. So no middle men leeches of lawyers or estate agents It is worth considering a lawyer though, as it can be useful to have someone familiar with the process. We had some shennanigans at the land office, where I'm pretty sure the buyer (Thai lady) and her bank representative were colluding with the land office staff to fudge the fees to make us pay more, so that the buyer could pay less. As I had done my homework on fee calculations I was able to disagree with the calculation bases that the bank representative said should be paid, and also query the land registry value of the condo which affects the witholding tax paid and transfer fee. Basaically we agreed we would pay stamp duty of 0.5% of sales price (normal), transfer fee 50/50 (very common) and we pay WHT on our "notional income" (normal) I'm pretty sure their various attempts were to increase all 3 taxes, so that they could then redistribute the XS so buyer paid little or no transfer fee and the bank lady and land office person got a nice little backhander. So I disagreed with the bank ladies stamp duty calc ( she said was based on value not sales price with the value being higher of course) and her WHT calc (she tried to say was a flat fee of 5%) and queried the land value amount. The bank lady tried to steamroller things thru. On reflection we should have just flat out said she has nothing to do with us and only the buyer. But initially we thought she was helping with the process as we were unfamiliar. They also tried to get us to pay a lump sum for all 3 taxes combined in cash. I insisted on paying the 3 taxes separately by cashier cheque so we would have a proper paper trail. Plus I know (as an accountant) that they will reconcile line by line where possible so makes it harder to fudge. That seemed to eliminate a lot of their scope for fraud. When I also queried the land registry value, and insisted on paying by cashier cheque, then a couple of hours later there was suddenly a revision by the land office and we got a refund of THB 44,000. I was pretty sure I had pinned down most of the original collusion attempts, but we couldn't do much about the land registry value, so that 44k was just sort of the residual potential rip-off I couldn't pin down. However, apparently a superior had checked (I know they would do that) and picked up a discrepancy in the value . Made easier of course because we segrated the payments. The explanation for the refund given was about the blacony and aircon being at different rates. That is true they are. But the maths didin't work. But I just kept quiet and accepted the refund. Basically the condo value was 500k higher because of this, which affected WHT and transfer taxes To be honest I would have been OK knowing we had minimised the rip-off attempts, as you often expect some in Thailand. But was nice to get a final refund. The bank lady was a bit naughty in keeping all the receipts - my wife and I only realised later when I wanted to check the numbers. So my wife went back next day to land office to get copies. She also checked the land registry value indepedently at a separate land office. So we conirmed the revised lowe rvalue as correct. With a proper audit trail, reviewing the receipts, and a separate independent check. I am now comfortable of the numbers. The point was though, for anyone else, doing this, you need to be on your toes.
Buyer, their bank and land office clerk may collude and try to cheat you. That's maybe where an expert could help. But the amounts involved for us were actually probably about what a lawyer would charge. When I look at their various attempts they were bal park around the 120k+ which approx represented the buyer's transfer fees share If you do get a lawyer of course being Thailand there's a good chance they simply bring the lawyer in on any collusion. But do your homework on calcs and how it all works See what you have done? You have created a situation where you will get (too) many emails from me if I do ever sell I am not good with the investor jargon and lingo, but one question I have... you mentioned "1% per yer profit in THB". To get a more effective figure out of that, would you not have to add the rent you would have paid on top of that to get a higher figure? That does seem very paltry in any case. I have always followed and agreed with your advice not to treat these as investments though.
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Post by Fletchsmile on Nov 28, 2019 10:58:19 GMT 7
The 1% per year in THB is just the capital appeciation, and as you say paltry. Although with interest rates so low cash in bank wouldn't have done much better. Maybe 2% p.a.
Yes, if I considered the rent aspect then I could claim a higher return. Rent would have been around 5% - 6% of the original cost. So there is that saving per annum, as you point out. 5% to 6% like that wouldn't be achievable on cash.
The rental saving is also interesting if you consider that it doesn't correlate much at all with an investment portfolio of equities, bonds etc. The savings carried on throughout the GFC. So interesting diversification.
That would have made it seem much more worthwhile, to think of 5% - 6% p.a. "income" or "reduction in expenses" + 1% capital growth. Against that though I would need to deduct the mortgage interest after tax, which we paid for the first 3 years. So probably around 6% p.a. all in. That isn't bad. But then a deduction for expenses, upgrades, maintenance etc that wouldn't have paid if renting
5% p.a. all in is probably a reasonable THB estimate for a total net return, after expenses. Thing is I would also have got more than 5%-6% investing in my normal bond/ equities portfolio, so that's worth remembering. As we tied up money that could have been earning more.
It's in GBP terms that the returns are interesting. 7% capital growth in GBP terms + the rental savings would have taken well into double digits in GBP terms
So yes, quite a few ways of looking at it. Good points to bring up
Financially did OK out of it Lots of ways of looking at it as you say.
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Post by rgs2001uk on Nov 28, 2019 12:42:49 GMT 7
Secondly, it dispels the myths spread by the barstool old china hands and keyboard warriors about thais not buying second hand, and you cant shift property in Thailand these days. Does it really? A few years ago I stayed in an apartment block in Bangkok whilst I was studying Thai language full time. Decent place, but nothing fancy. However, I'd estimate 80% of the apartments were empty, and at least 40% of them (based upon a notice board outside the office) were up for sale. And in my current moobaan in Bangkok around one in five of the houses has "for sale" notices outside, most for years. AFAIK, only two have ever sold, and they've been to people already living here wanting to bring family members to live close by. With a generous supply of new properties I feel the second hand market is pretty moribund. Forgot to mention, Thai superstition and fang shui, there is a brand new never lived in house that has been empty for about 5 years, still has the for sale sign on the gate, the Thais won’t buy it, something to do with a tree. Have seen others walk away from houses because there was a gatepost opposite the front entrance door. No doubt you have heard the same stories I have. My favorite those mor doo types who rock up and tell you where your spirit house should be placed, ha ha, for the record, there is no spirit house on our property.
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tbv
Crazy Mango
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Post by tbv on Nov 28, 2019 14:02:58 GMT 7
The 1% per year in THB is just the capital appeciation, and as you say paltry. Although with interest rates so low cash in bank wouldn't have done much better. Maybe 2% p.a.
Yes, if I considered the rent aspect then I could claim a higher return. Rent would have been around 5% - 6% of the original cost. So there is that saving per annum, as you point out. 5% to 6% like that wouldn't be achievable on cash.
The rental saving is also interesting if you consider that it doesn't correlate much at all with an investment portfolio of equities, bonds etc. The savings carried on throughout the GFC. So interesting diversification.
That would have made it seem much more worthwhile, to think of 5% - 6% p.a. "income" or "reduction in expenses" + 1% capital growth. Against that though I would need to deduct the mortgage interest after tax, which we paid for the first 3 years. So probably around 6% p.a. all in. That isn't bad. But then a deduction for expenses, upgrades, maintenance etc that wouldn't have paid if renting
5% p.a. all in is probably a reasonable THB estimate for a total net return, after expenses. Thing is I would also have got more than 5%-6% investing in my normal bond/ equities portfolio, so that's worth remembering. As we tied up money that could have been earning more.
It's in GBP terms that the returns are interesting. 7% capital growth in GBP terms + the rental savings would have taken well into double digits in GBP terms
So yes, quite a few ways of looking at it. Good points to bring up
Financially did OK out of it Lots of ways of looking at it as you say.
Thanks. Makes it much clearer. It is real nice to get a solid data point out there on a condo sale after that amount of time owning. You gave me way too much credit though, those were questions, not points Yeah, if I had my way we would have been putting monthly deposits into our couple preferred Thai funds. But the exchange rate have especially been making that difficult. If you were up for the hassles of renting the old unit Fletch, let's just say you did not sell and it was close to you and you did not mind the hassle, do you think that would be a wise financial move? Or, I take from what you say, you much prefer other investing avenues.
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Post by Fletchsmile on Nov 29, 2019 11:20:59 GMT 7
Thanks. Makes it much clearer. It is real nice to get a solid data point out there on a condo sale after that amount of time owning. You gave me way too much credit though, those were questions, not points Yeah, if I had my way we would have been putting monthly deposits into our couple preferred Thai funds. But the exchange rate have especially been making that difficult. If you were up for the hassles of renting the old unit Fletch, let's just say you did not sell and it was close to you and you did not mind the hassle, do you think that would be a wise financial move? Or, I take from what you say, you much prefer other investing avenues. We actually advertised the place for rent or sale.
On the original purchase price / historic cost would have given a gross yield of around 6% and more like 4%-5% after expenses
On the value we cleared after selling, all fees and tax, the gross yield was more like 5.5% and closer to 4% net after expenses and taxes. This to me is the more accurate yield as I should compare it to what else I could do with the money.... and exactly this is what I have done, pay down the mortgage on the house (we used for the tranistion) and then invest the rest.
I know I can easily clear 4% to 5% net after taxes on my investments, with less hassle, better liquidity etc. In addition to much less hassle, the liquidity is important, you can't sell one quarter of your condo tomorrow if you want. Selling 1/4 of investments is easy, and settles in under a week.
So for investment I would prefer normal equities, maybe some bonds, and property funds. i would rather invest the whole lot in Thai property funds/REITs than have a single condo. TMBPIPF for example is THB denominated, has better returns than that, expenses work out similar, etc.So no, for me wouldn't be a wise financial move.
For someone who knows nothing about investments and has a good understanding of physical property and investing in it, the story might be a little different. Invest in what you know, understand and have strengths in. Mine aren't in property and I don't like it either
Unless you really have an eye for property and are prepared to actively take an interest, physical property as an investment can often be bettered elsewhere, for better returns, more liquidity, less hassle, better tax etc etc.
The biggest of a condo investment would be diversification - very low correlation to financial market investments like equities and bonds.
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