Purchase of a home in Thailand and additional tax bill
Dear readers,
I am looking for people who have purchased a home in the Thai countryside to ask some questions.
My partner and I bought a house in the Krabi area; my partner took care of the paperwork and I took care of the financing. The transfer of ownership took place at the Land Registry, where I believe transfer tax was also paid. However, now we are confronted with an additional tax bill where we have to pay 6%.
A friend of ours explained that this is probably due to three factors:
1. The land was sold within five years.
2. The government has estimated the value of our purchase at double the purchase price.
3. The land and the house did not have the same owner.
During the transfer, we received the Tabien Baan (the title document) in my partner's name, as well as a document with a drawing and the dimensions of the land in my partner's name. I have a yellow Tabien Baan in my name, but I don't know what I can do with it, except that it is necessary to apply for a pink ID card.
We paid a total of ฿700.000, with part going to one seller and the rest to another. The government has valued the property at one and a half million. Can someone explain what exactly is going on?
And since I'm still asking questions: how much tax do we have to pay annually for our real estate?
Regards,
Martin
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Dear Martin, you have purchased a property with land from apparently 2 owners/sellers. The transaction was completed at the Land Office. The entire transaction cost you ThB 700K, being payments to sellers plus the transfer tax.
Now pay close attention: you have received “a document with a drawing and the dimensions of the land in the name of my partner”. This is the so-called 'Chanote', or proof of ownership. A very important document. The name says it all. Read all about it at: https://www.thailandlawonline.com/27-chanote.
Your wife has also been given a blue tabien job, and you have been given a yellow house book/tabien job. That blue book is also an essential item for your wife.
You have a yellow farang house book/tabien job. This confirms that you live at the address shown in that booklet. That's all it is. So it is not (repeat: not!) proof of ownership. You can find out about tabienbaan via: https://city-lawyer.net/en/whats-tabien-baan/
After all registrations, signatures, payments before a Land Office employee, receipt of paperwork, your property and land have entered an administrative process, and you will receive a letter from the Thai Revenue stating that your property has been valued at more than double the purchase price. Not 700K ThB but 1500ThB. It is therefore not surprising that an additional assessment takes place. Point 2 of your friend's explanation is therefore relevant.
Finally: after paying a transfer tax, there is no annual property tax assessment in Thailand. Thailand does not have such a tax.
Dear Herman, thank you for your detailed response.
We paid a few thousand baht at the Land Office, half by the sellers. The assessment now is 42.000baht, which amounts to 6% of 700.000. what I can find on the internet is that the transfer tax is normally two percent, but for this year it is one percent.
Do you perhaps know something about this? My other question is whether we can appeal against this absurd valuation.
Greetings, Martin.
Just respond directly to me: [email protected]
Dear Martin, 2% transfer tax is what is legally determined in Thailand. https://www.siam-legal.com/realestate/thailand-property-taxes.php
The Municipality uses a valuation of 1500K ThB. Then 2% ThB is 30K. The assessment is now 42K ThB. You're talking about a difference of 12K ThB. Can this be called absurd? Comes a bit from emotion, I think. Whether you should hire a lawyer because of 12K ThB? His bill will be more than double!
You can do a lot in Thailand yourself. Start by quietly going to the land office and let your wife, as holder of the blue tabienbaan and the chanote, with her Thai ID and the tax assessment in hand, ask the civil servants why this was not announced during the transfer. a valuation of 1,5 MB, plus a tax of 42K ThB, and why not 2% tax now, so a claim of 30K ThB.
Also check whether your wife was aware of the 1,5 MB valuation, or was she left in the dark by the seller? Did she ask further questions, request information from the Land Office, check the chanote? Was she aware of the fact that the asking price was very low? Has there been any buying/selling from family property? Are there any unpaid (tax) invoices that are passed on to your wife as the new owner?
Please note: you as a farang cannot obtain any recourse nor submit a claim. You live in your new house, nothing else. In short: let your wife do the talking and discuss together which questions you want answered. Your wife may already have some answers. During the conversation at the land office, remain somewhat in the lower position. Good luck.
Thailand does not charge property taxes on a Thai's first property. Well on a 2nd or 3rd or….
Not entirely true either. Thailand passed a new Land and Buildings Act in March 2019 that came into effect on 01-01-20. Real estate tax must be paid annually, but local municipalities are not completely ready for the introduction of the various modules. Nevertheless read: https://www.belaws.com/thailand/land-and-buildings-tax/ from September 2023.
You do not pay taxes on your own home, but if you have several homes, you do, but we do not yet know how many
amount not yet received.
Since 2019, I have been paying annual property taxes for my condo. Admittedly very little (something like 200 baht/year). During the corona year, half was waived.
An acquaintance of mine has bought land many times. Then sold the house. There has never been an additional assessment. The land department looks at the sales price. If the value is higher according to the land department, this will be used for a one-time tax at the land department. We also look at how long the previous owner has owned it. If it is short, they see it as trade and a higher tax is immediately collected. Never heard of an additional tax. With a lease construction there is income for the owner. This can lead to additional income taxes. There are municipalities that collect property taxes. Usually houses of limited value and land for agriculture are exempt. This varies per municipality. These are small amounts. Certainly not 1%. I'm very curious to know what kind of strange attack you got.
Don't completely agree with the above. We do receive an annual assessment for land (1 rai).
Recently many envelopes arrived in the mail with levies and fines, while we have never seen anything before and we have now been building for 3 years. We have had the land for 10+ years.
My wife of course objected to the local administrators with photos of the house that is not finished.
After a lot of pressure, they wanted to see exactly how much of the land is actually in use. I assume this is a local land tax. Everyone in the neighborhood immediately plants banana trees on their vacant land because then you are exempt from tax. The government has also been talking about it for years, but as far as I know, implementation has always been postponed. For the time being we are dealing with the local government here in Chiang Mai / Hang Dong / Ban Pong. I don't know whether it is an extension of national legislation or just local because we are still waiting for the final papers. It was also important whether we lived there permanently or whether it was a holiday home. My wife also had to prove that she only has 1 address/property in Thailand
Apparently there are more (local?) rules than mentioned above and there seems to be quite a poor organization and arbitrariness. But contacting us directly helped in our case.
Have fun with your new purchase.
Bastian
Go investigate further... This story stinks.
It is normal that the tax can be calculated on a higher value. This is more common, especially if you buy below the going price. Just like in the Netherlands, this tax is calculated on the fair market value and this may be higher than the negotiated sales price. Additional tax can also occur in the Netherlands.
We also bought below the normal price; the family had to lose land and house due to illness of one of the owners. My ex had to negotiate heavily (read: 'move' something) to get the agreed price accepted. That 'team oney' was money well spent….