Tessaban property tax

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Nereus
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Re: Tesaban Tax

Post by Nereus » Wed Jan 26, 2011 9:20 pm

Yes, I tend to agree. Maybe if my Daughter changes her ID address to the house it will go away.
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Re: Tesaban Tax

Post by Super Joe » Thu Jan 27, 2011 1:25 am

Nereus wrote:I think some of it MAY stem from the fact that my Daughters address is in Bangkok, my Condo in fact. But wherever it is or was, it would have to be some place else when we bought the damn place wouldn't it?
The 30 year lease that I have from my Daughter has an amount of 100k Baht per year, which the Lawyers insisted had to be part of it, although I did make them reduce it from what they said it should be.
A lease can only be registered if it has a 'reasonable rent' fee attached to it unfortunately, whereas a usufruct for example can be given without any fees. Reading some more about these property taxes and I think you're right that it's just about your daughter's address, because the tax they seem to be charging for 'House and Land tax', is exempt if it is owner-occupied as a primary residence. But not exempt if it is her second residence or the house on the land is registered in your name and your second residence.

The House and Land tax applies to someone who rents/leases out their house or land, the rate is 12.5% of the actual yearly rent/lease or their assessed value, whichever is higher. Which based on that 100k/year would be 12,500 Baht, so close to the amount quoted, maybe they assessed it a bit higher!? There's also a penalty attached of 200 Baht for non-filing of returns (which are due every January for tax payment in February), which they also quoted. So if your daughter shows she lives there it will hopefully get cleared.

Apparently they do only bother to collect them every few years, but I reckon the reason they are asking for them now is because these valuations the land office sets in their areas, are decided by a panel every four years, and used for the next four. February 2011 is the next review. Also this new property tax due to come in last year, is now touted for early this year.

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Re: Tesaban Tax

Post by PeteC » Thu Jan 27, 2011 3:45 am

We'll see HHF, of course this subject was the talk of the neighborhood last evening when everyone was out walking. One Thai family said no tax for houses in a development. Another said Rayong has so much tax revenue from industry, they don't assess against private homes. Who knows what is correct.

I've never gotten a Yellow Book before and am going to do it as quite easy here. Four photos, show passport/visa, have a government employee vouch for you, and that's it. We'll see what they say about tax when they pull up the property records during that exercise. Pete :cheers:
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Re: Tesaban Tax

Post by Nereus » Thu Jan 27, 2011 8:19 am

Thanks SJ, you are absolutely correct. It goes back to the pr--s of Lawyers not informing me, or my Daughter, off all the consequences. The same Lawyer strongly recommended that we NOT use a Usufruct, for reasons that I can no longer remember.

I knew about the "reasonable" rent amount, the tax office and / or the Land Dept, will not accept a "peppercorn" rent. The Lawyers had it set at, if I recall, about twice what it is now, until I insisted that they change it. To register the lease at the Land Dept tax is assessed on the total amount of the 30 years, in this case 3 Million Baht. I believe it was 10% tax, or 30k Baht.

I originally wanted to register the building in my name, and just rent the land from my Daughter. But again, I was told by the Lawyer that I could not as the original building permit was not in my name. It now appears that they were wrong again. (this law firm is not some "backyard" office either) I am not sure if that would reduce the tax, but surely, as it is based on the value of the rent, it should do.

Just to be clear, the tax is not charged to me, but to my Daughter, as she is the legal owner of the property and is charging me rent. Poosmate mentioned that there may be more tax due, as the "rent" is part of my Daughters income. But surely it would be double taxation if that is true?

I just wonder how far, and for how long, the Tessabahn would take this if it is not paid? If the Court system that I have been through before is any indication, I will be long gone before any conclusion. I guess that they would just wait until sometime in the future the house is either sold, or worse, Willed to my Daughter, and then insist on all the outstanding tax before completing any transfer.

It appears that I have no other option except to pay it on her behalf. It will not be done willingly, and with a Bank Cheque, NOT cash!

Thanks for everyone's input. :cheers:
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Re: Tesaban Tax

Post by poosmate » Thu Jan 27, 2011 9:32 am

I have had dealings with the issue of house registration before. The person who applies for the Tabien Baan at the tessabaan is deemed to be the owner and normally the holder of the building permit. The tabien Baan can be transferred. If the house is registered with the land office then a notice period of 30 days is required before a new owner can be registered.
The tax your daughter has been billed looks like business tax as SJ has already shown. 12.5% of the shown rental value ( the lowest value allowed usually better if left to the land office) declared by your lawyer. 100000 Baht per year = 12500 Baht plus penalties ( and interest ?).
The income tax perceived to have been generated by the rental payments is a separate issue as it is a personal tax. If your daughter receives no other income then the income tax could be used up with deductibles and allowances if not these if 'declared' will be also be due.
The subject of leases is beginning to be an issue as so many are now being either renewed due to resale's.
Most 'lawyers' previously were not familiar with the concept of private leases and certainly did not understand taxes. Many who took early leases were informed that the taxes were paid at the land office at the time the lease was registered.
They did not mention that further tax would be due but to be fair this is the job of an accountant or tax lawyer.
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Re: Tesaban Tax

Post by hhfarang » Thu Jan 27, 2011 10:11 am

^ Does this only apply if there is a structure built on the property, because as I said we have a building lot leased to a neighbor on a standard 30 year lease. If you take the price they paid us for the lot, divide it by 30 to get an annual lease amount and then apply the 12.5% tax, the tax on that plot would be around 6000 baht per year, but it has been only between 300 and 400 baht each year so far.
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Re: Tesaban Tax

Post by Nereus » Thu Jan 27, 2011 10:13 am

Well, as I understand it the, the Tabien Baan has nothing to do with who owns the house. The book belongs to the house is used to register, for want of a better word, people who live at that address.

Not having built a house I do not know at what point of construction the "book" is issued, our book for sure does not mention any owner, or who arranged the book in the first place, neither do either of my Condos in Bangkok. :?
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Re: Tesaban Tax

Post by hhfarang » Thu Jan 27, 2011 11:11 am

[Edited at the request of the poster]
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Re: Tesaban Tax

Post by Nereus » Thu Jan 27, 2011 11:22 am

Yes, hhf, they confuse the issue by calling it a building tax. What I do not understand is why the Tessabahn collects it if it is deemed a tax on income. I guess it is just another TIT way compared to what we might expect in our own country.

What is getting up my nose is the fact that in my case it appears that there is a better way of setting it up, and I have paid for bad advice from a Lawyer. :cheers:
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Re: Tesaban Tax

Post by hhfarang » Thu Jan 27, 2011 11:34 am

Yes, hhf, they confuse the issue by calling it a building tax. What I do not understand is why the Tessabahn collects it if it is deemed a tax on income.
Fair point Nereus. Maybe it's a tax only applied to leases where construction has been completed or is taking place since it is a Tessabahn collected tax (they approve construction). That gets back to my previous question about whether the tax applies only when there is a structure built on it. Our leased parcel is unimproved so that also could be why our tax has been low so far.
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Re: Tesaban Tax

Post by Super Joe » Thu Jan 27, 2011 12:11 pm

Couple of things to summarise and try and make bits clear, poosmate covered some of these already:

3 main types of tax associated with leases:
.
1) Registration fees at land office - Transfer fee of 1% and Stamp Duty of 0.1% of total rental of the whole 30 year term. That was your 30k on 3m.
.
2) House & Land tax - Building owner to pay this if different person to land owner. Principally a 'buildings used for commercial purposes tax', 12.5% of yearly rental to Tessabahn, even if it's empty and you're getting no rent. So private/personal use it's exempt, ie: owner-occupied as primary Thai home. Totally divorced from personal income tax on the yearly rental (rate not 12.5%), but easily confused.
.
3) Income tax - Personal or Corporation tax if company - Leaseholder to pay this at Soi 88 tax office (won't be Tessabahn anyway), each year with their annual returns. Sliding scale of %'s against the yearly rental.


Others:
.
4) Building Permit - Doesn't matter who's name building permit is in for this exercise, my wife has got every one in her name and customers own house on the land. When you step back and look at it, they are suggesting that every house started before a buyer comes along, can never be registered in anyone else's name.
.
5) House in Foreigner's name - For this House and Land tax it would mean it's exempt if occupied by farang. If second home or rented out, then House and Land tax applies, AND income tax.


Nereus wrote:I just wonder how far, and for how long, the Tessabahn would take this if it is not paid? If the Court system that I have been through before is any indication, I will be long gone before any conclusion. I guess that they would just wait until sometime in the future the house is either sold, or worse, Willed to my Daughter, and then insist on all the outstanding tax before completing any transfer.
I think if your daughter can show it's her main residence she occupies it may not apply, just as farang living with wife having a lease and the house not registered to him!? But based on this Price Waterhouse 2007 tax booklet, don't leave it 4 months :? :?
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Re: Tesaban Tax

Post by Super Joe » Thu Jan 27, 2011 12:20 pm

hhfarang wrote:^ Does this only apply if there is a structure built on the property, because as I said we have a building lot leased to a neighbor on a standard 30 year lease. If you take the price they paid us for the lot, divide it by 30 to get an annual lease amount and then apply the 12.5% tax, the tax on that plot would be around 6000 baht per year, but it has been only between 300 and 400 baht each year so far.
Reckon it's the other property tax I mentioned yesterday, 'Local Development Tax' or 'Land Development Tax', luckily this one only has 2no. names, the other House & Land tax has 5no. names according to lawyers websites :roll:

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Re: Tesaban Tax

Post by hhfarang » Thu Jan 27, 2011 12:38 pm

Ok, all good info and thanks SJ, but I read through it and I'm still not sure which part(s) apply to the small plot that we "sold" to a foreigner using the 30 (+30+30) year lease method.

It is a vacant lot. They have not constructed anything on it as yet [Edited at the request of the poster], one on which we live and the other vacant, with no mention of it being leased out, do we or the owners (lessee), owe any kind of additional tax because of the lease? In your example above it says "non rental property". If our 30 year lease to sell to a foreigner is considered a rental then this would not apply. :? :? :?
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Re: Tesaban Tax

Post by Super Joe » Thu Jan 27, 2011 1:54 pm

hhfarang wrote:Ok, all good info and thanks SJ, but I read through it and I'm still not sure which part(s) apply to the small plot that we "sold" to a foreigner using the 30 (+30+30) year lease method.

It is a vacant lot. They have not constructed anything on it as yet and has been paying some kind of land tax on it at the Tessabahn each year at between 300 and 400 baht, but as the Chanote shows two subdivided plots in her name, one on which we live and the other vacant, with no mention of it being leased out, do we or the owners (lessee), owe any kind of additional tax because of the lease? In your example above it says "non rental property". If our 30 year lease to sell to a foreigner is considered a rental then this would not apply. :? :? :?
Oh sorry, I didn't appreciate you had actually registered a lease on it for them, I took it that you had let Thais use some undeveloped land on a sort of informal arrangement. So if it's officially registered leased land then the House and Land tax applies, as it can apply to land only if no structure yet built on it:

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Why it doesn't add up I don't know, there's lots of exemptions, reductions etc that can apply. It may be they are applying their own assessed rental value in leiu of a return from you, it may be a 50% reduction for vacant land, ditto because no structure on it yet, or it may not be this tax you have been paying, the 300-400 Baht could be this tiny maintenance tax/fee for rubbish and whatever on your two plots.

Impossible to say with this lot, but personally I wouldn't like to ask as you never know what it'll bring. Anything where we've not paid something we should have years earlier, only usually attracts a few hundred Baht fine. By the way, when I noted about 'who pays what' with the main taxes, that is just the defaulf of who is liable, if your lease says you have to pay everything then I guess you do.

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Re: Tesaban Tax

Post by poosmate » Thu Jan 27, 2011 10:24 pm

Not having built a house I do not know at what point of construction the "book" is issued, our book for sure does not mention any owner, or who arranged the book in the first place, neither do either of my Condos in Bangkok.
The book can be applied when the house is completed ( needs toilets!)
The person who applies for the book (fills form nor sor 900? ) is deemed to be the owner until the house is registered into another name at which time the 'owner' will be changed. It was quite normal for a developer to apply for this book for the customer (most houses did not used to get registered with the land office) to give them an address.
This person is not necessarily entered into the book( they do not live there) but is on record as having applied for it. And will be in the eyes of the taxman etc be the person to chase.
Once again these issues are only now coming to light as houses are being resold.
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