Tessaban property tax

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hhfarang
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Re: Tesaban Tax

Post by hhfarang » Fri Jan 28, 2011 9:14 am

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This also doesn't seem to apply in my situation because it says "commercial and industrial buildings, and land used in connection herewith". Our land is leased to a foreigner who intends to possibly build a house on it one day but has not done anything yet so it is just sitting overgrown and unused.
My brain is like an Internet browser; 12 tabs are open and 5 of them are not responding, there's a GIF playing in an endless loop,... and where is that annoying music coming from?

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Re: Tesaban Tax

Post by poosmate » Fri Jan 28, 2011 9:27 am

HHF: You are renting your land. This is commercial. The tax clearly applies.
Whether it is being collected is a different matter.
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Re: Tesaban Tax

Post by hhfarang » Fri Jan 28, 2011 9:55 am

HHF: You are renting your land. This is commercial. The tax clearly applies.
It says land used in connection with commercial or industrial buildings. There are no buildings; commercial, industrial or otherwise, so I still say it does not apply as written.

Also a related question: Is renting and leasing the same thing under Thai law, i.e., is renting a house, apartment, or even a room on a daily, weekly, monthly or yearly rate to someone but retaining ownership looked upon exactly the same way as a 30 (+30 +30) year lease used to sell a property to a foreigner?
My brain is like an Internet browser; 12 tabs are open and 5 of them are not responding, there's a GIF playing in an endless loop,... and where is that annoying music coming from?

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Re: Tesaban Tax

Post by Super Joe » Fri Jan 28, 2011 11:17 am

hhfarang wrote:It says land used in connection with commercial or industrial buildings
No it doesn't, it says "includes" land used in connection blah blah. It might also include the partridge in your pear tree, if he's paying.

It also says "or land rented". But as mentioned earlier, 5 different lawyers' websites have 5 different bleedin' names for the thing, let alone their descriptions of what applies. But to be fair 'House and Land' tax is a bit of a tricky one, not! Their descriptions of what it encompasses is contradictory, has bad terminology and some is just plain wrong. Confusing as hell. You need to look up the House and Land act 1932 to get the full SP, but I can't find an English version yet.

Oh, and by the way, please don't forget to file your personal income tax return by end March :wink:


hhfarang wrote:Also a related question: Is renting and leasing the same thing under Thai law, i.e., is renting a house, apartment, or even a room on a daily, weekly, monthly or yearly rate to someone but retaining ownership looked upon exactly the same way as a 30 (+30 +30) year lease used to sell a property to a foreigner?
Yes. All comes under one law section catagory... 'Hire of Property'.

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Re: Tesaban Tax

Post by crazy88 » Fri Jan 28, 2011 2:07 pm

Heres a couple of scenarios to keep you out of the pub for a couple more hours.

My `Thai partner, we are not yet married, decides to lease me land for a nominal fee. Say 100 baht per year. I have permission to do what I want on the land during my lease so I elect to have a house built at my own expense so I have somewhere to live for the term of my lease. I get myself a tabien Bahn for the house, a blue one with nobodys name in it so I can get my electric and water connected then later on get a yellow one in my name, not that it proves ownership. What taxes should my "landlady" be paying?

Now she owns the land and has leased to me but does not own the house. Someone comes along and wants to lease, usufruct or buy the land either as a Thai national or a company. I agree to terminate my lease early and walk away as one does if you fit out a restaurant and your lease expires, ie leaving everything behind. Does the fact that there is a house on the land matter as my partner does not own it?

Now some people may be happy that they have control of the land by ownership or other methods but not trust me that I will not lay claim to the house at a later date. So I sell them the house. I have all the relevant receipts and documents to show I own it. Am I liable for capital gains or similar? Let's say I am. Simple. I can prove what it cost me, I sell it for way less and there is a loss rather than a gain? It is my prerogative to set the price surely? I have never heard of a law that says you cannot sell a house for less than you paid for it.

Now everything has been sold/leased for minimal cost so where does the "real" money go? Into a private or offshore account might be an idea. If the new owner or lessee wishes to shift the property they simply do the same or pay full taxes.

Your thoughts

Have a good weekend

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Re: Tesaban Tax

Post by Super Joe » Fri Jan 28, 2011 6:35 pm

Put my comments in RED.
crazy88 wrote:My Thai partner, we are not yet married, decides to lease me land for a nominal fee. Say 100 baht per year
Land office will only accept a 'fair rent', and have the right to assess it for you from their valuations, and use whatever is higher. 400-500m2 in your area the 30 year term could be 800k-1.2M from what I've seen. That's peanuts in income tax really. Register a Usufruct or Right of Superficies (both can be for lifetime) and they can be done 'without consideration', which means no rent charged, rather than what you do with her shampoo bottle. Your big advantage with no-one wanting to marry you, is that you are not subject to the clause that possibly allows wife to get court order to cancel all agreements made DURING marriage.



I have permission to do what I want on the land during my lease so I elect to have a house built at my own expense so I have somewhere to live for the term of my lease. I get myself a tabien Bahn for the house, a blue one with nobodys name in it so I can get my electric and water connected then later on get a yellow one in my name, not that it proves ownership. What taxes should my "landlady" be paying
You would want to register the house in your name imo for various tax benefit reasons, although some one-off land office registration taxes with it. A Right of Superficies takes care of the house ownership issue anyway as the whole thing is about the right to build and own buildings on someone else's land. Tax, forgetting one-off registration fees, she'll be liable for personal income tax on the lease rent, or presumably zero if a usufruct or rights of supercalafragilistic. The two yearly property taxes we've been discussing will both be exempt if you live there as owner-occupiers, but as I said a page back or so these two are getting scrapped for this one new tax, any month now. Under that you will be liable.
.
The new property tax is basically to try and 'persuade' owners of large tracts of land, that leave them unused, to let farmers etc. For a owner-occupied house it will be 0.1% of the property value, using land offices valuations, (not actual value, not yearly rent). Leased land not owner-occupied seems to be 0.5% of property value. That's just part of it, and is provisional only. Also many reductions, exemptions etc.


Now she owns the land and has leased to me but does not own the house. Someone comes along and wants to lease, usufruct or buy the land either as a Thai national or a company. I agree to terminate my lease early and walk away as one does if you fit out a restaurant and your lease expires, ie leaving everything behind. Does the fact that there is a house on the land matter as my partner does not own it?
If amicable then I think landowner becomes owner of house by default after you cancel your rights off the land title, how long I don't know, but you can sign it all back to her easily enough. But each land right has a different clause as to what happens to the house at the end of the term.


Now some people may be happy that they have control of the land by ownership or other methods but not trust me that I will not lay claim to the house at a later date. So I sell them the house. I have all the relevant receipts and documents to show I own it. Am I liable for capital gains or similar? Let's say I am. Simple. I can prove what it cost me, I sell it for way less and there is a loss rather than a gain? It is my prerogative to set the price surely? I have never heard of a law that says you cannot sell a house for less than you paid for it.
There's no capital gains tax here, but you pay personal income tax on a property sale, you take the assessed sale price, not actual, then deduct allowances per the number of years you hold the property, ie: 92% deduction 1 year, 84% 2 years, 77% 3 years, 71% 4 years and so on until it stops at 50% if 10 years old, for example 2m assessed sale price less 84% as you've had it 2 years = 320,000 taxable, divide over the 2 years then calculate against income tax sliding-scale rates to work out each year, then add them 2 years together. Exempt if primary residence and you can show within 1 year you spent the money on a new residence. Download the PDF: http://www.cbre.co.th/en/Consultancy-Property-Tax.asp
SJ

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Re: Tesaban Tax

Post by poosmate » Fri Jan 28, 2011 6:46 pm

The minimum amount of rent is determined by the land office or the owner whichever is greater. No peppercorn rents allowed. Business tax will apply for the rent plus income tax for the owner.
If the house is registered at the lowest figure allowed (again the amount determined by the office or the owner whichever is greater) when it is sold the minimum ( or higher) amount again will be used at the time of sale - which will be more than the first registered price. ( unless government property valuation fall).
Taxes are due on re-registration and will vary due to length of ownership ( special business tax applies under 5 years I was informed).
A house that is registered and the land lease is terminated I would expect the house will belong to the landowner unless it is removed or another lease agreed.
If however the house is not registered then there is no record of it at the land department but there also is no record of its value. There will be no profit taxes - unless they are declared. :wink:
All as clear as mud :?
Iv'e just read SJ post and he is talking about superfeices or something that I have no experience of and cannot comment on.
I know that SJ has also covered this but I have written it at the same time.
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Re: Tesaban Tax

Post by Norseman » Fri Jan 28, 2011 7:05 pm

Met up with a lawyer today.
He gave me the following information how to find out the correct Local Tax rate in Hua Hin.

Single house - 1 storey located outside the inner city circle = 24 Baht /Sq. meter

Single house 2 storey = 29 Baht / Sq. meter.
Single house 3 storey = 30 Baht / Sq. meter

Then the formula.

Your house living area x 24 Baht (1 storey house) x 12 (months) x 12,5% = Local Tax.

If you have a swimming pool they'll charge you an additional 3000 Baht for the luxury of owing it.

Does this make sence?

In addition to that he said you can not be charged for not paying the fee in the past years because Tessabahn didn't inform you to pay the tax before you receive the letter.

He also said that some of the tax payers have been informed by Tessabahn that the prices have been doubled since last year.
That is not true.
It's a scam he said.
If the municipality can't come up with any proof of the increased taxation then just pay the old correct sum of money or just sit on the fence and wait.
Later pay the penalty fee of 200 Baht, caused by the delay + the correct tax.

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Re: Tesaban Tax

Post by crazy88 » Sat Jan 29, 2011 7:51 am

Thanks guys

Now take another scenario. Thai national owns a rai of land on a chanote. They build themselves a 200 sqm bungalow with a swimming pool and a car port for personal residence. They register an address for the princely sum of 20 baht to get the Tabien Baan (blue book). What taxes are due?

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Re: Tesaban Tax

Post by Farang » Sat Jan 29, 2011 8:12 am

Good info, Norseman!

Thanks.
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Re: Tesaban Tax

Post by Super Joe » Sat Jan 29, 2011 10:34 am

crazy88 wrote:Thanks guys
Now take another scenario. Thai national owns a rai of land on a chanote. They build themselves a 200 sqm bungalow with a swimming pool and a car port for personal residence. They register address for the princely sum of 20 baht to get the Tabien Baan (blue book). What taxes are due?
Crazy 88
This under the new incoming tax, I believe:
The new property tax is basically to try and 'persuade' owners of large tracts of land, that leave them unused, to let farmers etc. For a owner-occupied house it will be 0.1% of the property value, using land offices valuations, (not actual value, not yearly rent). Leased land not owner-occupied seems to be 0.5% of property value. That's just part of it, and is provisional only. Also many reductions, exemptions etc.
So based on the above 1,000 Baht per 1M of it's value, yearly. However, the following allowances/deductions were mentioned in this 'proposed' version...

Exemptions (deductable allowances): From the taxable assessed value of properties is 1% after property 1 year old, 2% after 2 years old, increasing 1% annually until a maximum deductable amount of 10% when 10 years old.

Implementation: The new land tax is expected to be implemented over one to two years after the law wins approval from Parliament. During the transition period, the Ministry of Finance proposes to charge 50% of the LCT rates for the 1st year, 75% for the 2nd and 100% from the 3rd year onwards.


SJ

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Re: Tesaban Tax

Post by Nereus » Sat Jan 29, 2011 11:53 am

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Re: Tesaban Tax

Post by JimmyGreaves » Sat Jan 29, 2011 12:31 pm

Norseman wrote:Met up with a lawyer today.
He gave me the following information how to find out the correct Local Tax rate in Hua Hin.

Single house - 1 storey located outside the inner city circle = 24 Baht /Sq. meter

Single house 2 storey = 29 Baht / Sq. meter.
Single house 3 storey = 30 Baht / Sq. meter

Then the formula.

Your house living area x 24 Baht (1 storey house) x 12 (months) x 12,5% = Local Tax.

If you have a swimming pool they'll charge you an additional 3000 Baht for the luxury of owing it.

Does this make sence?

In addition to that he said you can not be charged for not paying the fee in the past years because Tessabahn didn't inform you to pay the tax before you receive the letter.

He also said that some of the tax payers have been informed by Tessabahn that the prices have been doubled since last year.
That is not true.
It's a scam he said.
If the municipality can't come up with any proof of the increased taxation then just pay the old correct sum of money or just sit on the fence and wait.
Later pay the penalty fee of 200 Baht, caused by the delay + the correct tax.
This seems wrong based it on what we paid the tessabahn last year, exactly 5220 thousand baht for house and 40 baht for land. (They required copy of chanote etc). Hope this doubled the tax what your talking about is wrong. Don't make any sense to me. as I'm going in to pay next week, rather the missus is. We never get a letter the missus just goes and pays as she know a couple of people who had to pay for previous years. You sure the lawyer knows what's he's talking about? Typical Thailand confusion. Arghhhhhh!

Based on above it equals 250sqm 2 storey based on the above calcs = 10875 (No Pool)

Do you have to pay if you own land in say hin lek fai ?
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Re: Tesaban Tax

Post by poosmate » Sat Jan 29, 2011 1:17 pm

crazy88 wrote:
Thanks guys
Now take another scenario. Thai national owns a rai of land on a chanote. They build themselves a 200 sqm bungalow with a swimming pool and a car port for personal residence. They register address for the princely sum of 20 baht to get the Tabien Baan (blue book). What taxes are due?
Crazy 88
As the house is not registered it will not attract taxes under the present law.
The land will be taxed as per national rules.
The 'lawyers' tax advise seems flawed to me as 'outside the city ring' covers a huge area. The taxes are always assessed by the government determined land price. There are many different prices for land 'outside the city ring' I also understood that beach front land was assessed higher than other land within the city and that there were several other 'zones'?
Most houses outside the tessabaan jurisdiction ( including Hin LeK Fai) do not pay any house taxes as they have not been registered and have not required consent to build..
I think the new property tax proposed will encompass all these houses that are slipping through the net.
Until then my advise - Don't tell em unless you have to! The Thais don't :wink:
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Re: Tesaban Tax

Post by crazy88 » Sat Jan 29, 2011 4:08 pm

Mmmmmm

How do they decide whether the fishpond is a swimming pool or the swimming pool a fishpond?

What rights do any authority have to even enter the land without invitation?

How is the sqm of the built up property assessed? Main house, car port, terrace, sala? To roofline or wall centres?

Is the pool tax based on size?

Crazy 88

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