House Transfer Taxes

[JimmyGreaves]

Anyone got any ideas how much the land office charges when you transfer a house from one owner to another. Thinking about transfering a company registered house to myself. Think I will have to do it this way as the building permit was unfortunetely issued in the company name on company land.

[Super Joe]

Hi JG,

Stamp duty is 0.50%, Transfer tax is 0.01% and Special Business Tax is 0.11%. They are all reduced only until next March, then may revert back to higher rates. Think they are all levied? and its applicable to the amount you declare the house value is, or the land office decide to value themselves. Bit of a strange one here because in theory you may have already paid 49% of the building cost!?!?

Is the company being closed down and land being transferred to a Thai if you don't mind me asking ? If not, IMO the building is best left in the company name as that is their 'office' and reason they bought land.
Also company has to declare the asset sale on tax return, it might ring bells. Apologies if overstepping your basic tax rate question.
If company remains to hold the land and use that 'office' they have to declare on tax returns rental paid to you to use your building, and you vice versa with the rental income you'll receive.

People over-estimate importance of building permit being in their own name (and Blue Book), neither are proof of ownership documents on their own. Building contractor could have applied for it and it doesn't matter or make it his building. Correct paper trail for build or purchase is what's required.

Apologies if overstepping your basic tax question but others have been considering same thing.

SJ

[hhfarang]

Think they are all levied against the value you declare the house cost, or the land office decide to value themselves.

...and declare something near the real value or they will say you lied and then value it themselves which could be 200 or 300% of the value as they see fit.

[Super Joe]

That's right HHF, but funny thing is the land office rates for land in zonal areas of town seems well below what we farangs pay, they are 'Thai' rates if you like. They've always used their own assesments where I've been involved and they've been lower.

But with company this is a bit tricky as a company may have already filed their building outgoing costs ie: for building contractor, yet when you sell the value is higher than build cost, gain could be liable for 30% corporation tax. Although being in middle of this recession could even out any normal gain.

As you say declare it right, especially at these temporarily greatly reduced property tax rates.

SJ

[hhfarang]

Our land purchase contract stipulated that the seller pay the transfer costs and the Thai owner put down the value (sale price) at about one third of the actual sale price to save some money. The land office didn't buy it and set the value themselves at way more than what we were actually paying, so then the seller didn't want to pay the tax. We ended up splitting it to get the deal done and it cost me an extra 2000 U.S. dollars in taxes, so one has to be careful (caveat: this was in 2003 and I think the tax rate was actually higher then).

[stgrhe]

JimmyGreaves is asking about the taxes involved when transfering his HOUSE and not the LAND.

Is it not so that the ownership of the HOUSE actually is determined by the construction contract signed between the builder and the buyer together with the building permit application?

I was under the impression that the ownership of a dwelling can be transferred without involving the land office by applying for a it at the tessaban and advertised the transfer for a period of 45 days; and, if in a village outside of tessaban's domain, do the same though the village chief.

Can someone please enlighten me?

[JimmyGreaves]

Circumstances are as follows:

Company Land 49/51

Builder is building on labour only basis with stage paid contract. House nearly completed and I am very happy with results

Building permit was issued on company name

Building materials/labour all paid for via my personnal bank account (Not company Account)

Idea is not to tie the house to the company but put it in my name so that if I ever have issues with the company land that the house is built on I can move that at a later date to maybe my partner on lease basis. Also if I leave it in the company I believe blue book and all bills (water/electricity) will have to go through the company route.

I have another small piece of land with the company so would not be closing the company even if I moved the land that the house is built on to my partner

Read somewhere as stgrhe says have to wait 45 days and advertise in papers for transfer but have to pay some transfer taxes and would like to know how much and if this is correct.

Cheers Guys

[Super Joe]

I was under the impression that the ownership of a dwelling can be transferred without involving the land office by applying for a it at the tessaban and advertised the transfer for a period of 45 days; and, if in a village outside of tessaban's domain, do the same though the village chief. Can someone please enlighten me?

We build outside the Tessaban domain and house registration's still need doing at land office, taxes paid, with a 30 day notice posting.

SJ

[Super Joe]

Idea is not to tie the house to the company

know what you mean but the purpose of the company buying the land was to build the company office on it. The Limited company will then be without office unless you lease it to them, and then tax declarations go with that both for company and you, you'll be getting an income and liable for personal income tax. Also normally there will already be a company paper trail, minutes of meeting etc where all shareholders agreed to buy the land and apply for the building permit to build their office. Land office have always insisted on this company shareholder paperwork for land purchases.

but put it in my name so that if I ever have issues with the company land that the house is built on I can move that at a later date to maybe my partner on lease basis.

You can do the house registration at this point, when/if you transfer the land from the company to a Thai.

Read somewhere as stgrhe says have to wait 45 days and advertise in papers for transfer but have to pay some transfer taxes and would like to know how much and if this is correct.

30 day notice and taxes are Stamp duty is 0.50%, Transfer tax is 0.01% and Special Business Tax is 0.11% until next March, they may revert back to usual higher rates then or may be continued at these lower rates for another year. These are applied to the value of the house only, and think they all apply, lawyer/accountant or land office will tell you if all 3 apply.

But as I said earlier, if you built the house for say example 2M, it may upon completion be worth 3M, then the company may be liable for 30% corporation tax on that 1M gain. But as you said you paid for build costs from personal account then no expenditure has been put through company accounts, does that make company liable for tax on whole 3M? or can company say the house build was not their business, they just applied for building permit on behalf of you?
Best seek some professional advice.


Please don't take this process as gospel, but was from a lawyer!?!?

SJ

[JimmyGreaves]

Idea is not to tie the house to the company

know what you mean but the purpose of the company buying the land was to build the company office on it. The Limited company will then be without office unless you lease it to them, and then tax declarations go with that both for company and you, you'll be getting an income and liable for personal income tax. Also normally there will already be a company paper trail, minutes of meeting etc where all shareholders agreed to buy the land and apply for the building permit to build their office. Land office have always insisted on this company shareholder paperwork for land purchases.
SJ

Hi SJ

Bought two pieces of land 4 years ago so cannot have two company offices, the office will go on the smaller piece and maybe some business when cash flow improves, The current office address has been with the lawyers who setup the company in BKK all those years ago (No Charge has been requested )

Building permit was issued to the company for a house to be built for the director using his money with no benefit to the company Crazy

Looks like the better option is to sell the land to the other director whilst the taxes are low and get a lease.

Wish I could give the lot to our 3 year old daughter and be done with all these worries as that's what the goal of this is arghhhhhhhhhhhhh

[JimmyGreaves]

Is it the case that because the building permit is now in the companies name the first blue book will be issued by the tessabahn in the companies name?

I have today got a lawyer to sort this out for me and he says not to worry, I can own the house by 30 day announcements, pay taxes at the land office, and grease a palm there etc We don't need to worry that your house is on some company land and if needs be you can transfer to your Thai partner later and get a lease.

Not sure what would happen at the Land Office if we did the land transfer later and got the lease, would I have to register the house again. That's a new question for tomorrow.

[Super Joe]

Is it the case that because the building permit is now in the companies name the first blue book will be issued by the tessabahn in the companies name?

Every brand new house Blue Book we've ever got comes without any name in. Farangs just leave it blank (don't know if this is ok?) and some get the Yellow Book, most don't bother. Again Blue Book with a persons name on is not a proof of ownership document in itself. The build/purchase contract, payments recepits for same and tax receipts from Land Office are.

Not sure what would happen at the Land Office if we did the land transfer later and got the lease, would I have to register the house again.

No definately not, the house is registered already job done. The new landowner would be purchasing land only off your company with the understanding someone else owns a building on it. You'd want an additional clause in any new owners lease that they can't build another structure on it etc for the 30 years.

Re: Minors, farangs have managed to get land their minors name, it is allowable under Land Code, but Land Office can decide if they're being used as nominees for foreigner or not and refuse. Also if situation where mother has custody she can sell if in kids 'best interest' etc.

Sounds like you have a solicitor on top of things. Personally I am keeping mine in Company until anything comes of these set-ups, only then at that point in time change to lease, its been fretted about for 5 years IF it actually materialised in another 5 years time you have a 10 year head start on the 30 year lease.
Also if law changes to the longer leases talked about from time to time a Company farang would be able to switch to that, someone already on a lease may well have problems, irrespective of lease clauses permitting it.

SJ

[JimmyGreaves]

Thanks for all the great info SJ, very useful, I like to not sound a complete idiot when talking to lawyers as then I can form a judgement if they are

One further point if anyone knows this.

As stated I have nearly completed building the house on company land and paid for this out my own pocket contracting it to be built on a labour only basis and I have bought the materials, the building permit was registered in the company name.

Would I still goto the land office and tell them that I have built a house that cost me say 1 million labour and 1.5 million materials and could you register this on your books and take some taxes from me?

[Super Joe]

One further point if anyone knows this.
As stated I have nearly completed building the house on company land and paid for this out my own pocket contracting it to be built on a labour only basis and I have bought the materials, the building permit was registered in the company name.
Would I still goto the land office and tell them that I have built a house that cost me say 1 million labour and 1.5 million materials and could you register this on your books and take some taxes from me?

I think you, or whoever is going to handle the house registration for you, needs to see what the land office is going to allow you to do in this regard. Lawyers have contacts in the Land Office who they can chat with off the record to see what will be required, that's normal practice and a sort of negotitation process. Because as it is the landowner (your Limited Company) that is allowing you to register the building on their land, plus the building permit is in their name, the land office may insist that house transfer in its full current value be recorded against the Limited Company.
This would be fine if I were you, you can simply put the 2.5M Baht costs you have personally paid out on the company books, which then allows your Company to record some business activity and pay some corporation taxes (next year) on the difference between the 2.5M costs and whatever the house 'current value' is transferred at. I'd hazard a guess you could declare the current value at 3M Baht.
It's a perfect opportunity for the Limited Company to pay a bit of tax and keep themselves ahead of the thousands of Farang 49%'ers who choose not too. If your lawyer is not advising putting this activity through the company personally I'd be out of there in a flash.

Good luck mate,

SJ