Hua Hin land office tax and valuation, a scam surely?

[OscarMike]

I have been told by someone at the Hua Hin land office that tax on the sale of a piece of land within five years of purchase is 5% + 3.3% business tax, totalling 8.3%.

Now this is sounds reasonable to me but the 'scam' part IMO comes in when the value of the land is an arbitrary number pulled out of a conjurers hat by the staff at the land office. It seems to bear no relation to the original purchase price, current value, or selling price and is appears closer to "how much whiskey they want today". They are reluctant to tell you what they 'think' the value of the land is before hand so trying to price it competitively for a sale becomes very difficult since the tax bill could be 2k or 200k.

Any advice on this appreciated and I realize that Hua Hin land office is a quagmire of corruption and sub-table activity so I may have to resort to doing what everyone else in town does and pricing it totally off the scale anyway and kissing goodbye any hopes of a quick sale.

[Spitfire]

Well, it never ceases to amaze me the scams these lot think up, and it infects every corner of everything, from kinder garden to aircraft carriers.

It is not a big surprise really, and the "Land Office" is probably one of the worst for corruption, and btw, the don't "think" as only the boss is allowed to do that, they're mindless automatons that you meet.

Sorry to sound negative, but it's endemic here in every possible field there is.

Better get used to it man. There's probably a mafia/corruption committee for the manufacture and distribution of toothpicks here.

[Nereus]

There's probably a mafia/corruption committee for the manufacture and distribution of toothpicks here.

Ha, Ha, thank you Spitfire. Now I know why the -------ing things break in the middle when you try to use them!

Sorry Oscar Mike, I don`t intend to steal your thread, but I think that you are correct.

[hhfarang]

Ha, Ha, thank you Spitfire. Now I know why the -------ing things break in the middle when you try to use them!

Sorry Oscar Mike, I don`t intend to steal your thread, but I think that you are correct.

Nereus,

Then maybe we should start a new thread on toothpicks.... I know most people on here think I am a wingher (or whiner in American), but this is another of my pet peeves... I'm used to toothpicks made out of good old oak or elm or some other sturdy wood... I have to use at least 3 of these %&**#@! bamboo ones after one meal as they are crap and break so easily... and they splinter so that I've sometimes had to pull the wood out of my gums with tweezers afterward!!!

Rant over, back to the corrupt land office...

[Super Joe]

I have been told by someone at the Hua Hin land office that tax on the sale of a piece of land within five years of purchase is 5% + 3.3% business tax, totalling 8.3%.

This is just in my experience so not saying it's all correct, and different officials will allow different things...

Your '5%' should be made up as follows, assuming individual sale & not company based on the 'within five years' part:
Transfer fee 2% - based on the appraised value.
Stamp Duty 0.5% (in your case exempt) - but exempt if SBT applicable.
Withholding tax 3% (it looks like they've estimated it as) - on appraised value, or actual sale value (that you declare anyway) , whichever is higher. Basically personal income tax deducted at source, progressive rates upto a max. of 37%. Taxable value is discounted for every year of ownership upto a max. on 8 years.

Then your 3.3%...
Specific Business Tax (SBT) 3.3% - on appraised value, or actual sale value, whichever is higher. Individuals exempt if held property over 5 years, companies pay irrespective of years held.

Now this is sounds reasonable to me but the 'scam' part IMO comes in when the value of the land is an arbitrary number pulled out of a conjurers hat by the staff at the land office. It seems to bear no relation to the original purchase price, current value, or selling price and is appears closer to "how much whiskey they want today". They are reluctant to tell you what they 'think' the value of the land is before hand so trying to price it competitively for a sale becomes very difficult since the tax bill could be 2k or 200k.

They're probably right not to tell you what their valuation is because they have an already set in stone valuation to use, and they want your real sale amount as that's typically higher than their rates. And they can't tell you how much the tax will be, or even the tax rate (see withholding tax above) until you value/sell it. They could estimate it, but then we could work out their valuations from that. And it's far from a scam normally because like most taxes in Thailand it's 'self-assessment', so you get to scam them if you do what most (everyone?) does with the 'declared' sale prices.

The Land Office have official valuation rates set by the Treasury Department to use for each 'zone', one for land & one for buildings, not sure how many zones Hua Hin is broken down into. They're fixed for 4 years, and the new appraisal was due Feb/Mar 2011 just gone, so you've caught it at about the worst time. I think they've increased a fair amount from wife was told for our area, although still only 50-70% of market value. Read they're set by taking the median value of recent transfers in your zone.

I'd be unusual for your market price to be less than land office valuation rates because sellers/buyers under declare their sale price, so the rates stay low, the 2007-2011 rates were about a third of market value in two zones I was involved in, people find out the area rates and just declare their sales at that for the remainder of the 4 year period. You mentioned land only I think but the rates for buildings on the land is just the one rate per m2, so a 200m2 palace made of gold gets taxed the same amount as a 200m2 mud hut. This in our area on these new rates is about a quarter of market value.

A buyer may be reluctant to under declare because they carry forward the tax liability, but mostly do because taxes are often split 50/50. And you could find out your area's rates if you know someone who has a 'contact' in the land office, most real estate lawyers would for instance.

Good luck, and post how it went down, be interesting to know, things may have change from all the cack I've written

SJ

[OscarMike]

Thanks for the info however it still reeks of scam, how can part of the tax be self assessed and another part be down to the whim of some officer who may or may not need some extra funds this month? If I told them I gave it away to a relation does that mean there is no tax to pay since I have made no money on the sale? If they deem it is valued at four times what I paid for it does that mean it will sell at a loss?

I presume there is no information from the treasury department on this zoning system and land prices? Would it be advisable to wait for 5 years before attempting a sale?

The dodgy part about it is the land office reluctance to tell you what 'they' think it is worth before you have found a buyer, its as if they're just sizing up each land seller for how much they can fleece them for and it has very little relevance to the actual chuck of dirt being transferred.

[Super Joe]

Thanks for the info however it still reeks of scam, how can part of the tax be self assessed and another part be down to the whim of some officer who may or may not need some extra funds this month? If I told them I gave it away to a relation does that mean there is no tax to pay since I have made no money on the sale?

'Under-valueing' is why they have their own assesed valuation rates, they use 'assessed' minimum rates in general for taxes, like employment and property lease income. They don't make up the rates as they go along to cream off tax, the only person that could do that is the head in there, and never seen him leave his seat. They have a specific rate to use for your area, ours where we develop never changed once in the 4 years, before you pay they give you an official government tax invoice/receipt for all taxes, obviously sequentially numbered. So there would need to be a load of 'spoiled' receipt numbers going back to the Revenue Dept, and the only person that would be doing that is the boss. They've got other avenues in there where they can raise a few quid, scamming foreigners seems acceptable, but stealing money from their own government in Bangkok I doubt they'd fancy much.

The dodgy part about it is the land office reluctance to tell you what 'they' think it is worth before you have found a buyer, its as if they're just sizing up each land seller for how much they can fleece them for and it has very little relevance to the actual chuck of dirt being transferred.

It's just not their job to do property valuations, they're just local government 'clerks' who get given guideline 'minimum' rates to use. I explained why they're reluctant to give out their rates, they're job is to collect revenues for their government at the highest amount, why would they tell us what their minimum is. They may have a valuation service in there, but doubt it'd be free.

If there's any development projects in your area it'd be fairly easy to find out last period's rates as a guidline, or a good way is to ring the numbers on the 'for sale' signs you see around, Thais rarely drop their prices much, so is as good a guide as any.

SJ