Taxes and fees on a resale transaction should be calculated in advance, with a lawyer and with an auditor. The lawyer will work out the amount payable in cash when the transfer of rights is registered at the Land Department, but the tax paid at registration is not always final. Where the transaction requires no registration at all — the assignment of unregistered rights under a contract with a developer — personal income tax calls for particular care.
Three types of transaction are set out below. The sale price in each case is 10 million baht.
Sale and purchase (freehold)
The sale price matches the appraised value; the holding period is three years.
Registration fee, 2% — THB 200,000.
Specific Business Tax, 3.3% — THB 330,000.
Personal income tax — THB 227,500.
Total — THB 757,500.
Assignment of a registered 30-year leasehold
The leasehold was bought from the developer for 9 million baht; the holding period is three years, with 27 years remaining.
Fees on registration: transfer fee of 1% — THB 100,000; stamp duty of 0.1% — THB 10,000; total THB 110,000.
Income from the sale of the rights is 1 million baht (the difference in price) plus THB 900,000 (at a leasehold value of THB 300,000 per year, three years of value have been used up), giving 1.9 million baht. The taxable base is THB 1,840,000 and personal income tax is THB 325,000.
Assignment of an unregistered freehold or leasehold
The tax consequences are the same in both cases. The amount paid to the developer is 9 million baht.
Income is the difference between the purchase and sale prices, that is 1 million baht. The taxable base is THB 940,000 and personal income tax is THB 103,000.
The legal position
On a freehold sale and purchase, personal income tax is final where the transaction is not commercial — a single sale in one year. Including the sale proceeds in total income is not mandatory; it is the taxpayer’s choice.
Fees paid on registration of a leasehold at the Land Department are not final and do not cover personal income tax: the Revenue Department issues its assessment by letter after registration.
The assignment of unregistered rights is not subject to registration, and the Revenue Department does not learn of the transaction or its price automatically; filing is voluntary. The information may nonetheless come to light from a statement of the bank account into which the seller received the money.
Where this is the only income for the year, a personal allowance of THB 60,000 applies. No deductions are available against this category of income.
These calculations are indicative: a number of further circumstances are taken into account for any particular transaction.
Author: Aleksandra Agapitova.
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