When selling a property in Thailand, the taxes and transfer fees can be complex. This guide aims to equip you, the seller, with a basic understanding of these cost components and help you negotiate the best deal.
Transfer Fee: A compulsory 2% levy applied to the higher of the appraised value or registered sale price of the property. This fee is typically split equally between seller and buyer.
Withholding Tax: The burden of this tax depends on your status. Companies are subject to a fixed 1% levy, while individuals benefit from progressive rates that decrease with ownership duration. Owning the property for five years or more grants exemption from the 3.3% Special Business Tax and translates to lower overall tax liabilities. Traditionally, the seller shoulders this responsibility, but remember, negotiation holds significant power.
Specific Business Tax (SBT) or Special Business Tax: This 3.3% levy applies to both companies and individuals who haven’t held the property for five years. However,individuals qualify for exemption after five years. While traditionally considered the seller’s responsibility, this tax can be renegotiated, especially when dealing with a buyer who secured a favorable price.
Stamp Duty Tax: A 0.5% levy payable only if the SBT exemption applies. This essentially serves as a tax clearance stamp. While traditionally borne by the seller, the flexibility of negotiation remains open.
Negotiation: the art of sharing the burden
There are no rigid rules dictating responsibility for taxes and fees. Each sale is a unique negotiation dance, where the initial agreement holds the key. While tradition suggests the seller covers all taxes and splits the transfer fee 50/50, this is not set in stone. A low offer from the buyer might incentivize them to share more tax costs or accept your preferred cost-sharing arrangement. Conversely, generous buyers might even offer to shoulder some or all of the burden.
Conclusion:
By understanding the Thai property tax and fee landscape and approaching negotiations with confidence and flexibility, you can navigate the selling process with clarity. Consulting with a professional tax advisor who understands Thai property regulations is highly recommended to ensure a smooth and cost-effective sale.