Value of your property

As a buyer looking to enter the market, you will very quickly face an array of different property values and terms used for the values of property and the numbers will not match each other. This is because there are three kinds of property valuation and each is determined by a different government authority and based on different factors. For legal and tax purposes, it is crucial for you to understand the following three property valuation terms and how they apply to your property:

  1. Assessed value (pegged by the Land Department office)

Assessed value is calculated by the provincial Treasury Office after land appraisals performed every 4 years. This value is usually up to 10% lower than the actual purchasing price that you have been asked to pay to buy the property. I.e. typically, assessed value does not properly reflect the value of your property.

Some provinces have been reluctant to raise their assessed value due to the immense pressure it would cause to the local property market. Thus, the main reason we see a prevalence of under-declaring prices with authorities turning a blind eye. In some better developed markets such as Phuket, however, the assessed value is more in line with the actual market value of the property.

  1. Registered value (in title transfer documents)

This value the price that you can find included on the property title transfer documents. The terms assessed value and registered value are commonly used interchangeably in the property world. Hence, the Registered Value, like the Assessed Value is usually lower than the actual price being paid for the property (although the Registered Value cannot be lower than the Assessed Value). It is the value used for calculating transfer fees and taxes.

  1. Market value (actual purchase price)

Market Value is the actual price that you as the buyer are paying for the property. This price can fluctuate according to the current supply and demand in the property market. This will be the amount that you are expected to transfer into Thailand in foreign currency. Oddly enough, this value is the least likely to be recorded by the Land Department on the property transfer documents.

Under-declaring the value of properties happens when both the buyer and the seller declare a value for the property that is not an accurate representation of the actual value of the property. Under-declaring is a form of tax-fraud that the Thai authorities have begun to harshly crack-down on. This is not recommended because the government is now imposing criminal and civil fines and penalties to those who are caught under-declaring.

Property Taxes and Transfer Fees

In order for you to possess the property that you are buying, you have to go jump through a few hoops during the transfer process that gives you ownership from the previous owner/developer to you. The purchase and sale contract will stipulate how the transfer will take place and this is usually when the construction of your Real estate Hua Hin property is complete or when you have made the final payment instalment, depending on your contract.

In addition to the full property purchase price, you will also have to pay certain taxes and transfer fees. Normally, the buyer is responsible for paying the transfer fee and the seller is responsible for the rest, this is negotiable amongst the parties before going to the land department and it is included in the purchase and sale contract.

Tax/FeeWho pays?How much?
Transfer feeBuyer2% of Registered Value of property
Stamp DutySeller0.5% of Registered Value of property
Withholding Tax(Also called Income Tax from the sale)Seller1% of Appraised Value or registered value (whichever is higher)
Business Tax (only if the property is sold within first 5 years of ownership)Seller3.3% of Appraised Value or Registered Value (whichever is higher)

 

Again, who pays for these taxes is negotiable. The actual calculation methods for these taxes are complicated but in order for you to have a rough idea of how much to anticipate if you are buying a residential property – the total fees and taxes usually accumulate to 2-3% of the market price that you are paying for the purchase. This 2-3% is split between you (the buyer) and the seller.

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