Who is responsible for paying the property taxes and transfer fees?
Everyone, both Thai and foreigner, is subject to the following basic property taxes and transfer fees:
- Transfer Fee: 2% of the appraised value or registered sale price of the property (whichever is higher) for the house and land. Typically, the seller and buyer split the transfer fees equally.
- Withholding Tax: 1% of the appraised value or registered sale price of the property (whichever is higher) if the seller is a company. If the seller is an individual, the withholding tax is determined by a progressive rate based on the property’s appraisal value or the registered sale price and for how long the property was owned by that person. The withholding tax is usually the responsibility of the seller, but it can be negotiable if the buyer makes an offer lower than the advertised sale price.
- Specific Business Tax or Special Business Tax: 3.3% of the appraised value or registered sale value of the property (whichever is higher). Both companies and individuals are subject to this tax, but individual sellers who have owned the property for five years or more are exempt. If a company is selling the property, the specific business tax is applicable regardless of how long it has been owned. Traditionally, the seller pays the specific business tax, but it is open to negotiation.
- Stamp Duty Tax: 0.5% of the registered value. This tax is only payable if the specific business tax is exempt. The seller usually pays the stamp duty tax, but it can be negotiable. It is important to establish upfront how the taxes and transfer fees will be shared between the buyer and seller.
Usually, the seller is responsible for paying the taxes, and the transfer fees are shared equally. However, depending on the negotiations, the allocation can be split differently. If a buyer offers a lower price, they may offer to pay half of the taxes and transfer fees, or the seller may stipulate that they will only accept the offer if the taxes and transfer fees are shared equally. There are no set rules on who pays what, so it’s best for both parties to agree on these terms at the beginning of the negotiation process.
Flexibility is essential for a successful sale !