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Wrong Price Stated on Registered Sales Contract at Land Office - Advice Needed

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I hope that someone can bring som clarity and advice.

 

Bought an off-plan condo in Pattaya and, once completed, it was time to transfer the ownership to me which was done via a Power of Attorney so the developer did the transfer in my absence.

 

The representatives from the developer stated the wrong purchase price by forgetting to bring a few FET´s so the registered amount in the issued sales contract by the Land Office are a few million THB too low.

 

The developer claims that the Land Office says "can't be changed" but I have my doubts about the accuracy since my experience with this "reputable" developer has been a true horror story from A-Z.

 

Please don't state the obvious "their fault, they have to fix it" and similar.

 

My question is if someone have had a similar experience or knows for a fact that the statement by the developer that "it can't be changed" is accurate?

 

We are of course trying to reach the Land Office in Pattaya.

 

 

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What is on the sales contract could be the actual price of the Condo. It is unlikely that all of the commissions paid to any sales agent would be included. This can be as high as 20%. Then there is the legal fees and 6% transfer tax. etc. etc.

So you could be looking at close to 30% of what you paid in fees.

Does that mean that when you come to sell your 5 million Condo, it is only actually worth 3.5 million?

Possibly, then the agent will be back and want 15% to sell it for you! Plus the 6% transfer tax again.

 

I am sure there are plenty of members on the forum that have an in depth knowledge of how this all works.

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Apparently it is a fairly common practice to understate the price of a condo, in order to reduce the taxes on the transaction at the Land Office.

Permit me to doubt the Land Office will buy the developer's contention the price cannot be changed.

However, tread carefully - the developer may have nasty friends.

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Anything can be fixed at the land office if you know who to "talk"  with, but best tackled by a Thai friend.

I know of forged signatures, passing documents that really should not be, jumping the queues, you name it.

Someone I know even has the head of the land offices direct phone number in one  location and was  told " call me anytime" there's a  "problem"

Sales have slowed dramatically and their revenue stream has  slowed with it.

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An update.

 

I have sent a very strong email to the developer informing them of the Revenue Code of Thailand and that it might be seen as tax evasion.

 

We managed to get in contact with the Land Office Headquarters in Bangkok and talked to the head guy and expert on registrations.

 

The answer is yes, it can be changed if the amount is wrong and the supporting documents show that the amount is wrong.

 

Documents such as the contract between you and the developer, Foreign Exchange Transaction Forms (FET`s) and so forth.

 

As too the developer having powerful friends, I am in the very lucky situation that I have contacts all the way up the food chain and very high so I am not worried about that aspect at all.

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    If you're smart, you'll keep this price.  As mentioned, prices are often reported low at the Land Office to lower taxes that have to be paid.  For example, a 7MB condo sale might be reported at 5MB.  When the next sale happens, the new seller can check and see that 5MB was reported and he can then report maybe 5.2MB, even though the sale price might be 8MB.  Be happy they were savvy and reported low--it will help you down the road.

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1 minute ago, newnative said:

    If you're smart, you'll keep this price.  As mentioned, prices are often reported low at the Land Office to lower taxes that have to be paid.  For example, a 7MB condo sale might be reported at 5MB.  When the next sale happens, the new seller can check and see that 5MB was reported and he can then report maybe 5.2MB, even though the sale price might be 8MB.  Be happy they were savvy and reported low--it will help you down the road.

Is that so smart tax wise if I sell a condo at 8MB and its reported at 3MB?

 

Just to clarify, we are talking a big difference in the reported purchase price and the actual purchase price of quite a few million THB.

 

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1 minute ago, Sexbomb said:

Is that so smart tax wise if I sell a condo at 8MB and its reported at 3MB?

 

Just to clarify, we are talking a big difference in the reported purchase price and the actual purchase price of quite a few million THB.

 

   The price reported at the Land Office has nothing to do with how you price your condo should you decide to sell down the road.  It just means that you pay less tax with this sale and down the road you will be able to pay less tax as well.  Often taxes are split 50/50 so the buyer is happy to be paying less taxes, too.

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4 minutes ago, newnative said:

   The price reported at the Land Office has nothing to do with how you price your condo should you decide to sell down the road.  It just means that you pay less tax with this sale and down the road you will be able to pay less tax as well.  Often taxes are split 50/50 so the buyer is happy to be paying less taxes, too.

You are stating the obvious about selling price down the road.

 

But you have taxes on the actual profit you make from a sale to consider as well correct?

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2 minutes ago, Sexbomb said:

You are stating the obvious about selling price down the road.

 

But you have taxes on the actual profit you make from a sale to consider as well correct?

   You pay taxes at the Land Office on the sale price you report, not on profit.  That is why you should be happy that your sale price was reported low.  That allows you to start with that low figure and add a bit to it should you sell down the road.

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4 minutes ago, newnative said:

   You pay taxes at the Land Office on the sale price you report, not on profit.  That is why you should be happy that your sale price was reported low.  That allows you to start with that low figure and add a bit to it should you sell down the road.

Well, the taxes has already been paid based on the higher amount and I have another reason for the amount being the correct one as I will apply for an Investment Visa based on a 10MIL/THB qualified investment(s) and this purchase was part of that plan in addition to being an investment.

 

I hear what you are saying and your input is very appreciated but based on my particular situation, the price needs to be right.

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I am not expert at this but: all the discussion has been about saving money on transfer taxes and such. How about income tax when the property is sold? Under-reporting now could lead to paying excessive income tax when the unit is sold sometime later. Given that Thailand has no special rate for capital gains, It seems like that could be an extra million baht bite by the Revenue Department. 

 

If that's incorrect, please do let me know.

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3 minutes ago, mahjongguy said:

I am not expert at this but: all the discussion has been about saving money on transfer taxes and such. How about income tax when the property is sold? Under-reporting now could lead to paying excessive income tax when the unit is sold sometime later. Given that Thailand has no special rate for capital gains, It seems like that could be an extra million baht bite by the Revenue Department. 

 

If that's incorrect, please do let me know.

My point exactly as stated above.

 

I mean, the transfer taxes are small compared to what the revenue department could charge me for the capital gain in particular if we are talking about a "profit" of 5-6MB due to the wrong price stated in the sales contract now registered with the Land Office.

 

The taxes could also be increased over the years until the day that I actually sell the unit if I hold on too it for quite a few years.

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Landoffice has an assessed tax value for condos and other real estate. Nothing to do with the market value or price you paid. 

They have exact lists with details such as floor, seaview etc. etc. that show their range of value to be taxed and to be used in the LO contract per sqm. They are usually not even asking or interested in your personal sales contract. 

Assessment of values in the last 10 years or so have been adjusted upwards quite a bit and the difference between LO value and market value is much smaller than it used to be. The value finally  at LO is slightly flexible and can be discussed in special cases. Once had a buyer of a condo way back, who insisted in using his full paid price, back then much higher, they accepted and he paid 30% more than needed. A recent example in Central Pattaya. Sold my condo for 4.7 Mio, 

LO value was determined and written in contract to be 3.4 Mio. 

BTW, same thing in many countries. 

 

Regards.  MS>

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