Calculating the fees when registering a condo unit
This article will examine the appraised value of condominium units, which is of importance for the calculation of fees and taxes when ownership of a unit is transferred. As with land or other general buildings and structures, ownership of a condominium unit is officially transferred through registration at the
Land Office. The fees and taxes payable on registration of ownership are the transfer fee, income tax (payable as withholding tax) and stamp duty or specific business tax/local development tax.
You will recall from my previous article that the specific business tax applies to commercial sales of a unit. This includes a unit that has been owned by the seller for less than five years. More than five years, and stamp duty (considerably less expensive) applies.
The transfer fee and income tax to be paid to the authorities upon transfer are calculated based on the Land Office’s appraised value of the condominium unit.
The stamp duty or specific business tax are calculated based on the Land Office’s appraised value of the condominium unit, or the sale price of the unit, whichever is higher.
The appraised value of a condominium unit is set periodically by a Valuation Committee.
The criteria taken into account by this committee can be summarized as follows: Sale and purchase price, terms and conditions of the sale and purchase agreement or rental amount of unit(s) in each floor of that particular condominium and of other identical or similar-style condominiums nearby; Quantity and quality of the common property of the condominium; Facilities and services provided in the condominium; Quality of the materials and built-in decorations of the unit; Purpose of use of the unit (commercial, residential or office space, for example); Style of the unit and its location in that particular condominium; Common property management system of the condominium; and The market price of the land on which the condominium is located, along with construction costs when the condominium was first registered.
After the committee has gathered this information, it then sets the official appraised value of a condominium unit by comparing it with the market price of an identical or similar-style condominium unit nearby, or by comparing it with the rental amount of an identical or similar unit nearby. If neither of these methods is feasible (for example, if there is no other condominium nearby) then the construction costs and the depreciation of the unit are used to calculate the official appraised value.
Usually the appraised value is designated floor by floor, though it may be unit by unit. Note that if the condominium comprises several buildings, the appraised value of the floors and units in each of the buildings may well be different. In general, the appraised value of each condominium must be re-evaluated by the Valuation Committee every four years. Naturally, the higher the appraised value is, the more expensive the fee applicable when registering ownership of the condominium unit at the authorised Land Office will be.
Here is the calculation for the residential condominium in Phuket that currently has the highest appraised value, of B91,000 per square metre. The registration fee payable upon registration of ownership of a 200-square-metre unit would be B91,000 x 200 = B18.2 million x 2 per cent, or B364,000.
If the unit has been owned for not more than five years by the seller, it will be subject to specific business tax, at a rate of 3.3 per cent of the appraised value or the actual sales price, whichever is higher. In the case of the example above, this would be B18.2 million x 3.3 per cent, or B600,600.
Stamp duty would apply if it has been owned for more than five years by the seller. In this case it would be B18.2 million x 0.5 per cent, or B91,000.
The income tax applicable depends on individual cases, as it is based on certain deductions, the calculation of which is done through a specific formula created by the legislature which takes into account how long the property has been owned and the progressive tax rates up to 37 per cent of the profit made by the seller calculated from the difference between the appraised value at the time of purchase and the time of sale.
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