When buying or selling real estate, whether it's a second-hand home, a renovated townhome, or flipping an NPA property for profit, one thing you absolutely cannot overlook is the "transfer costs at the Land Department." These are significant expenses that could eat into your profit or catch a buyer off guard if not agreed upon beforehand.
To avoid arguments at the counter, let's look at the 5 main costs on transfer day and, by custom, who should pay them.
1. Transfer Fee
Rate: 2% of the Land Department's appraisal value or the selling price (whichever is higher).
Who pays: The law does not specify, but by custom, "the buyer and seller usually split the cost (1% each)," or as otherwise agreed in the Sales and Purchase Agreement.
Note: In some years, the government may offer fee reduction measures (e.g., reduced to 0.01%) for homes within a certain price range. Always check for the latest annual announcements.
2. Mortgage Fee
Rate: 1% of the total loan amount.
Who pays: The "buyer" pays the full amount (if taking out a bank loan). If the buyer pays in cash, this fee does not apply.
3. Specific Business Tax
Rate: 3.3% of the selling price or appraisal value (whichever is higher).
Who pays: The "seller" is responsible for the entire amount.
Important Condition: The seller must pay this if they have held the property for less than 5 years or have been registered in the house registration for less than 1 year. (Flippers who buy and sell quickly usually cannot avoid this tax, so it must always be factored into the costs.)
4. Stamp Duty
Rate: 0.5% of the selling price or appraisal value (whichever is higher).
Who pays: The "seller" is responsible for the entire amount.
Important Condition: Paid only when "Specific Business Tax is not applicable" (i.e., holding the property for more than 5 years or being on the house registration for more than 1 year). Remember: the seller pays either one or the other, not both.
5. Personal Income Withholding Tax
Rate: Calculated according to the Revenue Department's progressive tax rates (based on the appraisal value minus deductions based on years of ownership). The longer you hold the property, the lower the deductible expenses, but there is also a higher divisor.
Who pays: The "seller" is responsible for the entire amount, as they are considered to be the one receiving the income from the sale.
💡 Example of Cost Allocation (For Clarity)
Suppose you bought a townhome in Rangsit-Pathum Thani, renovated it, and are selling it for 3 million baht (having held it for only 6 months). The most common and fair agreement in a contract is:
Buyer's responsibility: Mortgage fee 1% (if taking a loan) + Transfer fee 1% (split).
Seller's responsibility: Transfer fee 1% (split) + Specific Business Tax 3.3% (because it was held less than 5 years) + Withholding Tax.
(Note: In practice, sellers might include these costs in the total selling price and offer a "free transfer" promotion to make it easier for the buyer to decide.)
Conclusion
Before signing any real estate contract, clearly state in writing which party is responsible for transfer fees, taxes, and other expenses at the Land Department, or how they will be split. Having a written agreement minimizes risks and ensures your transfer day goes as smoothly and seamlessly as possible.
