What are the costs involved in selling a house?

1. Withholding Income Tax

Selling a house generates income, so the first thing to pay is withholding income tax. This tax is calculated based on the appraised value of the house by the Land Department. Sellers can reduce expenses by deducting a percentage based on the number of years they have owned the house. After deductions, the income is then taxed according to the basic personal income tax rates, without exception. After withholding the income tax at the Land Department, the seller can choose whether or not to include the income from the sale in their year-end tax calculation.

How is withholding income tax calculated?

The first thing to know for calculating withholding income tax is how many years you have owned the house (based on the year of ownership) to determine the percentage to deduct and find out the actual expense you need to pay. Before calculating withholding tax:

Example: How to count the number of years of home ownership (based on the Buddhist calendar year)

If you bought a house on December 1, 2022, and sold it on January 10, 2024, this counts as 3 years of ownership. According to the tax table, you can deduct 77% of the expenses. Assuming the selling price is 10 million baht, but the land office assesses it at 9 million baht, the homeowner must pay personal income tax withheld at source.

Note: Tax on the sale of a house differs from other types of personal income tax because it is not net income and therefore there is no exemption for the first 150,000 baht of net income.

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2. Specific Business Tax

Specific Business Tax is a tax levied on the sale of a house that is not inhabited by the owner. This is primarily based on the fact that the house has been owned for less than 5 years since the transfer of ownership. The specific business tax is calculated at a rate of 3.3% of the actual price or the assessed price, whichever is higher. However, specific business tax can be exempted. If the seller meets any of the following three conditions:

Except when their name has been on the house registration for more than one year since the transfer of ownership of that house.
Except when the house or land is expropriated.
Except when selling a house or land acquired through inheritance.

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3. Stamp Duty

Normally, after the sale of a house or land is completed, all sellers must pay stamp duty at a rate of 0.5% of the appraised value. However, if the seller has already paid the specific business tax, they are entitled to an exemption from stamp duty. In summary, when selling a house, you must choose to pay either the specific business tax or the stamp duty.

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4. Transfer of Ownership Fee

The transfer of ownership fee is an expense incurred on the day of the transfer at the Land Department office. The fee is 2% of the appraised value, but this fee can be agreed upon between the buyer and seller; it is not fixed which party must pay it.

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