Who pays the transfer taxes when you buy from a developer?

What happened

A company built and sold houses with land. A buyer agreed to buy two plots, each with a two-storey detached house. The contract said the transfer fee would be split equally, but that the buyer would pay the stamp duty and "all taxes".

Before the transfer date, the company told the buyer to bring money for every cost. At the Land Office the buyer paid half the registration fee and also the company's corporate income tax, specific business tax, local tax and stamp duty: 96,755 baht per plot, 193,510 baht in total. The buyer then sued to get the taxes back.

The rule

A contract to sell land in a housing estate must follow the form set by the Central Land Allocation Committee. Any part of the contract that does not follow the form and is not in the buyer's favour has no effect (Land Allocation Act, section 34).

For land sold with a building, the standard form (Form B, แบบ ข.) says the seller pays the taxes and duties on registering the transfer.

What the Supreme Court decided

In decision No. 6921/2558, the Supreme Court held that:

• As a land developer, the company had to use the standard contract.
• The Land Allocation Act exists to protect buyers. A clause making the buyer pay the seller's taxes goes against that purpose, so that part of the contract has no effect.
• The company could not rely on freedom of contract to shift its taxes to the buyer.

The company was ordered to repay 193,510 baht with interest at 7.5% a year, the statutory rate at the time. (For new cases, the default interest rate has been 5% a year since April 2021.)

What this means for you

• If you are buying in a housing estate, the seller's taxes on transfer are the seller's to pay.
• Fees can still be shared where the standard form allows it, such as the transfer registration fee, so read the form.
• If you have already paid the seller's taxes, you may be able to claim them back. Keep the Land Office receipts and get advice promptly, as time limits apply.