Selling Chiang Mai Property to Children or Heirs Below Market Price — Is It Allowed and What Are the Limits?

Selling Chiang Mai Property to Children or Heirs Below Market Price — Is It Allowed and What Are the Limits?

Many parents want to transfer property to their children below market price for financial support, but there are legal and tax limitations to understand first.

Is It Allowed? Yes, with Conditions

Thai law permits selling property at any mutually agreed price, including below market. However, the Revenue Department has specific rules for calculating tax on such transactions.

Applicable Taxes When Selling Below Market

Transfer fee and SBT: Calculated using whichever is higher — the "government appraised value" or "actual sale price." Even at a low sale price, fees may still be based on the higher appraised value.

Personal income tax: Also calculated based on government appraised value, not the actual agreed price.

Key Risk: Being Interpreted as a Gift

If the sale price is significantly below appraised value, the Revenue Department may interpret the difference as a "gift," potentially triggering gift tax assessment.

Gift tax threshold for parent-child transfers: Exempt up to THB 20 million per year (for gifts between ascendants and descendants in either direction). Amounts exceeding THB 20 million are taxed at 5% on the excess.

Common Methods for Transferring to Children

Method 1: Sell at market price, then gift cash back separately as a distinct transaction
Method 2: Transfer entirely as a gift (not a sale) — taking advantage of the THB 20 million gift tax exemption
Method 3: Sell below market but not excessively low — closer to government appraised value to reduce risk of gift reinterpretation

Sale vs Gift Distinction

Sale: Actual payment occurs, SBT or stamp duty applies, income tax calculated normally
Gift: No payment occurs, exempt if within legal thresholds, but standard transfer fees still apply

Important Recommendation: Every family's situation differs. Consult an accountant or tax lawyer before deciding on a transfer method to choose the legally sound and most tax-efficient approach for your family's circumstances.

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