What are the taxes and fees involve when selling or buying properties?
When buying or selling a property, it is important to know the taxes and fees involved in a real estate transaction in the Philippines, when it is due to avoid penalties and where to pay such costs to avoid delay and save you from the unncessary frustration. It is also important to note the time frame when the entire process of transfer of title can be completed. Your real estate agent should explain to you these costs particularly if you are a first time property buyer and buying from a private individual. Transaction costs differ when buying from real estate developers.
Closing Costs for Sale of Real Properties
Capital Gains Tax = 6% of property value
The tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro sales and other forms of conditional sale. Capital asset means property held by the taxpayer (whether or not connected with his trade or business) like residential house and lot.
This should be paid within 30 days after each sale, exchange, transfer or other disposition of real property at the Bureau of Internal Revenue office where the property is located or through authorized agent banks.
Documentary Stamps Tax = 1.5% of property value
The tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, right or property incident thereto.
This should be paid every fifth day of the month at the Bureau of Internal Revenue office where the property is located or through authorized agent banks.
Value-Added Tax = 12% of Gross Value
A form of sales tax. It is a tax on consumption levied on the sale, barter, exchange or lease of goods or properties and services in the Philippines and on importation of goods into the Philippines. It is an indirect tax, which may be shifted or passed on to the buyer, transferee or lessee of goods, properties or services.
VAT applies to sale of residential lot valued at One Million Five Hundred Thousand Pesos (P1,500,000.00) and above, or house and lot and other residential dwellings valued at Two Million Five Hundred Thousand Pesos (P2,500,000.00 and above.
This should be paid every 20th day of the month at the Bureau of Internal Revenue office where the property is located or through authorized agent banks.
Transfer Tax = 0.50% to 0.75% of property value
The tax imposed on the sale, donation, barter, or any other mode of transferring ownership or title of real property at the maximum rate of 50% of 1% (75% of 1% in the case of cities and municipalities within Metro Manila).
This should be paid within 60 days from the date of conveyance at the City Treasurer's Office where the property is registered.
Registration Fee = 1.0% of property value more or less
The tax imposed for the registration of new title. This shall be paid at the Register of Deeds that has jurisdiction of the property.
In the Philippines, these taxes and fees shall be paid either by the buyer or the seller depending on the agreement of both parties.
Our real estate agents can assist you in the transfer of title to your name if you are a buyer or help you accomplish the documents needed if you are a seller. It is part of our service to make sure that the transfer of ownership shall be easy for both buyers and sellers.