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How to Buy Properties in the

Philippines: A Guide for OFWs &


Filipinos Abroad
Step-By-Step Procedure on Buying a Philippine Real Estate Property for
OFWs/Filipinos Abroad
1. You will have a representative and he/she will be called attorney-in-fact will reserve the unit for you.
He/ She will sign the forms (reservation form, special power of attorney and authorized
representative form) as well as pay the reservation fee.
The property agent will then send you the Special Power of Attorney (SPA) for you to sign and consularize.
This

is

the

legal

document

authorizing

your

attorney-in-fact

to

act

on

your

behalf.

Consularize/consularization- is a required process that authenticate the documents by the Philippine


consulate. It usually costs 25 USD per document and varies from which country youre working from. The
documents will have a seal and a red ribbon over it. Its non-refundable.
2. Once reserved, here are the requirements that you need to submit within 30 days:
o

The SPA (Consularized) this must be authenticated by the Philippine consulate

Income Proof (3 months)

Proof of Billing (here in the Philippines)

TIN (for verification. If you dont have a TIN # in the Philippines, the property specialist may
do this for you)

CEC (Certificate of Employment and Compensation) needs to be consularized as well

Employment Contract (should be in English) must be with the seal of the employer as well
as a signature of the authorized personnel (HR manager, etc). Can be photocopied as
long as it is certified as true and correct.

Post dated checks (PDCs) for the down payment. Requirement may change to some
developers. If you dont have a checking account yet, your attorney-in-fact may open one in
his name. If you have a local savings account, you can request for a checking account thru
your representative.

Photocopy or scanned copy of your passport and IDs

3. Your attorney-in-fact will apply for a housing loan with the bank (if bank financing), developer (if inhouse financing), or Pag-IBIG (if Pag-IBIG financing).
4. Send back all the requirements on step 2 via courier to your agent/ property specialist.

5. The property specialist will then submit all the documents together with the PDCs to the developer
and that is all there is to it. All you need to do is fund the checking account and continue to pay the
monthly amortization.
The steps above will vary depending on the terms of the developer and the bank.

When Buying Condominiums


A down payment of 10%-30% is usually required. Ownership of condominium units is evidenced by the
Condominium Certificate of Title (CCT) but the transfer of title is usually not executed until the property is
fully paid. Foreigners can only own up to 40% of a condominium project.

The Other Costs


Get your calculators ready for computing these on top of the actual price:
Real Estate Transaction Costs in the Philippines
Purchases from Individuals:

Philippines Capital Gains Tax 6% of actual sale price. This is paid by the seller but in some cases it
might be expected that the buyer pays. This percentage could differ if the property assessed is being
used by a business or is a title- owned by a corporation, in this case the percentage is 7.5%

Philippines Documentary Stamp Tax 1.5% of the actual sale price. This is paid by wither the buyer
or the seller upon agreement. Normally however, it is the buyer who shoulders the cost.

Philippines Transfer Tax 0.5% of the actual sale price

Philippines Registration Fee 0.25% of the actual sale price

Purchases from Developers:

Philippines Capital Gains Tax 10% of actual sale price. This value might be expressed as part of
the sale price

Philippines Documentary Stamp Tax 1.5% of the actual sale price

Philippines Transfer Tax 0.5% of the actual sale price

Philippines Registration Fee 0.25% of the actual sale price

It is always a good practice to inspect the land/property youre going to buy. Inspect not only the physical
location but also thru the Register of Deeds to ensure that everything about the property is in the right place
and legally documented. Register of Deeds will help you verify the authenticity of the title and the legitimacy
of the owners selling you the property.

Turnover Process
The turnover process is the most important to a new homeowner, because this is when the property finally
changes hands. Because we know how important this is to you, wed like to share some guidelines to make
the transition smooth and satisfactory for both parties.
1. Completion of unit will commence upon issuance of Authority-To-Turnover (CLEARANCE) by
Documentation
2. Completion date:
o

Thirty (30) days for single condominium unit

Forty-five (45) days for tandem condominium units

Approximately Nine (9) months for unit construction

3. Punch listing/inspection by the client will be scheduled after the completion date
4. Rectification of punch listed items will be done immediately but completion date may vary depending
on the nature of the punch listed items
5. Client is responsible in settling all required fees & deposits prior to unit turnover
6. Homeowner Orientation of community house rules, policies & regulations is done during handover of
unit
7. Handover kit and welcome gift is given to client upon acceptance of unit
8. Upgrade/improvements of the clients unit will be allowed only after the acceptance of unit
9. Note that certain warranties may be voided by any unit material alteration
I hope that this helps broaden your perspective and make it easier for you to set expectations as you invest
into buying your dream place. This is something we should all be aware of and we thought as brokers,
sharing this knowledge is important for prospective buyers for it helps them truly understand where their
investment is going.
If you want to invest in real estate, you can contact us and send us a message and well be happy to assist
you.
Sources:
FAQs from Philippineembassy-usa.org
Image courtesy of PinoyOFW.com

Transfer Certificate of Land Title in the


Philippines Process, Requirements and Tips
The rules governing property ownership in the Philippines is handled by the
Land Registration Authority (LRA), and is primarily based on the Torrens System

of Land Registration. A Registry of Deeds (RD) is assigned to keep records of


every land title in a city or municipality, they keep the original copy of registered
land titles; while an Owners Duplicate Certificate is given to the current
property owner.
In this article, well give you a step-by-step procedure on how to get a
certificate of land title for a property that was already registered. This
procedure is otherwise known as transfer certificate of land title, where the land
or property purchased is already registered at the RD by the seller, and he or
she is transferring the title to you- the buyer.
Since research could only lead me so far, I asked help from Mr. Jay
Castillo, a PRC licensed broker, real estate investor, and author of
foreclosurephilippines.com. He is a recognized expert in this subject, and his
experience will give us more details regarding the process.
Requirements:

Notarized Deed of Absolute Sale and photocopies thereof


Latest tax declaration of the property
Certificate Authorizing Registration (CAR) and 3 photocopies thereof
Sellers Certificate Authorizing Registration- This is what the seller got
from the BIR after paying the capital gains tax and doc stamp tax
Receipt from BIR confirming payment of Capital Gains Tax, Documentary
Stamp Tax
Receipt from Assessors office for the payment of Transfer Tax
How to Get a Transfer Certificate of Title
1. The owner and buyer agree on the sale of property and which of them pays
the taxes included in the process. A lawyer creates a duly notarized Deed of
Absolute Sale (DOAS), which is a document proving the legal transfer of the
propertys ownership. After that, the Deed of Sale should be taken to the RD for
the transfer of title to be recorded. This is important for the buyers protection.
How much is the notarization fee?
Jay: The usual rate is 1% of the selling price but it really depends on the notary
public. I have observed that the 1% is the average, but it is still negotiable.
Whose lawyer will create the DOAS? Should it be the buyer or sellers lawyer?
What if they dont have a lawyer to represent them?
Jay: Either would be okay, as long as both parties would carefully read and
agree to the contents of the DOAS. If either party has no lawyer, it would be
best if they get the services of one to check the DOAS before they sign it.
Why is it important for the buyer to go to the Register of Deeds this early in the
process?
Jay: This is important because it would be best to verify the following by getting
a certified true copy of the title: if the title is authentic, if the seller is really the
owner, if the technical description is sound and complete, if the title is indeed

clean, etc. The buyer is basically verifying if the seller is saying the truth, at the
very start, to avoid wasted time.
2. Go to the Assessors office of the municipality or city where the property is
based, then request for a certified true copy of the latest Tax Declaration on the
property. This is needed for the BIR to assess the taxes to be paid like CGT or
CWT, whichever is applicable, depending on whether the property is a capital or
ordinary assets, DST, and for the issuance of the certificate Authorizing
Registration or CAR
How long does this process take?
Jay: For most cities and municipalities, you can get this on the same day. For
big cities like Quezon City, you will have to come back after a day to claim the
certified true copy of the tax declaration.
Are there any requirements to get this form?
Jay: You just need to know the name of the owner(s) of the property, or the
TCT/CCT number, or tax declaration number. I often just bring a photocopy of
the tax declaration from the seller
3. Go to the Regional District Office (RDO) of the Bureau of Internal Revenue
(BIR) that handles the propertys location. Fill out the applicable forms and pay
the Capital Gains Tax (CGT), which is 6% of the selling price (SP) or the zonal
value of the property, whichever is higher; and Documentary Stamp Tax, which
is 1.5% of the (SP) on the DOAS or zonal value; whichever is higher. As
practiced in the Philippine real estate market, the buyer usually pays for
Documentary Stamp Tax and all other transfer costs, while the seller pays for the
Capital Gains Tax or CWT, whichever is applicable. However, this is not true for
all cases because the seller and buyer can create a different agreement as to
who pays the taxes, as long as both parties agree in writing before the DOAS is
notarized.
When should these taxes be paid?
Jay: For CGT, the deadline is on the 30th day after the execution of the DOAS,
for DST, it is on the 5th day of the month after the execution of the DOAS.
Transfer Tax is due 60 days after the execution of the DOAS.
Are there penalties if the taxes are not paid on time?
Jay: Yes, a surcharge equal to 25% of the tax due is charged for late payments,
plus 20% interest per year on any unpaid taxes, plus compromise penalty (if
any, this depends on the BIR officer).
4. File a request for Certificate Authorizing Registration (CAR) at the BIR. This
document is a certification proving that the transfer of property has been
approved by the BIR and that the taxes due on the said property have already
been paid. Hence, this document gives the RD the go signal to transfer the title
to the sellers name.
How long does it take to get the CAR?

Jay: After submission of all requirements, it would take at least 2 weeks, based
on my own experience for properties in Antipolo and Quezon City.
Why is it necessary to have two photocopies of this certificate?
Jay: The buyer will need this if and when they decide to sell the property later on
and transfer it to their buyer. The BIR will look for this when the buyer applies for
the next CAR.
5. Go back to the Assessors office and pay the transfer taxes.
How much is the transfer tax?
Jay: This ranges from 0.25% to 0.75% (rate depends on the city/municipality
where the property is located) of the selling price or zonal value, whichever is
higher.
Are there any documents needed to pay this tax?
Jay: Yes of course- Certificate Authorizing Registration from the Bureau of
Internal Revenue; Realty tax clearance from the Treasurers Office; and the
Official receipt of the Bureau of Internal Revenue (for documentary stamp tax).
Please refer to the article, What is Transfer Tax at foreclosurephilippines.com
for more information.
6. Finally, go back to the Registry of Deeds and show the official receipts of the
paid taxes from the BIR and Assessors office, and the Certificate Authorizing
Registration. Pay the registration fee, which is based on graduated rates set by
the LRA based on SP (ex. For a property with a selling price of 1 Million pesos,
the registration fee is Php5,546).
How long does this process take?
Jay: Just recently, I submitted all requirements for the registration of the transfer
of a title in QC last February 4, 2013, and was informed the new title will be
ready for pickup on March 21, 2013, thats 45 days just for the registration of the
title and the release of a new one!
Any tips or pointers for people who will request for a transfer of certificate of
title?
Jay: Just make sure all the required documents are complete and pay all taxes
related to the transaction early to have time to correct and
problems/deficiencies, dont do it on the day of the deadline.
Is it easy to do this process on your own or would it be better to hire a
broker/title company?
Jay: If you are patient enough to travel through traffic to go to the BIR, cityb hall,
etc, then it would be okay to do this on your own.
How to determine if the Title Presented by the Seller is Authentic
Ask the seller for a copy of the certificate of title, then go to the Registry of
Deeds and ask for a certified copy of the propertys title. The copy usually costs

100 pesos (2.5 USD), but that depends on the municipality or city where the
property is located. Sometimes, it can take a few days to get this.

Once you have the copy, check that all details on the certified copy and
sellers title are identical. Everything has to be identical, down to the last letter. If
there are discrepancies, you should ask the seller to verify this.
Check if the property has any liens, existing mortgage, property ownership
claims, or restrictions.
Q&A and More tips from Jay
What if the property is in a subdivision or gated community, is it okay if it has a
lien?
Jay: Its okay as long as the owner fully disclosed this and explains how it can be
remedied. Better consult a lawyer that specializes in real estate or a
knowledgeable real estate broker

If a seller refuses to give you a copy of the title, walk away


If several months have passed since you got a certified true copy of a title,
make sure you get a new certified true copy before closing a deal, just to be
sure there are no surprises.
Always get a traceback to ensure the mother title has no problems.

Steps in transferring land titles in the Philippines


[By Jamila of PRIME Corporation on April 14, 2014]

God is the owner. "If God is God, then humans can actually never own anything." 1 From the
beginning of time we adhere to the concept of Stewardship doctrine, which states that we are just
mere stewards of our nature and of the world. The term stewardship comes from the word
oikonomas, where oikos means house and nomos means law. It is our birth right to live in this
world with sufficient means for subsistence and mother nature which will provide us with our needs
but with the implied obligation to take care of it like a good father of the family. This right does not
give us the corollary right to exploit and destruct it. As a steward it is our obligation to preserve it, to
utilize it properly for the needs of the next generation. We only have limited resources which when
added or not renewed cannot really cope with our unending desires.
From this stewardship concept comes land ownership. Since time immemorial, possession of
vast amount of land is a manifestation of influence, power and wealth. People normally purchase
land for investment, occupancy or for speculation. While purchasing land is quite exciting and in
fact some neophyte real estate buyers assume that when they acquire a property, the title will
instantly be assigned under their name. If you think it that way, then I tell you that transferring a
property title is much more difficult, tedious and time consuming. There are many things to
consider such as payment of taxes (transfer tax, capital gains tax/creditable withholding tax,
registration fees, business tax, if applicable, etc.) and it is best to determine beforehand and
incorporate in the contract as to who shoulders said taxes in order to avoid hassle. Also expect
delays in transacting with government agencies keeping in mind that patience is a virtue.
The one who is in-charge (normally the buyer) with the transfer might encounter fixers who
would offer their service to speed up the transfer process in return of something valuable either in
cash or in kind. Maybe we think that it is better to hire their service to save time, money and effort

and the worst is many people consent to this kind of arrangement. If you look at it there is the
advantage of a quicker transfer, not having to fall in line and wait longer compared to those who
perform the transaction religiously and patiently on their own. But what about those who cannot
afford the so-called royalty fee? Government officials paid to render public service without having
to receive extra pay. Do they withstand the term honorable attached to their names? We are at
the mercy of the officer-in-charge to do their task or there's an implied understanding that says,
give me a good offer first then I do the service for you.
The point is though many people consent to this, it does not make the act morally
permissible. We are feeding them in an illegal and unethical way, and an illegal or immoral act
does not ripen to a good act through continues and long time practice. Though long time delays
are really irritable, but if it is really the process then we must follow it. Try to fill in the shoes of
those who patiently wait without resorting to illegal ways.
If the government cannot make solutions to this perennial problem, then it is every persons
responsibility to solve this by checking first our values. If we will not stand up now, this problem will
not cease to exist and we will be left on a trap wherein those in the position use their power to
abuse others.
n order to avoid this, have a technical know-how of the process and follow the steps written
below:
After the notarization of the Deed of Absolute Sale (DOAS), here are the steps that you need to
follow to get a Transfer Certificate of Title:
1. Go to the municipal/city assessors office which has jurisdiction over the subject property,
then request for a certified true copy of the latest Tax Declaration of the property.
2. Go to the assigned Revenue District Office (RDO) of Bureau of Internal Revenue (BIR). Fill
out the BIR Form 1706 (CGT) and BIR Form 2000 for Documentary Stamp Tax (in triplicate
copies). Submit the required documents detailed in number 3 (below) which serves as basis for
computation of amount of taxes. BIR will return the documents submitted before payment of
Capital Gains Tax and Documentary Stamp Tax at the Authorized Agent Bank (AAB). Prior the
payment to the AAB, you will be required to fill out a separate AAB payment form, present it to the
AAB representative and then pay the amount due in cash.
3. Submit the following documents to BIR representative (including the original copies of the
AAB payment forms)
Original plus two (2) photocopies of the notarized deed of sale
Owner's duplicate copy of the transfer certificate of title (TCT) or the
Condominum Certificate of Title (CCT), whichever applies, plus two (2) photocopies
Certified true copies of the latest tax declaration for land and improvement of the
property plus two (2) photocopies. If property sold is a vacant lot or has no
improvement, a Sworn Declaration of No Improvement by at least one of the
transferees or Certificate of No Improvement issued by the city or municipal assessor
Tax Identification Numbers of the Seller and Buyer
Other requirements, (if applicable):
Special Power of Attorney if the person signing on the document is not the owner
as appearing on the TCT/ CCT

Certification of the Philippine Consulate, (if the document is executed abroad)


Location plan/vicinity map if the zonal value cannot readily be determined from
the documents submitted
Such other requirements as may be required by law/rulings/regulations/other
issuances.
4. Upon submission, BIR representative will give you claim slip which you will use to claim
the Certificate Authorizing Registration (CAR) on the date provided. It is one of the requirements
for the RD for the title registration and issuance of a new Owners Duplicate Original Copy of the
Transfer Certificate of Title or the Condominium Certificate of Title. (Under BIR Revenue
Memorandum Order No.15-03, the CAR will be issued by the BIR Revenue District Offices or local
agents for all One Time Transaction (ONETT) within a period of 5 days from date of receipt of
complete documentary requirements).
5. The CAR will be released to you together with the following:
Original copy of the Deed of Absolute Sale stamped received by the BIR
Owners Duplicate Copy of the Transfer Certificate of Title or the Condominium
Certificate of Title
Original Copies of the BIR Form 1706 (CGT) and Form 2000 (DST) stamped
received by the BIR
Copies of the Tax Declaration for land and improvement
6. Proceed to the local treasurer's office for the payment of transfer fee and secure a copy of
tax clearance upon payment of a certain fee for its issuance upon presentation of the following:
Original and 1 photocopy of the Deed of Absolute Sale
Photocopy of Tax Declaration
Official Receipt of Payment of Real Property Tax and Special Education Fund Tax
for the current year.
7. Submit Documents to the Register of Deeds. Present the following documents to the RD
which are required for the issuance of the new Owners Duplicate Copy of the Transfer Certificate
of Title or Condominium Certificate of Title in your name:
Original plus 3 photocopies of the Deed of Absolute Sale stamped received by the
BIR
Owners Duplicate Copy of the Transfer Certificate of Title (CCT)
Original Copy of the Certificate Authorizing Registration (CAR)
Original Copy of the Realty Tax Clearance
Original Copies of Official Receipts of Payments of Capital Gains Tax,
Documentary Stamp Tax, Tax Clearance Certificate and Transfer Fee
Original Copies of the Current Tax Declaration for land and improvement issued
by the local assessors office

If the seller or buyer is a corporation, the following requirements must also be submitted:
Secretarys Certificate authorizing the sale of the real property
Certified True Copy of the Articles of Incorporation and By Laws of the seller or
buyer corporation
8. Payment of Registration Fee. Upon payment of the required registration fee and
submission of the required documents, the Register of Deeds will issue a new Owners Duplicate
Copy of the Transfer Certificate of Title or Condominium Certificate of Title which in no case shall
exceed 5 days from submission of the complete documents and payment of registration fee.
9. Tax Declaration. Once you secure Owners Duplicate Copy of the Transfer Certificate of
Title or Condominium Certificate of Title, proceed to the local assessors office to request for the
issuance of the Tax Declaration in your name. The following documents are required for the
issuance of the Tax Declaration on your land and improvement:
Photocopy of the Deed of Absolute Sale
Photocopy of the Transfer Certificate of Title or the Condominium Certificate of
Title
Photocopy of the CAR
Photocopy of the Transfer Tax Receipt
Photocopy of the latest Tax Receipt or Tax Clearance
In other local assessors office such as in Makati City, the following are also required:
Subdivision Plan if lot is subdivided
Colored Photos of house, lot or condominium unit
Thats all for now. Hope youve learned valuable insights. For any questions or concerns, we
would be glad to hear from you. You may reach us through our mobile number (+63)917-555-8222, or direct line (02)442-6362, or email us at inquiry@primephilippines.com.

Sources:
http://www.luthersem.edu/stewardship/resource_detail.aspx?resource_id=1217

http://nreaphilippines.com/question-on-philippine-real-estate/land-registration-procedure/--EXPAT

Steps in Buying Real Estate in the Philippines


by: ROBERT l. WOLFF

Buying real estate in the Philippines can be fraught with problems, resulting in long delays in the title to realproperty being transferred to
the new owner. Some of the steps for buying real estate in the Philippines are similar to other countries, some are unique to the
Philippines. One way to avoid many of the problems associated with buying real estate in the Philippines is to understand the rules for
buying and selling real estate in the Philippines.

Generally, the purchase of real estate in the Philippines is a four step process that typically begins with a Reservation Agreement,
followed by Contract to Sell, then Deed of Absolute Sale and it ends with the Certificate of Title. TheReservation Agreement, which is an
option to buy,pertains to the agreement that focuses on the terms and conditions for the purchase of the property and the payment of
areservation fee. If a Contract to Sell is not used to bind the real property, the Reservation Agreement together an earnest money
deposit is the first step to bind the seller to sell the real property and often stipulates that when the buyer does not proceed to purchase
the property, the reservationfee will be forfeited.

A Reservation Agreement is typically used where the buyer needs time to analyze the real property, while retaining the right to purchase
the real property pursuant to stipulated terms of the agreement. Where the buyer is ready to buy, doing a Reservation Agreement is
often skipped and a Contract to Sell is done that set forths the terms of the sale.

The Contract to Sell - pertains to the entire agreement to sell, setting forth the purchase price of the real property, stipulating the terms
and conditions of payment and the description of the real property purchased. The Contact to Sell serves as the legal document that
binds the seller and buyer to the terms of purchase. It forms the basis for the execution the Deed of Absolute Sale when all conditions in
the Contract to Sell are complied with.

The Deed of Absolute Sale is the document that is filed with the Register of Deeds (ROD) for the transfer of ownership. The Deed of
Absolute Sale will be the basis for the issuance of the Certificate of Title (CT) in case of purchase of a real estate lot, house, etc. or
Condominium Certificate of Title (CCT) in case of a Condominium unit purchase, to transfer the real property into the name of the buyer.

The Certificate of Title is the final document in the process of purchasing real estate, which is issued in duplicate. One duplicate copy
goes to the new owner, the other duplicate is kept by the ROD. This is an important document, as it represents the buyers ownership of
the real property. It needs to be kept in a safe place. Do not lose your CT or CCT. If you want to sell the property, and you have lost your
CT or CCT, you will have to go to Court to obtain a Court Order which will increase the expense of selling the real property and a delay
in the ability to transfer title.

Most of the problems in acquiring real estate are incurred after the Deed of Absolute Sale has been filed. Most buyers believe
incorrectly that when the Deed of Absolute Sale is filed with the Register of Deeds, this is the final document to transfer title to the
real property to them. It is not.

There are a number of approvals that need to be obtained before the Certificate of Title can be issued. First, (watch out for this one) if
the owner has lost their duplicate Certificate of Title, a court proceeding has to be brought that approves the transfer of the
real property to the new buyer. Secondly, the capital gains tax has to be paid, and third, depending where the real propertyis located,
there are several other clearances and fees that have to be obtained or paid before the Certificate of Title can be issued.

If this process for filing a Deed of Absolute Sale is understood and followed through on, the Certificate of Title should be issued in a
matter of a few months. If not, no Certificate of Title will be issued until the requirements for issuing the Certificate of Title are met.
Often, when there is a long delay in obtaining the Certificate of Title, someone dropped the ball and did not complete all the necessary
steps to transfer title to the real property. When buying real estate, you should seek the help of people that know what they are doing.
The right person can make the process go much easier and faster.

How to Register a Newly Bought


Property in the Philippines
posted in Business, Philippines, Real Estate by Memorazon
It is very common for an OFW to buy a new property in the Philippines after a few years of earning a
better income from abroad.
We didnt immediately realized that it is easier to find a property that you wants to own than to get it
registered in your name after paying a large sum of money as it does not ends there. Most of us are not

familiar with the whole process of registering a property to the name of the new Owner. Here are a few
steps that may help you:
STEP 1 -DEED OF ABSOLUTE SALE
Anyone between the Seller and Buyer (or their Lawyers, if any) may prepare the Deed of Sale as long as it
has been executed before and Notarized by a Notary Public.
NOTES:
a.) If you are a Buyer, let me remind you that before giving all the money to the Seller be sure that you
got from him some important documents that you would need in the registration of the property under
your name such as a copy of his validID, a recent CTC and TIN or a copy of TIN Car original copy of all
Real Property Tax Receipts in his possession.
b.) If the Seller is a Corporation, you would need from them a notarized secretarys certificates containing
the resolution of their board of directors approving the sale and a certificate from the Securities and
Exchange Commission (SEC) stating that its articles of incorporation have been registered with the SEC.
STEP 2 -CITY ASSESSORS OFFICE (Located in the City Hall or Municipal Hall)
Secure the following:
a.) Certified True Copy of Tax Declaration (House and Lot)
b.) Certificate of No Improvement (If property is vacant lot)
c.) Two Original Copies 1 for BIR and 1 for Registry of Deeds
STEP 3 LAND TAX DIVISION OF CITY TREASURERS OFFICE (Located in the City Hall or
Municipal Hall)
Secure the following:
a.) Tax Clearance
Note: In order to obtain a Tax Clearance, the Seller must pay first all arrears on Property Tax (if any and
must be updated as of document of sale). Therefore, it is important that you got hold of the original of
the official receipts evidencing payment by seller of realty taxes of the current and preceding years,
before you gave him the full payment of the sale.
We had an experience that the Seller was able to gave us the Property Tax Receipt of the current year
however, upon application of Tax Clearance it was discovered that the previous five years was not paid!
STEP 4 BUREAU OF INTERNAL REVENUE
Submit the following:

Tax identification number (TIN) of seller and buyer;

Notarized deed of absolute sale/document of transfer, but only photocopied document shall be
retained by the BIR;

Certified true copy of the latest tax declaration issued by the City Assessors Office for the land
and improvement applicable to the taxable transaction;

Owners copy (for presentation purposes only) and photocopy (for authentication) of the Original
Certificate of Title (OCT), or the certified true copy of the Transfer Certificate of Title (TCT);

Sworn declaration of with Improvement by at least one (1) of the transferees, or certificate of
with Improvement issued by the City Assessors Office.
You (and/or the Seller, depends on the agreement) have to pay the following:
a.) Capital Gains Tax (6% for individual seller) or Witholding Tax (7.5% if seller is a corporation) it is the
Sellers responsibility to pay the Capital Gains Tax (CGT) or Witholding Tax unless the Buyer agrees
otherwise
b.) Documentary Stamps Tax (1.5% of the selling price or zonal value or fair market value, which ever is
higher) Payment for DST is responsibility of the Buyer
You shall received the following:

The Certificate Authorizing Registration

The Original copy of the Deed of Absolute Sale stamped received by the BIR

Original Copies of the BIR Return Forms 1706 (CGT) and 2000 (DST) stamped received by the BIR
Important Notes:
i.) Capital Gains Tax and Documentary Tax shall be computed based on Selling Price (per Deed of Sale), or
Market Value of Tax Declaration, or BIR Zonal Value, whichever is higher.
ii.) If the Buyer agrees to pay the Capital Gains Tax, it very important that you get the Sellers Tax
Identification Number (TIN) and a copy of his ID
iii.) Forms for payment of Capital Gains Tax can be secured from the BIR or may be downloaded from the
BIR website http://www.bir.gov.ph
iv.) Payment for Capital Gains Tax and Documentary Stamps can only be paid at the BIR Regional Office
or BIR authorized banks where the property is located. It can be paid either in cash or managers check.
v.) Capital Gains Tax shall be filed and paid to the BIR within thirty days from the date of sale, otherwise
there will be interest and penalty.
vi.) Documentary Stamps Tax shall be paid on or before the 5th day of succeeding month from the date of
sale.
STEP 5 MUNICIPAL TREASURERS OFFICE (Located in the City Hall or Municipal Hall)
Pay the following:

a.) Transfer Tax is computed as 1/2 of 1% (0.5%) of the Selling Price or Zonal Value or Fair Market Value of
Tax Declaration, whichever is higher. Payment of Transfer Tax is responsibility of the Buyer
NOTES:
i.) The transfer tax must be paid at the CTO not later than 60 days from the date of execution of the Deed
of Absolute Sale or the notarization date thereof, whichever is earlier.
ii.) Prepare the following requirements:

Certificate Authorizing Registration from the Bureau of Internal Revenue

Tax clearance certificate from the Treasurers Office

Official receipt of the Bureau of Internal Revenue (for documentary stamp tax)

Photocopy of Deed of Sale

Photocopy of Transfer Certificate of Title (TCT)

Photocopy of Tax Declaration


STEP 5 REGISTRY OF DEEDS (Located in the City Hall or Municipal Hall)
Pay the following:
a.) Registration Fee 0.25% of the selling price, or zonal value or fair market value, which ever is higher.
Payment of Registration Fee is responsibility of the Buyer
Apply for registration and submit the following documents:

Copy of deed of absolute sale;

Official receipt evidencing payment of transfer tax;

Certificate Authorizing Registration from the BIR (CAR) including official receipts for payment of
DST and CGT;

Real property tax clearance from the City Treasurers Office;

Original copy of owners duplicate of TCT (in the name of the seller);

Original or certified true copy of the latest tax declaration;


If Seller is a corporation, include the following:

Notarized secretarys certificate containing resolution of the board of directors of the seller
approving the sale;

Notarized secretarys certificate containing resolution of the board of directors of the buyer
approving the sale;

Articles of incorporation of the buyer and by-laws; and

Certificate from the SEC that the articles of incorporation of the buyer have been registered.
NOTE:
A new Certificate of Title under the New Owners Name will be issued by Registry of Deeds. Be sure to
double check the spelling of names and other information in the new TCT before receiving the new TCT.
STEP 6 MUNICIPAL ASSESSORS OFFICE (Located in the City Hall or Municipal Hall)
Secure the following:
a.) New Tax Declaration
NOTES:
i.) Prepare the following requirements:

Photocopy of notarized deed of sale

Copy of latest tax declaration (in the name of seller)

Tax clearance certificate of real property taxes from the CTO

Certificate authorizing registration from the BIR

Photocopy of official receipt of transfer tax payment (original copy to be presented)

The transfer certificate of title (TCT) issued by the RD (in the name of the buyer)

What You Need to Know About Real


Property Tax (RPT)
Real Property Tax (RPT) is a tax that owners of real property need to pay every year so that the local
government unit (LGU) will not auction off their property.
There are some investors who buy tax-delinquent real properties and participate in auctions held by LGUs,
and this is one of the ways one can buy properties at low prices. We also publish schedules and lists of taxdelinquent real properties of different cities they are classified under the category tax-delinquent
properties.

Table of Contents [hide]


1 What is Real Property Tax?
2 Who should pay the RPT
3 Where to pay
4 When to pay
5 How do you compute real property tax (RPT)?
6 What are the RPT rates?
6.1 Maximum RPT rates:
6.2 Special Education Fund (SEF) 1%
6.3 Ad Valorem Tax on Idle Lands 5%
7 How do you compute the Assessed Value?
8 Maximum Assessment Level rates
9 Sample Computation
10 Special Classes of Real Property
10.1 What are the assessment levels for special classes of real property?
11 What are Idle Lands?

o
o
o

In the past, we have discussed what happens during these LGU auctions. You may want to read them should
you be interested in this type of investment:

Marikina Public Auction of Tax-Delinquent Real Properties (one of our very first posts)
Four tips for investors who plan to invest in tax-delinquent real properties in

Quezon City
9 lessons learned from the real property tax foreclosure auction sale in Quezon

City
In this post, I will discuss the legal bases for RPT and how to compute it.

What is Real Property Tax?


Real Property Tax is the tax on real property imposed by the Local Government Unit (LGU). The legal basis
is Title II of the Local Government Code (LGC),Republic Act (R.A.) no. 7160. The implementing rules and
regulations of R. A. 7160 can be found here.
The RPT for any year shall accrue on the first day of January and from that date it shall constitute a lien on
the property which shall be superior to any other lien, mortgage, or encumbrance of any kind whatever, and
shall be extinguished only upon payment of the delinquent tax.
If you have prior years delinquencies, interests, and penalties, your RPT payment shall first be applied to
them. Once they are settled, your tax payment may be credited for the current period.

Who should pay the RPT


The owner or administrator of the property

Where to pay
At the City or municipal treasurers office

When to pay
If you choose to pay for one whole year, the payment is due on or before January 31. If the basic RPT and
the additional tax accruing to the Special Education Fund (SEF) are paid in advance, the sanggunian
concerned may grant a discount not exceeding twenty percent (20%) of the annual tax due. Jay wrote about
the discount on RPT recently in his post How To Get A 20% Discount on Real Property Taxes.
If you choose to pay in installments, the four quarterly installments shall be due on or before the last day of
each quarter, namely: March 31, June 30, September 30, and December 31.
In case of failure to pay the basic RPT and other taxes when due, the interest at the rate of two percent (2%)
per month shall be imposed on the unpaid amount, until fully paid. The maximum number of months is
thirty-six (36) months, so effectively, the maximum interest rate is seventy-two percent (72%).

How do you compute real property tax (RPT)?


RPT = RPT Rate x Assessed Value

What are the RPT rates?


Maximum RPT rates:
Coverage
Cities and Municipalities within Metro
Manila

RPT rate

2%

Provinces
1%

Special Education Fund (SEF) 1%


In addition to the basic RPT, the LGUs may levy and collect an annual tax of one percent (1%) which shall
accrued exclusively to the Special Education Fund (SEF).

Ad Valorem Tax on Idle Lands 5%


In addition to the basic RPT, the LGUs may collect a maximum idle land tax is 5% assessed value of the
property.

How do you compute the Assessed Value?


Assessed Value = Fair Market Value x Assessment Level

Sec. 199 (l) of the LGC defines Fair Market Value as the price at which a property may be sold by a seller
who is not compelled to sell and bought by a buyer who is not compelled to buy. In practice, however, the
Fair Market Value is based on the assessment of the municipal or city assessor as written in the Tax
Declaration.
The Assessment Level shall be fixed through ordinances of the Sangguniang Panlalawigan, Sangguniang
Panglungsod, or the Sangguniang Pambayan of the municipality within the Metro Manila area. To get this
data, look for the tax Ordinance of the city or municipality where your property is located.

Maximum Assessment Level rates


I. Land

Class

Assessment Level

Residential
20%
Timberland
20%
Agricultural
40%
Commercial
50%
Industrial
50%
Mineral
50%

II. Building and Other Structures


1.

Residential
FMV Over

But Not Over

Assessment Level

0.00

175,000.00

0%

175,000.00

300,000.00

10%

300,000.00

500,000.00

20%

500,000.00

750,000.00

25%

750,000.00

1,000,000.00

30%

1,000,000.00

2,000,000.00

35%

2,000,000.00

5,000,000.00

40%

5,000,000.00

10,000,000.00

50%

10,000,000.00

60%

2. Agricultural

FMV Over

But Not Over

300,000.00

25%

300,000.00

500,000.00

30%

500,000.00

750,000.00

35%

750,000.00

1,000,000.00

40%

1,000,000.00

2,000,000.00

45%

2,000,000.00

50%

. Commercial/Industrial

Assessment Level

FMV Over

But Not Over

Assessment Level

300,000.00

30%

300,000.00

500,000.00

35%

500,000.00

750,000.00

40%

750,000.00

1,000,000.00

50%

1,000,000.00

2,000,000.00

60%

2,000,000.00

5,000,000.00

70%

5,000,000.00

10,000,000.00

75%

10,000,000.00

80%

4. Timberland

FMV Over

But Not Over

Assessment Level

300,000.00

45%

300,000.00

500,000.00

50%

500,000.00

750,000.00

55%

750,000.00

1,000,000.00

60%

1,000,000.00

2,000,000.00

65%

2,000,000.00

70%

II. Machineries

Class

Assessment Level

Agricultural
40%
Residential
50%
Commercial
80%
Industrial
80%

Sample Computation
Data:
Actual use of property: Residential
Location: City within Metro Manila
FMV per assessors officer (based on Tax Declaration):
Land P350,000
Improvement P350,000
Assessment Level for Land: 20%
Assessment Level for Improvement: 20%
Note: The assessment levels are fixed through ordinances of the Sangguniang Panlalawigan, Sangguniang
Panglungsod, or the Sangguniang Pambayan of the municipality within the Metro Manila area. We will be
using the maximum rates for sample computation purposes.
Computation
Assessed Value of Land = P350,000 x 20% = P70,000
Assessed Value of Improvement = P350,000 x 20% = P70,000
Basic Real Property Tax for Land and Improvement
= (P70,000 + P70,000) x 2% = P2,800

Special Education Fund (SEF) for Land and Improvement =(P70,000 + P70,000) x 1% = P1,400

Special Classes of Real Property


All lands, buildings, and other improvements thereon actually, directly and exclusively used for hospitals,
cultural, or scientific purposes, and those owned and used by local water districts, and government-owned or
controlled corporations rendering essential public services in the supply and distribution of water and/or
generation and transmission of electric power

What are the assessment levels for special classes of real


property?
Actual Use

Assessment
Level

Cultural
15%
Scientific
15%
Hospital
15%
Local water districts
10%
Government-owned or controlled
corporations engaged in the supply and
distribution of water and/or generation
and transmission of electric power

10%

What are Idle Lands?


1. Agricultural lands more than one (1) hectare in area, suitable for cultivation, dairying, inland fishery, and
other agricultural uses, of which remain uncultivated or unimproved.

Exceptions

i.

Lands planted to permanent or perennial crops with at least 50 trees to a hectare; and

ii.

Lands used for grazing purposes (Note: put goats or cows on your property).

2. Lands Other than Agricultural, located in a city or municipality, more than 1,000 sqm. in area, of
which remain unutilized or unimproved
3. Residential lots in subdivisions, regardless of land area
~~~

Aside from real property owners, I hope this also helps those studying for the 2013 real estate brokers exam.
Do you have any questions, comments or reactions? Just let me know by leaving a comment below, thanks!
~~~

Cherry Vi M. Saldua-Castillo
Real Estate Broker, Lawyer, and CPA
PRC Real Estate Broker License No. 3187
PRC CPA License No. 0102054
Roll of Attorneys No. 55239
Text by Jay Castillo and Cherry Castillo. Copyright 2008 2013 All rights reserved.
Full disclosure: Nothing to disclose.
Image courtesy: of renjith krishnan / FreeDigitalPhotos

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