Taxes To Be Paid On Real Estate Transactions in the Philippines

Just like taxes charged on top of the price tags for products we pluck out of grocery shelves, taxes are also imposed on transactions on real properties in the Philippines.

This concept should always be kept in mind. By doing so, every time we negotiate the price of say a condo unit or a vacant lot, we allocate payment for taxes on top of the property price.

Let us examine these fees and better understand why we need to pay them.

Capital Gains Tax

Capital gains tax is equivalent to 6% of the residence’s sales price, zonal value, or fair market value, whichever is highest. Usually, but not always, this is paid by the seller. To make computation simple, combine this rate with the price tag and understood to be shouldered by the buyer. The buyer must settle this within 30 days after each transaction.

Transfer Tax

This is equivalent to 0.5% to 0.75% of the property sale price, zonal or fair market value, whichever is highest.

Documentary Stamp Tax

This is equivalent to 1.5% of the property sale price, zonal or fair market value, whichever is highest.

Title Registration Fee

This varies according to a published registration fee table; generally around 0.25% of the sales price. Registration fees are paid to the Register of Deeds or Land Registration Authority where the real property is located.

Conclusion

These taxes will vary based on the property price. And the price will also vary depending on the location of property, size, condition, and other factors. Settling these taxes are prerequisite with the formality of transaction and failure to do so would result in penalty and surcharges.

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