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, transactions on real properties in the Philippines do not only involve the property value; there are also several taxes that need to be settled.

This should be kept in mind so that every time we negotiate price of say a condo unit or a vacant lot, you not only prepare for the value of the property, but also allocate for taxes payable thereafter.

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

1. Capital Gains Tax
This 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, this rate can also be incorporated into the price tag which is understood that it is shouldered by the buyer. This and must be paid within 30 days after each transaction.

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

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

4. 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, obviously, based on the property price. And price will also vary depending on 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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Pros and Cons of Living Near The Airport

You might have found a nice looking house and lot unit, with garden and car park and offered at rate that’s slightly lower than market rate. The catch is that it is located at the airport.

Protagonists might convince you to take the offer, as it could just be once in a blue moon and it offers accessibility not only to your flights, but also to facilities nearby. Skeptics, on the other hand, could easily disagree as they point to health and pollution issues that you’ll be exposed to.

If the property is offered to you, would you take it?

Price and certain accessibility pulls you to an affirmative, but health and hazard issues could sway you to the other side. Here are some of the advantages and disadvantages that might help you decide to give a property near the airport a go or give it a pass.

Advantages of living near the airport

1. Benefits airline-related workers
From cargo worker to baggage handler and from check in counter to commercial pilot, living near the airport makes a lot of sense, putting you closer to workplace and minimize effort commuting from home to the job site.

2. Great for travelers
Frequent flyers or business travelers might find it more practical to live near the airport instead of commuting further downtown, where they’ll spend more on transport, not to mention potential risk of getting left behind by their flights in case they get stuck in traffic.

3. Accessible mode of transportation
Airports are often given priority in terms of ease of travel by tourists and locals returning to the city. Such benefit also applies to those who live near the airport as expressways or main access roads are close to their residential units. Just recently, NAIA Expressway was inaugurated for public use.

4. Close to facilities and commercial establishments
As airports upgrade to suit the needs of travelers, they also provide amenities to complement the service. For example, there are restaurants (some restricted though) inside the airport, shopping malls such as Mall of Asia and you’ll likely find vacant taxicabs within the area.

5. Property value could appreciate in the short term
If there are expansions or refurbishments that are in the pipeline, properties within the airport vicinity could increase in value especially if your neighborhood is planned to become a future site of a commercial area.

Why living near the airport is a bad idea

1. Aircraft noise can impact your lifestyle
Aircraft noise is an especially noticeable hazard especially for newcomers in the neighborhood. Such disturbance can affect your sleep. While the public generally rejoices over announcement of additional flights or destinations, your sleeping patterns could only get worse with more flights taking off or landing at the airport.

2. Air pollution could have impact in your respiratory system
Living near the airport exposes you and your family with air pollution as emission from aircraft and ground vehicles can contribute to deterioration of air quality and cause breathing problems. The most important pollutants are usually nitrogen dioxide (NO2) and small particulates (PM10, PM2.5).

3. Expensive price range
Given its access to the airport, properties nearby could carry an expensive price tag.

Conclusion
Living near airports presents set of pros and cons, mostly leaning towards convenience and health issues. Although these issues can be a common factor, not all airports are built the same. Besides taking these pros and cons by heart, have a closer inspection at your desired airport property.

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How Foreigners Can Buy A House in the Philippines

More than just a temporary stop over for foreign tourists who got fascinated by its fine beaches, more foreigners have decided to settle down in the Philippines.

There are plenty of perks for a foreigner to live in the Philippines. For citizens who wish to trade plowing snow with year-long sunshine, you got it here. Cost of living in the Philippines is ranked 92nd among 115 countries, and perhaps the most valuable asset are the friendly Filipino locals.

Expats can live comfortably at $1,000 a month, including housing costs, food, basic healthcare and leisure activities. That’s huge savings compared back home, and for retirees it’s a great deal even more.

When it comes to property ownership, foreigners are prohibited from owning land in the Philippines, though they can legally own a residence.

Here are some of the options foreigners who wish to buy residence in the Philippines.

Buy a condominium unit
One of the easiest option is to purchase a condominium, a hybrid type of residential unit that falls outside traditional structures that sit on a lot no foreigner is able to own under current Philippine constitution. With a condo, you only own the condo unit itself – not the land beneath it. The Philippine Condominium Act specifies that foreigners can own condominium units, as long as 60% of the units in the building are owned by Filipinos, a very likely scenario with how Filipinos have adopted this modern way of living.

Buy a house and lease it
By law, foreigners can legally own houses and other types of structures, but they are prohibited from owning the land on which it sits. To work around this, you can buy a freestanding house, but lease the property. Under the Investor’s Lease Act of the Philippines, a foreign national can enter into a lease agreement with a Filipino landowner for a long-term lease with an initial period of up to 50 years, with a one-time option to renew for 25 years.

Marry a Filipino citizen
Foreigners who marry Filipino citizens can buy property in their spouse’s name. Although the foreigner’s name won’t be on the title despite financing the purchase, his or her name can be included in the contract to buy the property. In case the couple legally separate (no divorce law exists in the Philippines), or the Filipino spouse passes away, the land can’t be transferred to the foreign wife or husband since he or she is still prohibited from owning land the Philippines, but will be granted a reasonable amount of time to sell the property and collect the proceeds; otherwise, the property will pass to on to the Filipino spouse’s heirs and/or relatives.

Establish a company and buy property under its name
Corporations with at least 60% Filipino ownership can own land in the Philippines. But before they are permitted to make property purchases, eligible corporations must be registered with government Board of Investment for permission to buy, sell or act as an intermediary in a real estate transaction.

There are also area restrictions that apply to foreigners who buy house in the Philippines. The largest piece of residential land one can own – either with a Filipino spouse or through a corporation – is 1,000 square meters of urban land (0.2471 acres), or one hectare of rural land (2.47 acres).

While there are certain restrictions on foreigners owning residential units in the Philippines, it’s not impossible for them to own one. And that is good news to aspiring foreigners who wish to settle down in the Philippines and enjoy what the country has to offer.

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3 Top Things A Home Buyer Should Do If Seller Declines Offer

Buying your dream home can be considered a major life milestone. After years living with parents, renting out when you started working — and accumulating savings, building credit reputation and planning on housing loans in the process — the next logical move is to get your own house as you plan to settle down and start a family.

Once in awhile, you find offers of new housing developments but choosing the right one involves several factors such as accessibility, layout, facilities and price. But the more attractive ones are those whose owners are willing to give up for certain reasons, mostly financial. Yet, while these offers might be easier to snag at a price lower than the market, it’s not a homerun when you start negotiating.

So let’s say you offered a decent, not extravagant, amount for a house you’d consider your dream home. However, the owner balked at the offer and seemed to walk away from the negotiating table. Should you bring a sweetener to the offer, threaten to walk away or do something else?

1. Provide a counter-offer
As an interested party, you are in a position to chase a coveted property. If your offer was indeed lower than the advertised price, it is normal for the owner to react with a “no deal” especially if you have shown significant interest to acquire the property. For the owner, realizing there’s a reason it is your dream house brings confidence he or she might find another buyer with better offer.

So before someone snags away your dream house via a better offer, you should at least consider making an offer. An owner may likely entertain you more than a newer bidder if you have established a cordial engagement, clearly stating your desire to own the house, and an offer that’s not too shabby.

If you received an unsolicited offer, the owner might likely agree to your new offer, giving himself confidence that as the new owner of the house, you’ll provide the necessary effort for its upkeep.

If you approached the owner making the offer, it requires more effort on your part to upgrade your bid; the owner might not even be willing to give it up except only on certain terms — likely an offer he or she cannot refuse.

Even when the house is sold, the owner might still have attachment to it, considering the good memories he or she has had within that dwelling place.

2. Understand owner’s perspective
As mentioned, there are factors that keep the owner from accepting an initial offer from an interested buyer. It could be that the owner isn’t really keen on selling the house, but was only approached for exploratory purposes. It may be the value of house is too big compared with the offer, not to mention the sentimental value and amount of effort and financial investment he or she had to exert to build the house. Or the owner has limited options at the moment once the house is sold — no idea where to move, property market is too expensive to acquire a new house, and so on.

Imagine if you were in the shoe of the owner, would you accept the offer you actually made? Would you leave the house where your children were raised and was a symbol of family stability? Will you be able to find a house of similar value (location, layout, equity value, etc) should you still be active in property investment?

Needless to say, it’s always beyond the money factors owners and buyers have to understand when dealing a second-hand residential unit.

3. Learn to know when to get off negotiating table
If you realize both parties have been in a deadlock for sometime and unable, or unwilling, to make a compromise to get the deal done, it might be time to move on. Sometimes, owners are not yet prepared to part with their property, or buyers don’t have pockets deep enough to make bigger bids.

When you feel you have done what’s necessary and exhausted all efforts, yet no offer has been accepted, it’s best to withdraw the offer and explore other options. You might realize later that if you have not backed out, you’ve gone beyond your means in your effort to acquire the property, while ignoring other properties available at less amount of investment.

Conclusion

As potential transactions involve huge amount of financial commitment/windfall, negotiating with property owners is a long process and it is never easy especially when they have already decided on a price and is firm with it or even tell you they changed their mind and the property is off the market.

As a buyer, you may be lucky if an initial offer is accepted. But if not, learn to know your limits — what to give up and what you’ll get in return. Research thoroughly all the factors, including taxation, cost of moving in or accessibility to work and school, which you may have overlooked as you gaze on the property itself for too long.

After all, buying your own home is a huge milestone and making a decision should not done in haste.

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Malaysian Tycoon Pledge 2,000 Houses For Poor Filipinos

One of Malaysia’s richest businessman has promised to build 2,000 homes for poor Filipinos in partnership with Gawad Kalinga Community Development Foundation.

Vincent Tan, founder of Berjaya Corporation Berhad, one of Malaysia’s largest conglomerates, made the pledge during the opening of the Berjaya Garden Restaurant and Culinary Centre in Angat, Bulacan last month.

Apart from his stake on property investment, gambling, hotels & resorts, telecoms, and food, Tan’s company is also the Malaysian franchise holder of Kenny Rogers Roasters, Starbucks, and Jollibean.

Considered by some as the ‘first farm village university in Asia’, the BGRCC is the primary food center of GK Enchanted Farm, catering to 200,000 partners, entrepreneurs, and students who visit the facility each year.

This is the second time the Malaysian tycoon has donated houses to poor Filipinos, pledging 3,000 houses at a cost of P300 million following the devastating Typhoon Sendong and other natural calamities in 2012. Of this some 1,000 houses have been constructed to date.

“We’re very pleased to help the Philippines by doing business here. Like what I always say, the rich people need the poor to support their businesses and I think the rich must give back as much as possible,” Tan said.

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List of Subdivisions, Villages Under West Valley Fault

It is a well-chronicled fact that the Philippines lies on what is called the Pacific Ring of Fire, a geologic locations where most earthquakes on Earth take place. However, less is known about which specific areas lie directly along the West Valley Fault and East Valley Fault in Greater Metro Manila.

With the intention of making people aware rather than drive scared folks out of their minds, Rappler compiled this list along with map locations on these subdivisions and villages the fault line is defined.

Studies show that residential buildings will suffer the most damage during a 7.2-magnitude earthquake because many of them do not follow building standards. So if you happen to live within the defined areas listed below, take extra precaution to ensure safety in case the so-called the Big One will ever happen.

“Everyone must learn from the recent effects of the magnitude 6.7 earthquake in Surigao del Norte. If a similar event happens in a highly urbanized area, the effects can be more devastating,” Phivolcs director Renato Solidum warned.

Rizal (Rodriguez)

  • Amity Ville
  • Christine Ville

Marikina

  • Loyola Garden Village
  • Loyola Subdivision
  • Monte Vista Village
  • Industrial Valley Subdivision
  • Cinco Hermanos Subdivision
  • Wood Crest Subdivision

Quezon City

  • Sunnyside Heights Subdivision
  • Doña Anna Village
  • Fil-Heights
  • Filinvest Homes II and Villa Amor Uno
  • Northview Subd
  • Loyola Grand Villas
  • White Plains Subdivision
  • Queensville Court
  • Greenmeadows
  • Blue Ridge B

Pasig

  • Valle Verde 6
  • Valle Verde 5
  • Valle Verde
  • Valle Verde 3
  • Valle Verde 1
  • Kawilihan Village

Makati

  • East Rembo
  • Pembo
  • Rizal

Taguig

  • Pinagsama
  • Pinagsama Phase II
  • Pan-Am Village
  • North Signal Village
  • Central Signal Village
  • South Signal Village
  • Maharlika Village
  • Camp Bagong Diwa

Parañaque

  • Posadas Village

Muntinlupa

  • Solid Mills Village
  • Embassy Village
  • Liberty Homes
  • Carmina Compounds
  • L&B Subdivision and Compound
  • UP Side Subdivision
  • Country Homes Alabang
  • Planas Ville
  • Camella Homes Alabang 3
  • Country Homes Subd and Jose Marey Subdivision
  • Camella Homes
  • Susana Heights Village 1
  • Susana Heights Subd Phase I
  • St Anne Homes
  • Real Ville Subdivision

Laguna

  • Adelina 1A Subdivision
  • GSIS Village
  • Elnor Homes
  • Sampaguita Village
  • United San Pedro Subdivision

Cavite

  • Wedgewoods Subdivision

Related: Guide to Property Investments in Earthquake Prone Areas in the Philippines

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Top Reasons Why You Should Convert Your Paper Titles Into E-Titles

Land titling can easily be faked, get damaged by act of God, or used to deceive prospective buyers when presented to people with less familiarity with these documents. So if you are a lot owner precariously holding that fragile paper title, you must be feeling anxious you’ll lose the copy you only have.

To address these concerns, the Land Registration Authority, in a real estate summit hosted by the the Organization of Property Stakeholders Inc. has aimed to upgrade to E-Titles which are basically digitized copy of all valid land titles.

The computerization project aims to:

  1. Maintain on-line information on titles that is current, complete and accurate.
  2. Maintain the security and integrity of records by safeguarding these from tampering or destruction and deter substitution or insertion of questionable data, in paper or digital form; and
  3. Provide a system of timely detection and identification of fake land titles which will assist in the identification of persons responsible therefore.

We see the idea as a much-needed upgrade to the existing (and outdated) system of land titling in the Philippines.

Here are some of the benefits why your land title should be converted to E-Titles.

1) You’ll be more secured from various forms of real estate fraud or potentially scam transaction.
Those who are not well-versed in distinguishing between a bogus and an authentic land title, especially the elderly owners who cling on what could be their most precious asset to pass on to the next generation, could be among the most vulnerable and likely to become victims of property scams. That’s because it’s now very easy to copy a legitimate document, and show to potential buyers, sending multiple cases in court once disputes occur.

An E-Title will eliminate such possibility as it’s virtually stored in a Registry of Deeds vault and can only be accessed within 154 Land Registration Authority office kiosks. Extra annotations that comes on the paper title will be carried over to the new E-Title, such as those with pending court cases. This means a potential buyer will immediately know whether a tract of land on offer for sale is, in fact, subject of a litigation.

How to check if your land title is authentic or fake

2) Processing of property transactions will be quicker.
Imagine taking the old method of retrieving information about titles: spend days or weeks following up on application, processing, verification and release of documents. With the E-Titles, TOPS President Michael Jansen Abella said procurement and verification of certified true copies of the land titles would be a lot easier. This is especially the case when retrieving the history of ownership of the property.

He emphasized that before acquiring a property, buyers have to ensure there are no other claimants. Computerization of the system will also make it easier to generate certified true copies of land titles, especially those that didn’t change hands for over a century.

3) Processing of home mortgage will become faster.
Not all of Land Registration Authority kiosks are hosted by major banks in the Philippines, where many of home mortgage loans are obtained. So with the upgrade in system, TOPS-LRA Summit Chairman Atty. Rodolfo Fernandez says there will be reduction in waiting time:

Verification of authenticity of land title will only take minutes or hours instead of several days.
Visit to the Registry of Deeds site where paper title is kept will become unnecessary.

4) E-Titles will resolve the complex process of replacing lost or destroyed titles.
Although there is a standard process in reconstituting paper titles lost or destroyed by force majeure as determined by the LRA, there are multiple steps that need to be followed as described in the following charts.

administrative-reconstitution-title
Administrative Reconstitution
(Source: ombudsman.gov.ph)

judicial-reconstitution-title
Judicial Reconstitution
(Source: ombudsman.gov.ph)

On the other hand, with E-Title, the process requires much fewer steps:

5) The program helps government processes become more efficient
Besides cutting time and bureaucratic red tape, adopting the new system will dispel the notion that transacting with the government is a tedious and long process.

The new E-title option for property owners provides them with peace of mind, and helps create a new perception that the government is moving forward from slow deliverer to a more efficient provider of service to all taxpayers.

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For Rush Sale: House and Lot in Cabantian, Davao City

RUSH SALE!  

HOUSE AND LOT located at DecaHomes, Cabantian, Davao City. It’ already renovated and ready for accupancy.

Considering the rapid development in the Cabantian area with the opening of Gaisano Mall soon (just a few minutes ride), and the main road widening, this a good investment in a strategic place to live with your family.  

Location: Blk 2 Lot 41 DecaHomes, Cabantian Davao City
Price: 2.5 Million.
Rooms : 3 BR and 2CR
Area: 81 Sqm
Special Features: High Ceiling (good ventilation), Modern Type, Garage, Wide road, All rooms have Sliding Windows, Back yard with beautiful view of nature.

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For Rush Sale: House and Lot in Cabantian, Davao City

RUSH SALE!  

HOUSE AND LOT located at DecaHomes, Cabantian, Davao City. It’ already renovated and ready for accupancy.

Considering the rapid development in the Cabantian area with the opening of Gaisano Mall soon (just a few minutes ride), and the main road widening, this a good investment in a strategic place to live with your family.  

Location: Blk 2 Lot 39 DecaHomes, Cabantian Davao City
Price: 2.5 Million.
Rooms : 3 BR and 2CR
Area: 81 Sqm
Special Features: High Ceiling (good ventilation), Modern Type, Garage, Wide road, All rooms have Sliding Windows, Back yard with beautiful view of nature. The place is cool enough that you won’t need AC!

Contact 09430001430 for more details.

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Price vs Location: How to Pick the Right Property

One of the oldest and most traditional ways to accumulate wealth and earn large profits is investing in property. Most entrepreneurs, amateur and top rankings can attest to that. The value of real estate increases proportionally to the rate of inflation. Real estate property is your hedge against inflation.

Determining how to make the best decision can be hard, the investment be based on price or/and location of the estate. Below is a comprehensive explanation to help you arrive at the best decision.

Prime Location
Your prime location changes depending on your investment plans. If you’re planning to rent your property, your property must be attractive for renters to keep showing up year after year. Renters are interested in a residential or condominium that have a store or business outlet where it’s near workplaces, trendy and convenient.

Decisions must be accurate and timely especially on how to make your property an affordable commodity in the future. Make decisions on how to make your investment profitable, quantify your goals by setting them as stages to accomplish, figure out how much you wanted to earn in a specific timeframe and aim to make the investment attractive to gain profit several years from now. Ask which locations are going to have the most business growth and which spots will continue to thrive. It should also be made clear if the property would be considered a prime location in the future.

Affordable Price
Real estate industry expands as the Business Process Outsourcing industry expands. Current best investment as of now is condominiums as your investment offers shelter, a very basic need. More so, if your investment gives you an early return of investment.

Investing in condominiums offer you affordability as you can start making rental income as early as two months after. There are condo units where you need to pay 20% equity or down payment before having access to the property. Nowadays, developers even less or zero down payment with consideration to monthly payment. At latest, owners and developers offer rent-to-own programs that would all mean less money for you to shell out now. After turn over of the unit, you can then start placing an ad and attracting potential renters. An early move-in date means early monthly cash flow.

You can also avail of a pre-selling term, which means the turnover date is not within this year but four to five years from now. Prices of condominiums appreciate about 7 to 8% annually. By the time the property is turned over to you, your property would have around 30-40% price appreciation.  And if you invest in luxury condos in prime areas, you can expect this amount to be significantly higher.

The potential profit in real estate is high. However it’s important to remember not to rush into a decision. Seek help or additional research that will help you arrive to the best decision.

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