Written by: Rita Magallona
Interested in buying or selling property in the Philippines? Any property sale – be it for a house, a condo, or an undeveloped lot – involves closing costs on top of the selling price. Are you aware of the taxes and fees that you would need to pay before the legal transfer of ownership of the property becomes final?
Costs of Buying Property in the Philippines
|Costs for Buyers
|Documentary stamp tax
|1.5% of the selling price, fair market value, or zonal value, whichever is higher
|Bureau of Internal Revenue (BIR)
|0.5% to 0.75% of the selling price, fair market value, or zonal value, whichever is higher
|Title registration fee
|A graduated table of fees based on 0.25% of the selling price or zonal value or fair market value, whichever is higher
|Land Registration Authority
|Incidental expenses (notarial fee, etc.)
Documentary Stamp Tax
Any document, instrument, contract, or other paper that signifies the “acceptance, assignment, sale or transfer of an obligation, right or property” requires the payment of a documentary stamp tax. The rate for the deed of sale of a property is 1.5% of the selling price, fair market value, or zonal value, whichever is higher.
Buying property means a transfer of ownership, which is taxable by the city or municipal government where the property is located. Each city or municipality has its own tax laws, so the rate could be anywhere from 0.50% to 0.75% of the selling price, fair market value, or zonal value, whichever is higher.
Title Registration Fee
This is the fee paid for the issuance of a new title in your name as the buyer. The registration fee is determined using a graduated table of fees based on the value of the consideration.
These include notarial services and miscellaneous expenses.
Costs of Selling Property in the Philippines
|Costs for Sellers
|Capital gains tax
|6% of the gross selling price, fair market value, or zonal value, whichever is higher
|5% to 10% of the gross selling price
|Real estate broker
|3% of the net price
|Incidental expenses (notarial fee, etc.)
If you are the seller, don’t think that you don’t have to pay anything while enjoying the profits of your sale. You will also need to pay for some closing costs as well. These are:
Capital Gains Tax
Capital gains tax is the tax imposed on how much you would profit from the sale of the property. The rate is 6% of the gross selling price, fair market value, or zonal value, whichever is higher. This should be a major factor in pricing your property so that you will still have a measure of profit after the sale. This is paid to the BIR.
This is strictly based on the agreement between you and your broker, if you have one, which is usually around 5-10% of the gross selling price. Of course, you can do your own selling and negotiations without a broker and save on the broker’s commission. But if you decide to use the services of a broker, you will need to factor in the commission when you set your selling price.
For new or preselling condos, the developer may assign an exclusive in-house broker to help process the transaction. The seller may need to pay an additional developer’s commission fee in this situation, which is normally at 3% of the net price.
Unpaid Real Property Tax
As the original owner of the property, it is your responsibility to pay for the annual real property tax (RPT) of the property before the transfer of ownership. In fact, for the property to be considered “clean” for selling, one of the qualifications is all RPTs should be paid up to date. RPTs are paid to the City/Municipality Treasurer’s Office.
Your real estate financial planning should factor in these additional expenses. When buying or selling property in the Philippines, it is best to be informed of all the requirements that you will need to fulfill to avoid any delays and inconveniences.
For more information on the best and latest property listings nationwide, visit Ohmyhome.com or download the official Ohmyhome app. Feel free to get in touch with an OMH property agent to get started.
Ohmyhome was launched in the Philippines in September 2020, following the company’s establishment of a tech team in the country in 2017. Ohmyhome was originally founded in 2016, and subsequently rose in Singapore as a leading PropTech solution and licensed real estate agency.
Ohmyhome expanded into the Philippines so that Filipino home seekers can have a real estate partner that they can trust to have their best interests at heart and can be relied upon to provide exceptional services throughout the entire property journey.
Featuring thousands of properties across many of the Philippines’ major real estate brands, Ohmyhome differs from other local platforms by going the extra mile and extensively helping buyers narrow down the choices and find the property that best suits their budgets, home needs, and lifestyle preferences.
The company’s Real Estate Agents not only help in the shortlisting of options but also provide professional services through the entire purchasing process. These include assistance in property inspections, negotiations, the finalization of the Conditions of Sale, deposit collection, the submission of property documents, as well as providing buyers regular updates.
Ohmyhome helps Filipinos find their dream homes, all while making sure each real estate transaction is complete and is an efficient and enjoyable experience.