Real estate taxes and fees in the Philippines

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When buying and selling real estate properties in the Philippines, the final purchase price is not the only relevant amount. Other taxes and fees charged on the transaction must be considered by both the buyer and seller because these costs affect the total transaction price.

In the Philippines, the following fees and taxes are charged on real estate transactions.

Although the costs are usually associated with the buyer or seller, some of these can actually be passed on to the other party subject to mutual agreement. The Sales Contract or the Deed of Sale, however, must explicitly mention the parties in charge of shouldering the costs in order to avoid problems in the future.

Real Estate Taxes and Fees in the Philippines

For the account of the Seller (to be paid by the Seller):

  • Capital Gains Tax: 6% of the Selling Price or Zonal Value or Fair Market Value, whichever is higher
  • Business Tax: if applicable, rate depends on local government unit where property is located

For the account of the Buyer (to be paid by the Buyer):

  • Documentary Stamps Tax: 1.5% of Selling Price or Zonal Value whichever is higher
  • Transfer Tax: rate depends on location of property (ranging from 0.25% to 0.75% of Selling Price or Zonal Value, whichever is higher)
  • Registration Fee: graduated rate based on Selling Price
  • Realty Taxes: for the remaining months of the year based on the date of full payment

In the case of Manny Pacquiao’s Forbes Park house, the relevant taxes and fees paid are shown in the table below.

The computation assumes that the actual purchase price was P388 million and this Selling Price (SP) was the highest value compared to the Zonal Value or Fair Market Value of the property.

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It also assumes that there were no business taxes or realty taxes paid, that the registration fee was negligible, and that the transfer tax rate was 0.75%.

Manny Pacquiao’s P388 million Forbes Park house

  Paid by Rate Amount Paid
Capital Gains Tax (CGT) Seller 6% of SP P23,280,000.00
Documentary Stamps Tax (DST) Buyer 1.5% of SP P5,820,000.00
Transfer Tax Buyer 0.75% of SP P2,910,000.00

Assuming the above assumptions are correct, the purchase of the Forbes Park property resulted to the following payment of taxes and fees:

  • The seller (rumored to be Roque Tordesillas of Marsh Philippines) paid a total of P23.28 million capital gains tax
  • Manny Pacquiao (as buyer) paid a total of P8.73 million for documentary stamps tax and transfer tax

That’s a lot of taxes in one single real estate transaction. We hope they do go to the coffers of the country, to be used for a good purpose in the future.

  • lalaine77

    Wala po bang VAt ang pagbenta ng real estate o condo sa pinas

  • Mary Grace Albino

    Very Nice and Interesting Topic you have here :)

  • Mia

    This topic is incomplete. What about VAT (value added tax). Who pays for this?

    • James |

      Hi Mia, VAT is typically paid by the buyer and is usually embedded in the selling price of the property. If, according to the seller, VAT is not yet included in the price, this is paid by the buyer.

  • PhatB01

    What if you cannot pay the Estate / Inheritance taxes because of lack of funds. My father passed away in Feb. 2008 but due to falsification of public records and the property title was transferred to the name of my sister, apparently there is a 3% interest rate per month after the first month of the death of original owner (father) so the Estate taxes (20%) plus the interest added (3%) for each month passed to present I was told would wipe out close to or half of the value of the gross selling price. After I revoke the deed of donation document for falsification of public documents, the title will revert back to the original owner which is my father and mother (property is conjugal property). This will then result in the BIR asking to have estate and capital gains taxes paid before I can sell the property but if I cannot pay for the Estate Taxes due to lack of funds, would it be possible to be able to ask the court to force the sale of the property to be able to pay off the Estate taxes? Property is over 10m in value closer to 20m market value here. My mother is still alive and I can afford to pay the capital gains tax probably because it is only 6% based on the zonal value and not the market value. I also will add the VAT in the selling price.

  • Cristobal Turbacuski

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