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Taxes and Fees when Buying Property in the Philippines


When buying and selling real estate properties in the Philippines, the final purchase price is not and should not only be the 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.

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.

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

Real Estate Taxes and Fees in the Philippines

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

  • 1. Capital Gains Tax

6% of the Selling Price or Zonal Value or Fair Market Value, whichever is higher

  • 2. Business Tax

Paid only if applicable; rate depends on local government unit where property is located

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

  • 1. Documentary Stamps Tax

1.5% of Selling Price or Zonal Value, whichever is higher

  • 2. Transfer Tax

Rate depends on location of property (ranging from 0.25% to 0.75% of Selling Price or Zonal Value, whichever is higher)

  • 3. Registration Fee

Graduated rate based on Selling Price

  • 4. Real Estate Taxes (Amilyar)

For the remaining months of the year based on the date of full payment

In the case of Manny Pacquiao’s Forbes Park house that he bought supposedly for P388 million ($9 million), the relevant taxes and fees paid are shown in the table below.

The computation assumes that the 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.

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%.

Sample Computation: Real estate fees paid by Manny Pacquiao 

  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 in the following payment of taxes and fees:

  • The seller (rumored to be Roque Tordesillas of Marsh Philippines) paid total Capital Gains Tax of P23.28 million
  • 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!






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About this post: real estate tax, real estate tax philippines, property tax philippines, property tax in the philippines, real estate tax in the philippines

26 thoughts on “Taxes and Fees when Buying Property in the Philippines”

  1. lalaine77 says:

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

  2. Mary Grace Albino says:

    Very Nice and Interesting Topic you have here :)

  3. Mia says:

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

    1. James | PinoyMoneyTalk.com says:

      Hi Mia, VAT is typically included in the selling price of the property and the amount remitted to the government by the property seller or agent. If, according to the seller, VAT is not yet included in the price, this is then paid by the buyer.

  4. PhatB01 says:

    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.

  5. nerisubido says:

    what if 50% of the total purchase price was paid? will it be charged the CGT? date of reckoning is the date when the 50% was paid or taxes are due once the real estate is fully paid? pls advise

  6. proxy list says:

    Hi there, your writing style is awesome, keep it up!

  7. Vher says:

    If i have a house still paying back in the philippines and hopefully next year i have our canadian citizenship, what are the impact of the payment since still ongoing? Is theres interest or tax will be added or no?

    2. If i want to get a new property this end of the year and again i am going to be a canadian citizenship next year 2018, how is the procedure is payment? Is theres interest or tax will be added or no?

  8. Jaybee says:

    Hi, may i ask I am buying 1million Lot, how much should i pay for the tax

  9. PinoyMoneyTalk says:

    Hi Jaybee, assuming the P1 million selling price is amount higher than the Zonal Value, you’ll have to pay the following:

    Documentary Stamps Tax (DST) – 1.5% of P1 million = P15,000
    Transfer Tax – assuming 0.75% rate = P7,500

    So for the DST and transfer tax, you’ll have to pay a total of P22,500.

    Take note that the amount still excludes the Registration Fee, which depends on the local government unit where the lot is located, and unpaid real estate taxes (amilyar) of the property.

  10. duya amayo says:

    Hello,

    I would like to know who is responsible to pay the tax.

    This is the case.
    We own a house and lot, because of some issues, we used it as a collateral for the loan, because we have no interest to stay in the house anymore, we were looking for buyer but some of our relatives opposed the selling, years passed by, we didn’t expect that some of our relative who opposed the selling bought it without informing us, now, they are asking us for the payment of the tax, I would like to be clarified if are we accountable for the tax or no? we have no formal arrangement for buying they done it secretly with the bank manager.

    Thank you!

  11. Mrs. Coronel says:

    Hi,

    Would like to ask if the new tax reform to be implemented next year 2018 includes buying of house and lot? Since my agent is telling me that if i would not start buying the property this year, it would be subject to 12% VAT by January 2018. The house and lot cost more than 2.6M.

    Thanks a lot.

    1. Daryll Pua says:

      Hello! I’m a Property Specialist. So if you’re looking for condo investment in the Philippines, you may refer to me. We have a project yet to be launched with more than 200 units sold, located at Fort Bonifacio. With this best investment choice, I can offer you the best deal! Message me or call me at 0906 370 7486 or send me an email at darylljpua@gmail.com

    2. Jonelyn Oreta says:

      threshold for vat exempt…….for the sale of residential lot 1.5M and below
      House and lot 2.5M and below are exempt from vat

      Bumalik lang po sa dati before 2012.

      For condotel & lot investment….http://condominium.sytes.net

  12. nick says:

    hi there, just saw your post, and recently I planned to have a deep consideration in having a condo in Metro Manila. I wonder if I purchase a condo E.g. 3million, do I need to pay VAT tax as well?

    1. Daryll Pua says:

      Hello! I’m a Property Specialist. So if you’re looking for condo investment in the Philippines, you may refer to me. We have a project yet to be launched with more than 200 units sold, located at Fort Bonifacio. With this best investment choice, I can offer you the best deal! Message me or call me at 0906 370 7486 or send me an email at darylljpua@gmail.com

  13. Leticia Jones says:

    We bought a condo in Taguig City, Philippines , both named to me & my husband. We live in Florida USA, my husband passed away April 2013, I am told I have to pay inheritance tax ?
    Why do I need to pay when Im a co owner of the property? What are the laws in this. Thank you.

  14. Majoy says:

    Hi, Since your property is conjugal, when your husband passed away, the portion he owned (50%) will be subjected to Estate tax. But taking into account the TRAIN law, there is an automatic deduction of Php 5M from the Estate and the rate is no longer progressive as before. Net estate will only be taxed at 6%. Hope this helps.

    1. Daryll Pua says:

      Hello! I’m a Property Specialist. So if you’re looking for condo investment in the Philippines, you may refer to me. We have a project yet to be launched with more than 200 units sold, located at Fort Bonifacio. With this best investment choice, I can offer you the best deal! Please message me on fb, or you can call me at 0906 370 7486 or send me an email at darylljpua@gmail.com

  15. Mr Milkie Trinio says:

    If i am a foreigner who owns a condo in the Philippines and paying my taxes in the country where I currently reside. Will I still be expected to pay capital gains tax in the Philippines if I evently sold my unit?

  16. Ea says:

    Hi we just bought a 3 BR condo unit in BGC. The seller added to the SP as amount to be paid by us of almost 1M representing Documentary Stamp tax, Transfer tax and registration fees.
    Question…these taxes and fees are based on Selling Price or Zonal value whichever is higher. The selling price which is the basis, is it price plus VAT or just the price not including VAT?
    Also is the seller bound to provide the buyer the amount of these individual taxes and fees separately and also can the buyer request for government receipts for these payments from the seller?
    Appreciate your response.

  17. Johngie Manuel says:

    Hi! There .just want to inquire .i brought a condo unit in Santa Ana.do I need to pay the property tax and other charges although I don’t have the key yet for the condo? I will really appreciate your reply.thank you!

  18. Johngie Manuel says:

    Hi! There .just want to inquire .i bought a condo unit in Santa Ana Manila .do I need to pay the property tax and other charges although I don’t have the key yet for the condo? I will really appreciate your reply.thank you!
    REPLY

  19. franco says:

    did the train law increase the 1.5% documentary stamp tax on the sale of property?

  20. Howard says:

    I think your explanation on capital gains tax is a bit off. Capital gains tax is not computed against the entire selling price but only against the gain by the seller in selling the real property. So in the case mentioned above, to compute the capital gains tax, the acquisition amount by the seller must be considered and then less from his selling price. Assuming that he acquired the property for $15M and he sells to Manny for $19M, the difference of $4M is the gain subject to capital gains tax. 6% of $4M is $240k – enough to last me a lifetime, lol.

  21. C J Allen says:

    My wife wishes to sell our house in Timog Park, Angeles City. We paid P2,800,000 and we are offering it at the same price.
    In the UK [where I am from] that would mean that there was no capital gain, so no CGT would be due.
    Is it different here in the Philippines?

    The house is in my wife’s name of course, as I am a foreigner (though a resident on a 13A [probationary] visa.)

    My wife has no income as she is not employed.

    Would we have to pay CGT on the sale?

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