Summary: Learn moreabout the relevant charges for buying and selling a property in thePhilippines. We will also look at which local agencies are responsible forhandling the necessary fees.
Read Time: 8 minutes
Whether it’s acondo, house, or lots (residential or commercial), selling or buying a property in thePhilippines will always involve closing costs involved in purchasing ahouse, not to mention the selling price.
Closing costs areoverheads of the property cost acquired to fulfill a buy or sell real estatenegotiation. The accomplishment of the real estate adds up to the ownership andtitle transfer to the property buyer. If you’re a buyer, it’s essential torealize the total cost of buying ahouse.
Know the taxes andfees to pay when buying a house before finalizing thetransfer of the property. If you’re also a seller, you’ll learn here the cost of buying and selling a house. Thisarticle will also help you better understand the costs associatedwith buying a house in the Philippines.
Costsof Purchasing Property in the Philippines
| Costs for Buyers | Fees | Payable To |
| Documentary stamp tax | 1.5% of the selling price, fair market value, or zonal value, whichever is higher | Bureau of Internal Revenue (BIR) |
| Transfer tax | 0.5% to 0.75% of the selling price, fair market value, or zonal value, whichever is higher | Bureau of Internal Revenue (BIR) |
| 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 cost, etc.) | Differs | Differs |
DocumentaryStamp Tax
It is an excise taximposed on instruments, loan agreements, documents, sale or transfer of anobligation, and papers evidencing the acceptance, to name a few. The tax amountis either fixed or is under the benchmark or the document or instrument’s worth.The individual who makes, signs, issues, accepts or transfers the document isthe one who will pay the tax or costs ofbuying a house.
TransferTax
It is a taxextracted from the ownership transfer of title or property from one individualto another. A country, state, or municipality may charge a tax and the amountdepends on the property value and classification. The buyer is the one who paysthe transfer tax, which is 0.5% of the fair market value, zonal value, orasking price, whichever is loftier.
NeededDocuments for New Owner Title Transfer
Transferring thetitle to the new owner requires the following documents:
●Most updated tax declaration ofthe property
●Bureau of Internal Revenuecertificate indicating paid documentary stamps and capital gains tax
●Notarized copies of the Deed ofSale
●Payment receipts for registrationsfees and transfer tax
●Original copy of the propertytitle
TitleRegistration Fee
It’s a payment forissuing a new title in the buyer’s name. The graduated table of fees determinesthe registration fee according to valuable considerations. As a buyer, you needto know the hidden costs of buying a home, such as a title registration fee.
You pay the title registration fee after the taxeson the property sale are paid. Also, you need to secure the CertificateAuthorizing Registration (CAR) and the Tax Clearance (TCL) from the BIR.
After issuing CAR and TCL, you need to present it tothe Register of Deeds in two years. Else, you’ll have to ask for anotherissuance of CAR. Additionally, you need to adhere to the requirements of theRevenue Memorandum Order (RMO) No. 23-2010 in March 2021.
IncidentalExpenses
Otherwise known as“incidentals,” incidental expenses are commissions and other small fees,including notarial services. They are costs paid for additional expenses to themain item, service, or paid events incurred throughout business activities. Itis subject to the costs of transportation, food, and lodging, which are usuallycommon during traveling for business.
Costsof Selling Property in the Philippines
| Costs for Sellers | Fees | Payable to |
| Capital gains tax | 6% of the gross selling price, fair market value, or zonal value, whichever is higher | Bureau of Internal Revenue |
| Broker’s commission | 5% - 10% of the gross selling price | Real estate broker |
| Developer’s commission | 3% of the net price | Developer |
| Incidental expenses (notarial costs, etc.) | Varies | Varies |
It’s not only thebuyer who pays a few closing costs but the seller as well. These include thefollowing:
CapitalGains Tax
It is a governmentalfee a seller pays on the profit made from selling particular types of assets.The usual rate is 6% of the fair market value, zonal value, or gross sellingprice, whichever is greater. As a seller, you need to consider this as asignificant factor in valuing your property. It will enable you still to get a measureof profit after a deal and paid to the BIR.
Broker’sCommission
It is a fee paid tothe real estate broker who could close a deal with an individual or entity thatwants to buy land or otherproperties. The amount or percentage of the real estate broker commission rates depends on the agreement of theseller and the agent himself, which comes to around 5% to 10%. You have the optionto do your marketing to save on realestate agent commissions.
Developer’sCommission
For otherproperties, such as condominiums, the developer may designate a select in-housebroker to help in the transaction procedure. The seller might have to allocatean extra developer’s commission fee, typically 3% of the net price.
UnpaidReal Property Tax
The original ownermust shoulder the property’s annual Real Property Tax (RPT) before theownership transfer process. This tax is paid to usually to the City orMunicipality Treasurer’s office.
If you are a buyer,it’s paramount to know the different costsassociated with buying a house inthe Philippines. You also need to know the feesfor buying a house and where to look for good houses to buy. Moreover, you must learn the hidden costs of buying a house so you won’t be surprised about thetaxes or fees you need to pay.
On the other hand, if you’re a seller, you also needto know the cost of selling a house witha realtor. Additionally, you need to set your expectations regarding the costs involved in selling a housebecause while you enjoy the profits, you also need to pay specific feessimultaneously.
Related Articles :
