Taxes to Pay When Selling a Property in the Philippines (2024)

• Legals in the Philippines

• Legals in the Philippines

• February 27, 2024
• Therese Angeles

Selling a property in the Philippines involves more than finding the right buyer and negotiating the sale price. Among the crucial factors to consider are the various taxes and fees that apply to such transactions. Given the complexities of the Philippine tax system, it can be challenging to understand the full scope of your financial obligations as a seller. This article will discuss the various taxes to pay when selling a property in the Philippines.

Types of taxes to pay when selling a property in the Philippines

As a seller, you must pay various selling property taxes and other fees to complete the transaction. Here are the different types of taxes to pay when selling a property in the Philippines:

1. Capital Gains Tax(CGT)

When it comes to taxes to pay when selling a property in the Philippines, the most important is the Capital Gains Tax (CGT). It is a tax levied on the presumed profit acquired by the seller from selling a property classified as a capital asset. These capital assets include properties not utilized in any form of trade or business, like homes and land, that are not income-generating.

Philippines Capital Gains Tax calculator

When calculating the Capital Gains Tax on the sale of property in the Philippines, the property’s selling price or fair market value is used, whichever is higher. Then, you multiply the value with the tax rate of 6%. You can use our calculator below to calculate the Capital Gains Tax in the Philippines.

2. Personal Income Tax

Personal Income Tax can be a significant element in calculating taxes to pay when selling a property in the Philippines, particularly when the seller is engaged in the real estate business. In this case, the sold property is treated as an ordinary asset, and the Personal Income Tax will be computed based on tax rates ranging from 15% to 35%, correlating with the seller’s annual income.

3. Value Added Tax (VAT)

A 12% Value Added Tax (VAT) is imposed on real estate sales of those involved in selling, developing, leasing, or sub-leasing real property and those licensed to engage in the real estate brokerage business. When selling a property in the Philippines, the VAT and other taxes apply even if the real property is not primarily held for sale to customers or leased in the ordinary course of business.

4. Documentary Stamp Tax (DST)

Documentary Stamp Tax (DST) is an excise tax levied on documents evidencing the acceptance, assignment, sale, or transfer of an obligation, rights, or property therein. The taxes to pay when selling a property in the Philippines involve a rate of 1.5% based on the highest selling price, BIR zonal value, or assessed value by the provincial/city assessor.

5. Transfer Tax

The Transfer Tax shouldn’t be overlooked when discussing taxes to pay when selling a property in the Philippines. The BIR defines it as a tax imposed on any mode of transferring absolute property ownership, with a rate of 0.5% imposed on the highest selling price or zonal value, depending on the municipality where it is located. In the case of donation or inheritance, a Donor’s Tax or Estate Tax of 6% is paid over the property’s value at the moment of the land title transfer.

Other feesto consider when selling property in the Philippines

In addition to the taxes above, there are additional fees that you may need to pay as part of the taxes to pay when selling a property in the Philippines, including:

• Registration fees: The registration fees cover registering the property transfer with the Register of Deeds. These fees are calculated as a percentage of the property’s selling price or fair market value.
• Notarial fees: For any property transaction in the Philippines, including selling property taxes, it is necessary to have a notary public notarize the registry of deeds transaction, which incurs notarial fees. These fees depend on the property’s selling price.
• Unpaid real estate taxes: Any outstanding property taxes to pay when selling a property in the Philippines must be paid. The debt cannot be transferred from you to the person buying the property. Failing to pay these could result in the proposed transaction being voided.
• Agent’s or broker’s commission: If you choose to enlist the help of an agent or broker to sell your property, you will be responsible for their commission fee. Be sure to factor this into your calculations when selling the property.

Get assistance on property taxes in the Philippines from Own Property Abroad

Understanding the complex property taxes in the Philippines can be challenging. Own Property Abroad offers support for property owners, including assistance with all types of property taxes, such as property sales taxes, Capital Gains Tax (CGT), Real Property Tax (RPT), Transfer Tax, Value Added Tax (VAT), and Documentary Stamp Tax (DST).

Our team can assist you in understanding which property taxes to pay, preparing tax reports, filing tax returns, and ensuring timely payment of all property taxes. If you want more information on how we can help you with these services, please leave your contact details below or email us at[emailprotected].

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