Taxes and Other Money Issues in Philippine Real Estate

One of the biggest dreams that every Filipino has is to buy a certain form of real estate property, like a house for sale. The process of buying a property is one that is big and complex, and should therefore be approached with extreme caution. When talking about money in real estate, it’s essential to keep in mind that the actual price of the property is not the only thing that you need to take care of. Here are some Philippine real estate money matters that you should familiarize yourself with before buying a property.

The Bureau of Internal Revenue requires house and other property developers to pay an income tax of 30% for every property that they sell. As a result of this, the buyer has to pay a 5% withholding tax based on what amount is higher among the price of the property, the zonal value or the tax declaration (TD) value of the property, and this is then credited to the developer’s income tax.

In addition, every time a sale of real estate property is made, the BIR requires a payment of value-added tax, which is based on 12% of the highest amount among the TD value, zonal value and price of the property.

The documentary stamp tax (1.5%) and the local transfer tax (half of 1%) are other taxes that are computed based on whichever is the highest rate among the property’s price, zonal value and TD value.

A certain amount is also paid as registration fees to the Register of Deeds where the property the buyer purchased is located. The buyer is responsible for paying P8,796.00 for the first P1.7 million. For every P20,000.00 or fraction of that amount that goes over P1.7 M, the buyer will pay P90.00.

Depending on the size and type of residence, association dues vary from property to property. For example, for every square meter of a condo, owners are required to pay from P75.00 to P90.00. Lot owners, on the other hand, pay association dues of P25.00 per square meter.

Keep in mind that when buying a house or any property, these are only a few of the money issues that you’ll need to handle. Your monthly bills, as well as future maintenance and remodeling needs are other financial needs that require your attention.