Buying and Selling Real Estate in the Philippines

Mortgage

house deed 21 Buying and Selling Real Estate in the PhilippinesThe SELLER pays for the:

  • Capital Gains Tax equivalent to 6% of the selling price on the Deed of Sale or the zonal value, whichever is higher. (Withholding Tax if the seller is a corporation)
  • Unpaid real estate taxes due (if any).
  • Agent / Broker’s commission.

The BUYER pays for the cost of Registration:

  • Documentary Stamp Tax – 1.5% of the selling price or zonal value or fair market value, which ever is higher.
  • Transfer Tax – 0.5% of the selling price, or zonal value or fair market value, which ever is higher.
  • Registration Fee – 0.25% of the selling price, or zonal value or fair market value, which ever is higher.
  • Incidental and miscellaneous expenses incurred during the registration process.

The above sharing of expenses is the standard practice in the Philippines. However, buyers and sellers can mutually agree on other terms as long as it is done during the negotiation period (before the signing of the “Deed of Sale”).

Documentary Requirements:
1) One original copy and one photocopy of the Notarized Deed of Sale or Exchange

2) Photocopy of the Transfer Certificate of Title; Original Certificate of Title; or Condominium Certificate of Title

3) Certified True Copy of the tax declaration on the lot and/or improvement during nearest time of sale

4) “Certificate of No Improvement” issued by the Assessor’s office where the property has no declared improvement, if applicable or Sworn Declaration/Affidavit of No Improvement by at least one (1) of the transferees

5) Copy of BIR Ruling for tax exemption confirmed by BIR, if applicable

6) Duly approved Tax Debit Memo, if applicable

7) “Sworn Declaration of Interest” as prescribed under Revenue Regulations 13-99, if the transaction is tax-exempt

8) Documents supporting the exemption

Additional requirements may be requested for presentation during audit of the tax case depending upon existing audit procedures.

Procedures:
File the Capital Gains Tax return in triplicate (two copies for the BIR and one copy for the taxpayer) with the Authorized Agent Bank (AAB) in the Revenue District where the property is located. In places where there are no AAB, the return will be filed directly with the Revenue Collection Officer or Authorized City or Municipal Treasurer.

Tax Rates:
For real property – 6%.
Deadline:
Within 30 days after each sale, exchange, transfer or other disposition of real property.

What Is A Deed Of Sale?

deed-of-sale-thumb21401089

deed of sale thumb21401089 What Is A Deed Of Sale?The “Deed of Sale” or “Deed of Absolute Sale” is the document showing legal transfer
of real estate property ownership. It is entered into by two parties namely, the buyer and
the seller who must be of legal age. After notarization, the deed of sale is then taken
to the Registry of Deeds to be officially recorded after paying the documentary stamp,
transfer tax and registration fees.

All government taxes, transfer fees and incidental or miscellaneous expenses will be
shouldered by the buyer, whereas the seller will pay for the capital gains tax equivalent
to 6% of the selling price on the Deed of Sale or the zonal value, whichever is higher.

To assure the buyer that the land he buys is covered by an Original Certificate of

Title (OCT) or the Transfer Certificate of Title (TCT) issued by the Registry of Deeds,

the “Torrens” system of land registration was adapted and used in the Philippines and

confirming that the same is absolute, indefeasible and imprescriptible.

A Transfer of Certificate of Title (TCT) is a proof of ownership of a subdivision lot issued

by the Register of Deeds of the city or municipality where the subdivision project is

located.

A Condominium Certificate of Title (CCT) is proof of ownership of a condominium unit

issued by the Register of Deeds of the city or municipality where the condominium

project is located.

The following documents are needed when transferring the title or Transfer of Certificate
of Title (TCT) and Condominium Certificate of Title (CCT) for condominium unit to the
new owner:

1. Certified true copy of the title

2. Notarized copies of the Deed of Sale

3. Latest tax declaration of the property

4. Certificate from the Bureau of Internal Revenue that the capital gains tax and

documentary stamps have been paid

5. Receipt of payment of the transfer tax and registration fees