What Are The Expenses Involved in a Sale of a House in the Philippines?

Posted in QA on March 11th, 2010 by admin | No comments
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taxesHere’s a rundown of the standard sharing between buyer and seller when transferring the real estate property title to the new owner: (please not this is not absolute as buyers and sellers can negotiate on other terms before signing the deed of sale)

Buyer’s Expense Amount Seller’s Expense Amount
Documentary Stamp Tax 1.5% x Tax Base (BIR) Capital gains of Creditable Witholding Tax (BIR) 6% x Tax Base
Value Added Tax (although this is usually incorporated in the selling price) 12% Updating of realty tax at the time of sale, usually done at the Treasurer’s Office
Transfer Tax (Treasurer’s Office) Tax Base x 1% x 75% Philippines Real Estate Broker’s Fees depends on agreed rate
Registration Fees (Register of deeds) (depends on area) Notarization Fees
Assessor’s Office (for new tax declarations) about P250

Tax Base = The higher value between:

  • Selling price on the deed of sale
  • BIR Fair Market Value (BIR Zonal value on the lot + Value of improvements based on latest tax declarations)

Capital Gains Tax - Tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or other disposition of capital assests located in the Philippines, including pacto de retro sale and other forms of conditional sale. It is a final income tax.

Documentary Stamp Tax - tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, rights, or property incident thereto.

Value Added Tax- business tax imposed and collected from the seller in the course of trade or business on ever sale of properties (real or personal), lease of good and properties (Real or personal) or vendors of services. It is an indirect tax, thus it can be passed on to the buyer.

Transfer Tax - is a tax on the passing of title to property from one person (or entity) to another.
What other Philippines Real Estate Questions do you have? We’ll try to find an answer for you!

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