Paying tax for properties sold or donated in the Philippines
Paying tax for properties sold or donated in the Philippines
In life, there are things you cannot escape - namely death and taxes. Taxes are your prime contribution to the improvement of your municipality, city, and even the whole country - where you could access police for security, roads for mobility, healthcare from government hospitals, and liberty from doing personal and business matters by following the law.
Whenever we want a property sold or donated to someone else, we have to pay taxes. In the Philippines, there are taxes that you need to settle in transferring the ownership to someone else. There are local and national taxes. Local taxes include real property taxes and transfer tax. National taxes need to be paid in Bureau of Internal Revenue - particularly capital gains tax, documentary stamps tax, donor's tax, and certification fees. As for the properties to be accepted for processing in national and local taxes, certain documents need to be submitted as well, but that is for another topic.
Do I need to pay real property tax and transfer tax?
Yes. You need to pay local taxes in the form of real property tax and transfer tax. It is one of the revenue generating measures of the municipality, city, or province in the Philippines.
Where do I need to pay real property tax and transfer tax?
You have to determine where is the location of the property. What is the municipality or city of the property? Find the municipal hall or city hall where the property is located. For Metro Manila cities and municipality of Pateros - visit this link: https://mikaelrealestate.blogspot.com/2022/01/metro-manila-city-hall-contacts.html
How much do I need to pay for real property tax and transfer tax?
The real property tax and transfer tax levied to you is dependent on the ordinance of the city or municipality in the Philippines. If you have your previous real property tax receipt, you can pay the same amount annually, until such time that the city or municipality have changed the rates. If you have further questions, you can ask the treasury officers of the specific city or municipality.
For the transfer tax, it is also dependent on the local ordinance. Rates vary from city to city, and municipality to municipality. For example, Mandaluyong charges 0.75% of selling/donation price. Dasmarinas Cavite might charge 0.6% of selling/donation price. As to where is more convenient to live and invest properties on, it is for you to decide.
How can I pay the real property tax and transfer tax?
You can pay the real property tax either online or offline. Certain cities and municipalities offer online payment. It is convenient for you to have a Landbank/OF Bank/Gcash/Paymaya (whichever is available) account operating in your phone through their official apps. For offline payment, you can pay through cash or check. For check payments - ask the city or municipality of the name to PAY IN THE NAME OF. Usually they only accept manager's check. If they accept personal check, ensure that the funds are sufficient for withdrawal.
For transfer tax, you need to settle it offline - in the site of the city hall or municipal hall. Payment can be cash or check. Same rule apply with PAY IN THE NAME OF.
What are the national taxes that needs to be paid in properties sold or donated in the Philippines?
The national taxes that needs to be paid in Bureau of Internal Revenue when a property is sold or donated are capital gains tax, documentary stamps tax, donor's tax, and certification fee.
How much do I need to pay for the national taxes?
Capital gains tax and donor's tax are 6% of the taxable rate. For computing capital gains and donor's tax, you can refer to this page - Definitive Guide for Establishing Taxable Price of Real Property Sold or Donated in the Philippines (mikaelrealestate.blogspot.com).
Documentary stamps tax are pegged at 15 pesos per 1000 of taxable rate. For example, if I have sold a single property worth 1 million, the documentary stamps tax is 1,000,000 / 1000 x 15 = 15,000.00.
Certification fee is 100 pesos per certificate.
If you have difficulty in establishing the taxes you need to pay, you can always ask help from the officer of the day to help you compute various taxes needed.
How do I pay the national taxes?
You can pay either online or offline. For online payment - you can settle through Landbank/Gcash/ Paymaya and follow their instructions. For offline payment, you can pay using cash or check in the Authorized Agent Banks (AAB) of a specific Revenue District Office (RDO). For the list of RDO in the whole Philippines, visit this link: Regional/District Offices - Bureau of Internal Revenue (bir.gov.ph)
Where do I need to pay the national taxes?
In case you need to pay it offline, you can pay in the Authorized Agent Bank (AAB) of a specific Revenue District Office where your property is located. Some cities like Manila, Makati, and Quezon City have several RDOs. Several municipalities share the same RDO like in the provinces of Rizal, Cavite, and Batangas. To be safe, ask the officer of the day where is the nearest Authorized Agent Bank (AAB). Ask the AAB of the format for the PAY IN THE NAME OF by specifying the RDO. For the list of Authorized Agent Banks, visit this link: List of Authorized Agent Banks - Bureau of Internal Revenue (bir.gov.ph). You can find their contact numbers in their respective websites.
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