Guide when Buying real Estate in the Philippines|
This is the standard sharing
of expenses between the buyer and the seller when transferring the real estate
property title (TCT - Transfer Certificate of Title or CCT - Condominium
Certificate of Title) to a new owner:
The SELLER pays for the:
The BUYER pays for the cost of Registration:
- 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 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 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 "Deed of Sale" or "Deed of Absolute Sale" is the document
showing legal transfer of real estate property ownership. 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. Always verify from the Registry of Deeds the authenticity
of a Transfer Certificate of Title before buying a property. If the seller only has a tax
declaration, be extra cautious and check with neighbours, the Barangay captain or anyone in
the know in the community to verify the seller/owner's true identity and the property's history.
Your Agent / Broker will usually do the registration process (sometimes for a fee). However, all government
taxes, transfer fees and incidental or miscellaneous expenses will be shouldered by the buyer.
Documents needed when transferring the title (TCT or CCT) to the new owner:
An adapted form of the "Torrens" system of
land registration is used in the Philippines. The system was adapted to assure a buyer that if he buys a land covered by
an Original Certificate of Title (OCT) or the Transfer Certificate of Title (TCT) issued by the Registry of Deeds, the
same will be absolute, indefeasible and imprescriptible.
- Certified true copy of the title
- Notarized copies of the Deed of Sale
- Latest tax declaration of the property
- Certificate from the Bureau of Internal Revenue that the capital gains tax and documentary stamps have been paid
- Receipt of payment of the transfer tax and registration fees