Costs of Buying and Selling Property

Summary: Learn more about the relevant charges for buying and selling a property in the Philippines. We will also look at which local agencies are responsible for handling the necessary fees.

Read Time: 8 minutes

Whether it’s a condo, house, or lots (residential or commercial), selling or buying a property in the Philippines will always involve closing costs involved in purchasing a house, not to mention the selling price.

Closing costs are overheads of the property cost acquired to fulfill a buy or sell real estate negotiation. The accomplishment of the real estate adds up to the ownership and title transfer to the property buyer. If you’re a buyer, it’s essential to realize the total cost of buying a house.

Know the taxes and fees to pay when buying a house before finalizing the transfer of the property. If you’re also a seller, you’ll learn here the cost of buying and selling a house. This article will also help you better understand the costs associated with buying a house in the Philippines.

Costs of Purchasing Property in the Philippines

Costs for Buyers	Fees	Payable To
Documentary stamp tax	1.5% of the selling price, fair market value, or zonal value, whichever is higher	Bureau of Internal Revenue (BIR)
Transfer tax	0.5% to 0.75% of the selling price, fair market value, or zonal value, whichever is higher	Bureau of Internal Revenue (BIR)
Title registration fee	A graduated table of fees based on 0.25% of the selling price or zonal value or fair market value, whichever is higher	Land Registration Authority
Incidental expenses (notarial cost, etc.)	Differs	Differs

 

Documentary Stamp Tax

It is an excise tax imposed on instruments, loan agreements, documents, sale or transfer of an obligation, and papers evidencing the acceptance, to name a few. The tax amount is either fixed or is under the benchmark or the document or instrument’s worth. The individual who makes, signs, issues, accepts or transfers the document is the one who will pay the tax or costs of buying a house.

Transfer Tax

It is a tax extracted from the ownership transfer of title or property from one individual to another. A country, state, or municipality may charge a tax and the amount depends on the property value and classification. The buyer is the one who pays the transfer tax, which is 0.5% of the fair market value, zonal value, or asking price, whichever is loftier.

Needed Documents for New Owner Title Transfer

Transferring the title to the new owner requires the following documents:

●     Most updated tax declaration of the property

●     Bureau of Internal Revenue certificate indicating paid documentary stamps and capital gains tax

●     Notarized copies of the Deed of Sale

●     Payment receipts for registrations fees and transfer tax

●     Original copy of the property title

Title Registration Fee

It’s a payment for issuing a new title in the buyer’s name. The graduated table of fees determines the registration fee according to valuable considerations. As a buyer, you need to know the hidden costs of buying a home, such as a title registration fee.

You pay the title registration fee after the taxes on the property sale are paid. Also, you need to secure the Certificate Authorizing Registration (CAR) and the Tax Clearance (TCL) from the BIR.

After issuing CAR and TCL, you need to present it to the Register of Deeds in two years. Else, you’ll have to ask for another issuance of CAR. Additionally, you need to adhere to the requirements of the Revenue Memorandum Order (RMO) No. 23-2010 in March 2021.

Incidental Expenses

Otherwise known as “incidentals,” incidental expenses are commissions and other small fees, including notarial services. They are costs paid for additional expenses to the main item, service, or paid events incurred throughout business activities. It is subject to the costs of transportation, food, and lodging, which are usually common during traveling for business.

Costs of Selling Property in the Philippines

Costs for Sellers	Fees	Payable to
Capital gains tax	6% of the gross selling price, fair market value, or zonal value, whichever is higher	Bureau of Internal Revenue
Broker’s commission	5% - 10% of the gross selling price	Real estate broker
Developer’s commission	3% of the net price	Developer
Incidental expenses (notarial costs, etc.)	Varies	Varies

It’s not only the buyer who pays a few closing costs but the seller as well. These include the following:

Capital Gains Tax

It is a governmental fee a seller pays on the profit made from selling particular types of assets. The usual rate is 6% of the fair market value, zonal value, or gross selling price, whichever is greater. As a seller, you need to consider this as a significant factor in valuing your property. It will enable you still to get a measure of profit after a deal and paid to the BIR.

Broker’s Commission

It is a fee paid to the real estate broker who could close a deal with an individual or entity that wants to buy land or other properties. The amount or percentage of the real estate broker commission rates depends on the agreement of the seller and the agent himself, which comes to around 5% to 10%. You have the option to do your marketing to save on real estate agent commissions.

Developer’s Commission

For other properties, such as condominiums, the developer may designate a select in-house broker to help in the transaction procedure. The seller might have to allocate an extra developer’s commission fee, typically 3% of the net price.

Unpaid Real Property Tax

The original owner must shoulder the property’s annual Real Property Tax (RPT) before the ownership transfer process. This tax is paid to usually to the City or Municipality Treasurer’s office.

If you are a buyer, it’s paramount to know the different costs associated with buying a house in the Philippines. You also need to know the fees for buying a house and where to look for good houses to buy. Moreover, you must learn the hidden costs of buying a house so you won’t be surprised about the taxes or fees you need to pay.

On the other hand, if you’re a seller, you also need to know the cost of selling a house with a realtor. Additionally, you need to set your expectations regarding the costs involved in selling a house because while you enjoy the profits, you also need to pay specific fees simultaneously.Back To Home           Estate Tax and Real Property Tax