Fees and Taxes to Pay to Transfer Property Title (House and Lot, Condo, or Land)
Whether buying a house, condo, or land, you should pay several taxes and fees to transfer the property title. If you're the buyer, knowing what fees you should pay is essential to prepare your finances, ensuring you have enough funds available.
But what are the fees you should pay when transferring a property title? Keep reading to learn about the 4 major fees you should pay to transfer property title.
1. Documentary Stamp Tax
The Documentary Stamp Tax (DST) should be paid during a sale or transfer of a property, indicating the official transaction between the involved parties. Also, a DST signifies an original document and 1.5% (0.015) of the property value.
Let’s say, for example, the market value of the property you’re planning to buy is P1,000,000, and it's higher than the zonal value. When we compute it, 1.5% of P1,000,000 is P15,000. So if you're the buyer, you should include it in your budget.
2. Transfer Tax Fee
Secondly, the buyer should pay the Transfer Tax Fee. It's 0.5% (0.005) of the selling price, market value, or zonal price, whichever is higher. However, this percentage only applies to properties in the province since the Transfer Tax Fee in Metro Manila goes up to 0.75% (0.0075).
If you’re purchasing a property in the province with a P1,000,000 market value, the Transfer Tax Fee will amount to P5,000. But in Metro Manila, the Transfer Tax Fee would be P7,500.
3. Registration Fee (fixed)
Apart from taxes, the buyer should pay the Registration Fee, a fixed amount based on the table of fees from the Registry of Deeds. The Registration Fee is often 0.25% of the market value, zonal value, or selling price, zonal value, whichever is higher.
Nonetheless, a property with a market value of P1,000,000 has a fixed Registration Fee of P5,736. So it’s ideal to check the fees directly from the Registry of Deeds.
4. Notarial Fee
According to the Integrated Bar of the Philippines, the Notarial Fee reaches up to 3% of the total selling price. But the commonly computed fee is only 1% (0.01).
For a property worth P1,000,000, the notarial fee would be P10,000. When totaled, the buyer should pay P35,736 fees if the property is in the province or P38,236 in Metro Manila.
Note that we didn't include the Capital Gains Tax in this computation. It's the largest tax required when transferring a property title. Usually, the seller pays for it instead of the buyer.
The Capital Gains Tax is 6% (0.06) of the property value or P60,000 for a P1,000,000-worth property.
On the other hand, the buyer can also pay the Capital Gains Tax depending on the agreement with the seller. Furthermore, transferring a property title will include minor fees, like securing or printing certificates. If you're busy, you can hire a broker or salesperson and pay them a processing fee to complete the paperwork.
Nonetheless, this is only optional since you can transfer the property title yourself. Lastly, it's important to discuss thoroughly with the seller who should pay this and that before proceeding with the transaction.
Transferring a property title is time-consuming and requires a lot of paperwork. If you're the buyer, you should also have enough finances to transfer the rights and ownership of the property under your name. Thus, it's necessary to understand what fees you should prepare for during the transfer process before you seal the deal.