We often hear the word “tax declaration” and “tax clearance” in every real estate transaction. Have you ever asked yourself what is this for? Are they one and the same? Why is there a need of these documents when buying or selling real estate? Let us take a deep dive into these two types of tax documents.
 
A Tax Declaration ("Tax Dec") is an official document, issued by the local assessor’s office where the property is located, that serves as a record of the assessed property value for the purpose of calculating real property tax (RPT). Tax Dec includes important data such as the owner’s name, property location, property type (either residential, commercial, agricultural, etc.), and tax declaration number which is often required for property transactions such as selling, buying, or mortgaging real estate. Tax Dec shows the computation of the real property’s assessed value and the corresponding real property tax due to the local government. While a Tax Dec doesn’t directly prove ownership in the same way a certificate of title does, it may be evidence that the person named therein has a claim over the property. However, a diligent buyer should always look for a Certificate of Title (TCT for house and/or lot or CCT for condominium) to make sure it's free from liens and encumbrances. While a tax declaration is significant, it's not definitive proof of ownership of title.
 
On the other hand, Tax Clearance Certificate (“TCC”) is a document issued by the local government showing that the real property owner has paid the real property taxes in full and has complied with tax laws. The issuance of tax certificates proves that the real property tax for the whole year has been properly paid. When buying a real property, the TCC helps prospective buyers verify that real property taxes are updated, ensuring no pending liabilities. Once the Tax Clearance has been issued, it has a validity period of one year from the date of issuance since this shows full payment of taxes for the current year only.
 
The main difference is while a tax declaration relates to real property assessment value, a tax clearance pertains to compliance of real property tax payments. When buying a real estate, a prospective buyer should ensure these are presented by the seller as proof that there are no pending liabilities to the government and for the prospective buyer to determine the annual real property taxes due from them going forward.

written by: Angie Wee, CPA

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Are you selling your property and met a buyer who wants to transfer the title even before the full payment? This may come as a shock for some sellers, but this is actually happening in the real estate market for some time now. Buyers want to have the title of the property under their name because it is required for the housing loan. Now, what should you do to protect yourself from this kind of transaction? Continue reading to know whether you should allow this or not and is it really safe to transfer the title with only a bank guarantee?

What Is Bank Guarantee?

It’s okay to transfer the title first even before getting the full payment if a bank guarantee is in place. Hence, it is important for buyers and sellers to understand the essence of a bank guarantee during the transfer process. Whether you’re selling a condo unit, house and lot, or land property, knowing what this document entails for a buyer using a housing loan is crucial in making informed decisions.

The bank guarantee is a document that’s given to buyers who want to get a bank loan to purchase a property. This document is issued by the bank to give assurance to the seller that it’s safe to transfer the title to the name of the buyer while the bank is still processing the release of the full payment. This may take up to one month, depending on the bank and the requirements.

Why the Title Must be Transferred First?

Most banks in the Philippines require that the title must be named under the buyer before they release the loan amount. The seller, on the other hand, is rest assured that the transaction is safe with the guarantee of the bank. In addition to that, the bank also requires 20% downpayment or equity from the buyer.
So don’t worry if the buyer is asking you to transfer the title before getting the full payment for the property as long as there is an existing bank guarantee. Otherwise, do not proceed with the transaction to avoid future problems. If there’s no bank guarantee, the buyer needs to pay the total price of the property before transferring the title.

Final Thoughts

Getting a housing loan in the Philippines is not that complicated once you have all the requirements including the property title named to you. This can be a challenge, but providing the bank guarantee to the seller and assuring them that you are going to pay once the money is released by the bank will make things easier. Make sure that you understand the process before applying for a bank loan.
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If you have questions regarding housing loans and how to convince the seller of the property you want to buy, our teams of expert real estate agents can help you. With REALS Corporation, you are one step closer to your dream home!

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Real estate investors and home buyers may want to reconsider acquiring properties in the Visayas as geographic constraints are currently driving rising prices in Cebu. Meanwhile, Davao is emerging as the region’s central for real property development. If you’ve been considering purchasing a house and lot, condo unit, or land property in Cebu and Davao regions, we’ll give you the key points to consider before sealing the deal.

Cebu Property Market’s Steady Increase

​Ricardo Inting of Land Asia Realty explained that Cebu is 93% mountains and only 7% flat land. This topographical constraint is causing land availability limitations, driving real estate prices upward. Nevertheless, the industry is projected to expand as these geographic limitations lead to a steady growth in property and land prices while development is centered in the city.

Inting furthered that as investors look for housing units in Metro Cebu, the supply-demand dynamic benefits the developers including the South Road Properties. This is expected to elevate the real estate market in the city. However, developers focus on the right market to avoid potential foreclosures and oversupply.

No Condo Oversupply in DavaoWhile there were earlier reports that there is a condominium oversupply in Metro Manila, it is the other way around for Davao City. According to Jarvie Harlem Gantalao of the Chamber of Real Estate Builders Association – Davao Chapter, there’s a strong demand for condos while the tourism and hospitality property market is growing. Developers are launching new projects to meet the demands of the condominium market.

Unlike Cebu, the real estate growth in Davao goes beyond the urban center. Developments are also in place for Tugbok District, Mintal, and Toril. Gantalao mentioned that the continuous expansion is attributed to the affordable cost of living, safe environment, and quality of life in Davao. CREBA Davao is currently focusing on the hospitality and tourism sectors with the untapped potential of the city to drive economic growth in these markets.

The main investors in both regions are overseas Filipino workers with PHP 50,000 to PHP 100,000 salary. If Cebu has limited land availability, Davao has limited entertainment options for investors. However, developers are already looking for ways to improve this aspect so that more investments will be made in the hospitality sector. Right now, they are also bolstering their efforts in improving the tourism infrastructure such as resorts, hotels, gaming facilities, and restaurants to attract retirees.

Final Thoughts

Real estate developments in Cebu and Davao City represent the thriving property market that is designed to meet the needs of investors and home buyers. The future is brighter as we see a lot of improvements being made to fit the dream lifestyle of every homeowner. If you are looking to invest in properties in Metro Cebu or Davao City, we are here to help. You can register on the REALS Corporation website for property listings. Invest now and secure your future with us!

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If you haven’t thought of it yet, time will come when you need to transfer the title of the property your parents own. And a lot of people are asking where they can save some money, is it by transferring the title while their parents are still alive or just wait until they’re gone. Well, this is a practical question and no one should feel bad about this. Find out the answer in this article including the four major fees that you need to settle during the title transfer.

Donor’s Tax vs. Estate TaxSo, why is it better to wait until your parents are gone before you transfer the mother title. There’s one good reason for this, and not everyone is aware of it. You can save a lot of money when transferring the title of a property from the deceased owner. It’s because you are paying the estate tax instead of the donor’s tax. Let’s make it even simpler with some examples so you can easily understand how this works.

You don’t need to pay for the Documentary Stamp Tax if the original owner is already gone. The DST is based on 1.5% of the net value of the property. For example, for a 10 million-worth property, you will pay Php 150,000 for the Documentary Stamp Tax. If both parents are gone while transferring the title, you don’t have to pay this huge amount. Therefore, you’re able to save money by settling the estate tax rather than paying the donor’s tax.
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4 Major Fees During Title TransferHere are the processing fees that you need to pay when transferring the title of an inherited property in the Philippines:

1. Estate Tax. This is the 6% of the net estate or total value of all the properties that belong to your deceased parents with BIR set deduction. Let’s say the net estate of the property is Php 10 million, the estate tax will be Php 600,000 minus the BIR set deduction. You will settle this with the BIR where the registered owner resides.
   
       
2. Transfer Tax Fee. With a 10 million-worth property, the Transfer Tax Fee is 0.5% of the     value. This fee is paid at the Treasurer’s office where the property is registered.
   
       
3. Registration     Fee. This fee must be paid at the Registry of Deeds. The amount depends on the assessed value of the property, and this is system generated. If the value is 10 million pesos, the registration fee would be Php 49,386.83.
   
       
4. Notarial Fee. The notarial fee depends on the lawyer you hire to notarize the document. However, the common rate used is 1% of the property’s net value. So if it’s worth Php 10M, then you need to pay Php 100,000 to your lawyer for the notarial fee.
   
   
   

Now that you have an idea how much money is involved when transferring a land title, you can make an informed decision whether to transfer the title before or after your parents are gone. Let us know if you have further questions so we can assist you and address your concern.

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You have just found the perfect property for your home. After reviewing your finances and completing the
due diligence on the title of the property, you are ready to make your first purchase. But wait, is the
purchase price the only consideration for the buyer? The answer is no. Below is a list of the associated
costs and expenses for the buyer when purchasing a real property.

At the time of purchase:

1) Documentary stamp tax (DST) – due to Bureau of Internal Revenue (BIR)
DST is a tax imposed on the document (Deed of Sale or a transfer of real property agreement).
Rate & Tax Base: 1.5% X Selling Price/Consideration or Fair Market Value, whichever is higher.
Deadline: Within 5 days after the close of the month when the agreement was executed.

2) Transfer tax – due to Local Government Unit (LGU)
Transfer tax is a tax on sale, donation, barter, or any mode of transferring ownership or title of
real property.
Rate & Tax Base: Not more than 50% of 1% of the Selling Price/Consideration or Fair Market
Value, whichever is higher. Note that the regulation states a “not more than” provision so the local
government may impose a lower percentage than 50% of 1% as per local government guidelines.
Deadline: Within 60 days from when the agreement was executed.

3) Registration fee & IT Fee – due to Register of Deeds (ROD) or Land Registration Authority (LRA)
where the real property is located.
Rate & Tax Base: The registration fee is computed based on the LRA Registration Fee Table
found in LRA’s website. An IT Fee is also collected which is minimal (about P5,000).
Deadline: After payment of taxes to the BIR, a Certificate Authorizing Registration (CAR) and Tax
Clearance (TCL) is secured by the buyer. Both CAR and TCL should be presented to the ROD,
together with other requirements, within 2 years as the CAR is only valid for 2 years from
issuance date. Otherwise, buyer will need to request for issuance of a new CAR.

4) Title Transfer Service Fee (Optional) – payable to documentation services company or services of
a broker.
Instead of personally going to these government agencies to process the title transfer, the buyer
may engage a third-party individual or company or broker to process all the title transfer
procedures, and a fee is collected as agreed by the parties.

The Capital Gains Tax (CGT) is usually paid by the Seller, unless it is explicitly stated that CGT will be for
the buyer’s account.

CGT is a tax imposed on the gains presumed to have been realized by the seller from the sale,
exchange, or other disposition of capital assets located in the Philippines. The word “gains” in CGT
should not be misconstrued as tax on the profit (selling price less cost of acquisition) as the tax base is
the higher of the Selling Price or Fair Market Value.

Rate & Tax Base: 6% X Selling Price/Consideration or Fair Market Value, whichever is higher.
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Deadline: Within 30 days from when the agreement was executed.

Regular Payments after purchasing the property:
1) Real property tax (RPT) – due to Local Government Unit (LGU)
Rate & Tax Base:
Deadline: 4 equal quarterly installments of Basic RPT:
31 March – 1 st quarter
30 June – 2 nd quarter
30 September – 3 rd quarter
31 December – 4 th quarter
Note: The LGU gives a discount for Advance Prompt Payment (annual payment) not
exceeding 20% of annual tax due. Note that the regulation states a “not exceeding”
provision so the local government may impose a discount percentage lower than 20% as
per local government guidelines.

2) Association dues – this is usually collected by a subdivision’s Homeowner Association (HOA) or a
condominium’s property manager and the amounts vary. Property owner may opt to pay monthly
or do an advance payment for the full year to avail of discounts, as may be applicable.

are you looking for a house and lot for sale in the Philippines? 

​Author: Angie Wee, CPA

When it comes to transferring a mother title to its heirs, it’s important that everyone involved are open to communication. It’s easier to subdivide an inherited property when the siblings are in good terms and are willing to cooperate during the title transfer. If there are no problems with the property such as debt, it would be faster to get the new individual titles for the new owners. Read on to understand the five steps when transferring the title from the deceased owner.

1. Get the CAR from BIR

Go to the Bureau of Internal Revenue office located in the city or region where the deceased owner is registered and pay the estate tax. If it’s already settled, you can proceed to get a copy of the Certificate of Authorizing Registration or CAR.

2. Go to a Publication Company

One of the most common options here is a newspaper or broadsheet in the Philippines. Just bring the Deed of Extrajudicial Settlement of Estate and publish this document on the newspaper in three consecutive weeks. Then request for the Affidavit of Publication which you need to submit together with the other requirements.

3. Proceed to the Treasurer’s Office

Pay the Transfer Tax fee at the City or Municipal Treasurer’s Office in order to get the Tax Clearance.

4. Bring All Requirements to the Registry of Deeds

Go to the Registry of Deeds and submit all the requirements from the BIR, Treasurer’s Office, and the publication company. After submitting the documents, wait for the release of the new individual titles under the heirs’ names.

5. Update the Tax Declaration

Proceed to the Assessor’s Office to update the name on the Tax Declaration with the heirs names. Keep in mind that all these steps are applicable if there’s no Last Will Testament, more heirs, and they are in good terms.

Requirements for Title Transfer of Inherited Property

• Notarized Extrajudicial Settlement from a lawyer.
      
• Affidavit of Publication from the publication company or newspaper.
      
• Certificate of Title or original title of the inherited property.
      
• Tax Declaration from the Assessor’s office and Certificate of No Improvement if there are no construction done in the property.
      
• Certificate of Non-Delinquency from the City or Municipal Treasurer’s Office.
      
• Transfer Tax Clearance from the Treasurer’s Office.
      
• Certificate Authorizing Registration or CAR from the BIR.
• 
  

When you request for CAR from the BIR office, you also need to submit additional documents such as the Death Certificate, TIN or Tax Identification Number, valid IDs, Birth Certificate/Marriage Certificate, and Bond Certificate if there are personal properties that should also be subdivided among the heirs.

Final Thoughts

Again, this is applicable if there’s no Last Will Testament, heirs have proper communication among themselves, and the property doesn’t have any debt. If you have questions regarding land title transfer for inherited properties in the Philippines, please feel free to contact us or send us a message here on the website.

You probably already know a few things to do or avoid when buying a property in the Philippines. But there are some secrets that I will share with you that I’ve learned as a seasoned real estate broker. Some of these are often overlooked by buyers, but are actually very important during the buying process. So, let’s figure out the key factors that you need to know before purchasing a house and lot, specifically in subdivisions.

1. Is It a Flood-free Area?

If you’re living in a condominium building, flooding might not be a common problem which you may overlook when buying a property in subdivision. The best way to see if the area is prone to flooding is to ask a local or the sari-sari store owner nearest to the property.

2. Verify the Authenticity of the Title

To buyers eyeing on secondhand properties or house and lot on private listings, there are several ways to verify their titles. However, the most effective way is to ask the Registry of Deeds regarding the property you want to buy. You can request a certified true copy of the land title to see if there are problems and check its authenticity. The staff can answer all your questions pertaining to the property as well as issues regarding the title.

3. Ask About the Type of Finishing

It’s also important to know the finish type of the property you are purchasing. There are three types of finish – bare, fully finished, and fully furnished. Bare finish means you are buying a house without tiles, paint, and cabinets. Fully finished refers to a house that is completely constructed with paint, tiles, and fixtures. Fully furnished is the best because that means the house is complete with appliances and all you need to do is move in. Avoid advertisements that say affordable house and lot, but only bare finish. That means you need to spend more to finish the interior and exterior of the house.

4. Is It a Formal Subdivision

Formal subdivisions have property management, admin staff, security guards, and fence. On the other hand, informal subdivision is the exact opposite of formal subdivision where there’s no security guard, admin, and even gate.

5. Subdivision Dues

If the property is in a formal subdivision, you need to pay monthly subdivision fee. This is used by the admin to pay the security guards and other staff, maintain the amenities, and pay common electricity bills. The advantage of informal subdivision is that there’s no monthly dues. So make sure to ask how much is the subdivision fee before buying a property since this is a lifetime fee that you need to pay as long as you’re residing in that subdivision.

6. Ask About the Minimum Construction Cost and Height Restriction

Some subdivisions have height restrictions before giving building permits to owners. Also, be sure to ask about the minimum cost for construction to ensure you are not violating any policies. These limitations are set to ensure that all properties have good quality structures and meet the standards of the subdivision.

7. Is the Property VATable

Value-added tax refers to the additional 12% on properties being sold. If the house is worth Php5 million, you will need to pay an additional Php600k to BIR. So ask about the VAT first before buying a property to avoid these huge costs.
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Whether you want to buy or sell a property anywhere in the Philippines, please let us know so we can help you get started. Visit reals.ph website and go to our dashboard to List a Property in the market, or Sell a Listed Property without the hassle.

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Before you buy a land property in any subdivision here in the Philippines, make sure to check on the unpaid dues of the previous owner. Every month, homeowners need to pay a subdivision fee which is calculated depending on the amount per square meter. To know more about this, read until the end of this article so that you won’t have a problem in terms of unsettled fees when buying a lot. 

Hidden Charge Explained

The hidden charge that we are talking about here is the unpaid Home Owners’ Association dues by the lot owner. This subdivision due or HOA fee must be settled before buying a land property to avoid paying hefty hidden charges in the future. Making sure that the property doesn’t have any dues with the HOA admin will save you a lot of money and time by the time you want to build a house in that lot.

Now, what is this Home Owners’ Association fee and why do homeowners need to pay it? This fee is used to maintain the subdivision’s amenities including the swimming pool, and it is also where the admin gets the salary for the security guards, utility workers, and even landscapers. HOA fees also help in paying common electricity consumption such as street lights. In other words, it is very important in the maintenance of the entire subdivision.

The Problem with Unpaid Subdivision Dues

It becomes a problem for the buyer of the land property when they only find out the unpaid dues after the lot title transfer. Why? Because it may be difficult to contact the previous owner after so many years without communication. If the seller have unsettled dues with the association, you might end up paying that amount. As a buyer, you won’t know this unless the seller discloses this part during the negotiation.

You’re lucky if your real estate agent does his due diligence and ask the admin regarding this matter. Then it would be easy to avoid such problems and save yourself from the headache. Settling these unpaid dues before transferring the title is crucial when the time comes that you want to build a home. Remember that you will need a permit from HOA to build a house which you need to process by paying any amount due. Some sellers would say they won’t settle the dues anymore since the lot title has already been transferred to you.

HOA Fees Computation

Do you know why it is a big problem when you discover there are unpaid HOA dues from the previous owner? Let’s say you bought a lot in your dream subdivision and the HOA fee is Php 3 per square meter every month. That is Php 1,500 per month and Php 18,000 per year. If the previous owner did not settle this for 10 years, then you need to pay a whopping Php 180,000 HOA fees. So before you pay the total selling price of the lot you are buying, make sure that the owner has settled all dues with the HOA admin. Ask for the HOA Clearance or Official Receipt of the HOA fees paid for the previous year as proof of payment.

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