As an investor into Philippine real estate, it is important to understand your tax obligations. The most basic tax that you need to take care of is the Real Property Tax. Every owner of a property in Philippines has to pay Real Property Tax.
Real property tax is an ad valorem tax imposed on real estate paid annually to the Local Government Unit. Real Property tax is collected every 31st of January each year. However, taxpayers can also decide to pay in quarterly installment every end of the calendar quarter.
If a taxpayer opts to pay the basic real property tax and the additional tax for public education called Special Education Fund in advance, the municipality concerned may grant a discount of not more than 20% of the annual tax. That is also the reason why the City Hall is very busy before the end of the year!
To pay for the Real Property Tax, you need to prepare the following:
If you are a new owner of a property, you will need to obtain the tax declaration and official receipts from the developer.
For those who have paid the Real Property Tax before, you simply have to bring along the previous official receipts for RPT to the Treasurer’s Office of the municipality to get an assessment of the tax to pay.
The Real Property Tax is not based on the sales transaction price of the property, but rather based on the assessed property value (or taxable value of the property). The tax rate for most cities and municipalities in Metro Manila is 2%, and for provinces is 1%.
The Treasurer’s Office of the municipality collects the payment of real property tax. You can pay by cash or manager’s check issued by a bank. Personal checks are not accepted.
Late payments will result in an interest rate of 2% surcharge per month to a maximum of 72% percent or 36 months of late payment.
Non-payment will result in the local government to foreclose and auction the property under the category of tax-delinquent properties.
The good news is that PPIC provides assistance for payment of Real Property Tax, for our foreign investors. We know that it will be troublesome for our owners to handle the tax payment. At PPIC, we help to take care of the payment of RPT on behalf of the owners. Talk to us to let us know how we can help.