This post was updated by Hermann Haller on July 30, 2024
Buying a property is a significant investment, and understanding the associated transaction costs is crucial for both buyers and sellers. In the Philippines, these costs can add up and influence your overall budget. Because each transaction is unique it is important to get a detailed estimate from a professional. Feel free to call or message us on WhatsApp at +63-917-106-8136 or email us at contact@hhresco.com for more specific information about your transaction.
Here’s a detailed breakdown of what you can expect.
1. Documentary Stamp Tax (DST)
Rate: 1.5% of the property’s selling price, zonal value, or fair market value, whichever is higher.
Explanation: The DST is a tax on documents, instruments, loan agreements, and papers evidencing the acceptance, assignment, sale, or transfer of an obligation, right, or property. This is paid to the BIR.
Explanation: The DST is a tax on documents, instruments, loan agreements, and papers evidencing the acceptance, assignment, sale, or transfer of an obligation, right, or property. This is paid to the BIR.
2. Transfer Tax
Rate: 0.5% to 0.75% of the selling price, zonal value, or fair market value, whichever is higher.
Explanation: This tax is necessary to transfer the ownership of the property from the seller to the buyer. This is paid to the city or municipality treasurer.
3. Registration Fee
Rate: Between 0.25% and 0.5% of the selling price, zonal value, or fair market value, whichever is higher.
Explanation: This fee is for the registration of the property in the buyer’s name. This is paid to the registry of deeds.
Explanation: This fee is for the registration of the property in the buyer’s name. This is paid to the registry of deeds.
4. Notarial Fees
Rate: 1% to 2% of the selling price but negotiable. If you high value property, do frequent transactions, or your realtors have existing relationships where they can obtain volume discounts, this rate often is reduced.
Explanation: These fees are for the services of a notary public who will notarize the Deed of Absolute Sale and other relevant documents. This fee often includes the coordination of the title transfer. This fee is paid to the lawyer, notary, or title processor.
5. Capital Gains Tax (CGT)
Rate: 6% of the selling price or zonal value, whichever is higher.
Explanation: This tax is applied to the profit made from the sale of the property and is paid to the BIR.
Explanation: This tax is applied to the profit made from the sale of the property and is paid to the BIR.
6. Real Estate Agent/Broker’s Fee
Rate: 3% to 5% of the selling price.
Explanation: These fees are usually paid by the seller but can be negotiated depending on property value. This fee is for the services provided by the real estate agent or broker and act as incentive for agents and brokers to complete your transaction successfully.
Explanation: These fees are usually paid by the seller but can be negotiated depending on property value. This fee is for the services provided by the real estate agent or broker and act as incentive for agents and brokers to complete your transaction successfully.
7. Value Added Tax (VAT)
Rate: 12% of the selling price if applicable (generally for properties sold by developers).
Explanation: This tax applies primarily to properties sold by developers or certain types of commercial properties that are sold brand new. VAT does not apply to secondary sales, unless the owner of the property is a corporation that used the property in the course of business.
Explanation: This tax applies primarily to properties sold by developers or certain types of commercial properties that are sold brand new. VAT does not apply to secondary sales, unless the owner of the property is a corporation that used the property in the course of business.
8. Miscellaneous Fees
Rate: Varies
Details: This includes fees for the preparation of documents, administrative fees, and processing fees, which can vary depending on the complexity and the entities involved.
Details: This includes fees for the preparation of documents, administrative fees, and processing fees, which can vary depending on the complexity and the entities involved.
9. Home Loan Fees (if applicable)
Rate: Varies
Details: These can include appraisal fees, processing fees, and other bank charges. Typically, appraisal fees range from PHP 3,000 to PHP 5,000, and processing fees can be around 1% to 3% of the loan amount.
Details: These can include appraisal fees, processing fees, and other bank charges. Typically, appraisal fees range from PHP 3,000 to PHP 5,000, and processing fees can be around 1% to 3% of the loan amount.
Example Calculation:
Let’s assume you are buying a property with a selling price of PHP 10,000,000.
- Documentary Stamp Tax: 1.5% of PHP 10,000,000 = PHP 150,000
- Transfer Tax: 0.5% of PHP 10,000,000 = PHP 50,000
- Registration Fee: 0.25% of PHP 10,000,000 = PHP 25,000
- Notarial Fees: 1.5% of PHP 10,000,000 = PHP 150,000
- Capital Gains Tax: 6% of PHP 10,000,000 = PHP 600,000 (paid by seller)
- Real Estate Agent/Broker’s Fee: 5% of PHP 10,000,000 = PHP 500,000 (paid by seller)
- Miscellaneous Fees: PHP 20,000 (estimate)
When buying property in the Philippines, it is crucial to budget for these additional transaction costs to avoid any surprises. It’s also advisable to consult with a real estate professional to get a precise estimate and understand all the requirements specific to your transaction.
If you need more detailed information or assistance with a property transaction, feel free to contact our team at Haller's Realty. We're here to help make your property buying experience as smooth and transparent as possible.
Last Updated On July 25, 2024