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Taxes and Fees in a Real Estate Transaction: What’s there to know?

Taxes and Fees in a Real Estate Transaction: What’s there to know?

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Whether you are buying or selling a property, it is important to bear in mind that, most of the time, the selling price is not the end-all of your expenses. There are taxes and fees to complete your real estate transaction. What are these?

 

  1. Capital Gains Tax (CGT) – this amounts to 6% of the (a) selling price as appearing in the Deed of Sale, (b) BIR zonal value or (c) assessed value, whichever is highest. This is payable to the Bureau of Internal Revenue within 30 days from date of transaction.

 

  1. Documentary Stamp Tax (DST) – this amounts to 1.5% of the (a) selling price as appearing in the Deed of Sale, (b) BIR zonal value or (c) assessed value, whichever is highest. This is payable to the Bureau of Internal Revenue on the 5th day of the month following the transaction.

 

Usually, the CGT and DST are paid simultaneously by the person processing your documents.

 

  1. Transfer Fees – This amounts to 0.5% of the (a) selling price as appearing in the Deed of Sale, (b) BIR zonal value or (c) assessed value, whichever is highest. This is payable to the Assessor’s Office of the Provincial Government, if the property is located in municipalities, or of the City Government, if the property is located in the city.

 

  1. Transfer Fees –This is payable to the Provincial Register of Deeds (P-ROD), if the property is located in municipalities, or City Register of Deeds (C-ROD) if the property is located in the city. The fee is based on a schedule of fees http://lra.gov.ph/wp-content/uploads/2015/07/lrafeeschedule1.pdf . Just to give you an idea, a P 400,000 selling price cost us around P5,000.00.

 

A reliable licensed broker will assist you in going through these payments at the government agencies concerned. Broker’s fee, however, is usually already included in the selling price.

 

Aside from the fees mentioned above payable to government agencies, there is also Notarial Fee payable to the lawyer who will prepare and notarize the document of sale.

 

Who pays these taxes and fees, nowadays, depends on negotiation between the buyer and seller.