Guide to Taxes, Commissions & New Title (TCT or CCT) Registration when
Buying Real Estate in the Philippines
by Doug Marsh, Managing Director of Marsh Real Estate Agency
Here is the Standard sharing of expenses between the Buyer and the Seller when transferring the Real Estate Property Title/Deed (TCT - Transfer Certificate of Title or a CCT - Condominium Certificate of Title) to the new owner:
The SELLER pays for the:
- Capital Gains Tax which is equivalent to 6% of the selling price on the Deed of Sale or the zonal value, whichever is higher. Or,Withholding Tax if the seller is a corporation.
- Unpaid real estate taxes due (if any).
- The Broker's Commission/Professional Fee.(usually 5%).
The BUYER pays for the cost of of the Documentary Stamps, Title Transfer and Registration of the new TCT or CCT to their name:
- Documentary Stamp Tax - 1.5% of the selling price or zonal value or fair market value, which ever is higher.
- Transfer Tax - 1% of the selling price, or zonal value or fair market value, which ever is higher.
- Registration Fee - 0.50% of the selling price, or zonal value or fair market value, which ever is higher.
- Incidental and miscellaneous expenses incurred during the new registration process.
The above sharing of expenses is the standard practice in the Philippines. However, Buyers and Sellers can mutually agree on other terms as long as it is done during the negotiation period (before the signing of the "Deed of Sale"/”Deed of Absolute Sale).
The "Deed of Sale" or "Deed of Absolute Sale" is the Notarized Document showing the legal transfer of Real Estate Property ownership. The deed of sale is then taken by Buyers Broker to the Municipality/City Registry of Deeds to be officially recorded after paying the documentary stamp, transfer tax and registration fees. Always have your Broker verify from the Registry of Deeds the authenticity of a Transfer Certificate of Title before buying a property.
Your Broker will do the entire registration process for you (part of the service they provide for their Commission), however, the payment of all government , taxes, transfer fees and notary expenses will be shouldered by the buyer.
Documents needed when transferring the title (TCT or CCT) to the new owner:
- 2 Certified true copies of the title
- 2 Notarized Copies of the “Deed of Sale” or “Deed of Absolute Sale”
- Latest Tax Declaration of the property
- Certificate from the Bureau of Internal Revenue that the Capital Gains Tax and Documentary Stamps have been paid
- Receipt of payment of the Transfer Tax and new Registration Fees
An adapted form of the "Torrens" system of land registration is used in the Philippines. The system was adapted to assure a buyer that if he buys a land covered by an Original Certificate of Title (OCT) or the Transfer Certificate of Title (TCT) issued by the Registry of Deeds, the same will be absolute and final.
Always consult first with your Licensed Broker about the latest Government information on the above Fees, Taxes and Commission, as these may change periodically.