“Risk comes from not knowing what you’re doing.” — Warren Buffett.
Understanding the sharing of real estate taxes and fees expenses when buying a property in Cebu or anywhere in the Philippines is important to avoid problems during the sale transaction.
All parties involved in the transaction must know the expenses of who will pay the taxes and fees when buying a property — either the Buyer, the Individual Seller, or the Real Estate Developer. It is important to know beforehand who, what, and how much the standard taxes are during a property sale transaction in the Philippines.
Here’s a detailed yet simplified guide to help Real Estate buyers and Property sellers understand the Tax and Fee obligations in a property buying for 2025.
Taxes and Fees in a Real Estate Buying in the Philippines: Standard Practice.
The Property Seller (Individual) will pay for:
- Capital Gains Tax (CGT)
- Rate: 6%
- Based on the selling price or the BIR zonal value, whichever is higher.
- Unpaid Real Property Tax (RPT)
- The amount depends on the local assessor’s office rate for the property’s location.
- Real Estate Broker/Agent/Realtor Professional Fee (PF)
- Rate: 5% (standard)
The Property Buyer will pay for:
- Documentary Stamp Tax (DST)
- Rate: 1.5%
- Based on the selling price or the zonal value, whichever is higher.
- Registration Fee
- Rate: 0.8%.
- Transfer Tax
- Rate: 0.5% to 0.8% (varies by local government unit or LGU).
- Notarial (Lawyer) Fee
- Rate: 2% to 3% (negotiable based on the Integrated Bar of the Philippines standard).
- Title Transfer Processing Fee
- Approx. PHP 35,000 to PHP 50,000.
Common Practice: "Net of Taxes" Sale
- For most transactions, the Seller offers a net price.
- This means Buyers shoulder all taxes and fees (except the broker’s Professional Fee or commonly known commission).
When a Buyer purchases a pre-selling or ready-for-occupancy (RFO) property (house and lot, townhouse, lot, or condominium unit) directly from a real estate developer, the standard sharing of Taxes and Fees are as follows:
The Real Estate Developer will pay for:
- Real Estate Broker/Realtor/Agent Professional Fee
- Rate: 5% (standard).
- Title Transfer Processing Fee
- Handled by the Developer’s Liaison Officer.
The Property Buyer will pay for:
- Creditable Withholding Tax (CWT)
- Rate: 6%.
- Documentary Stamp Tax (DST)
- Rate: 1.5%.
- Transfer Tax (TT)
- Rate: 0.5% to 0.8%.
- Registration Fee (RF)
- Rate: 0.8%.
- Notarial Fee
- Amount varies but is often included in transfer charges.
- Value-Added Tax (VAT)
- Rate: 12%.
- Applies to properties exceeding the VAT-exempt threshold of PHP 3,600,000 (effective January 1, 2024).
Note The rate for transfer taxes varies depending on the local government unit (LGU)
Total Buyer’s Expenses from Real Estate Developers:
- Transfer charges: More or less 10% of the total contract price (TCP).
- The Developer’s Liaison Officer processes taxes and fees for all Developer buyers.
Key Takeaways
Buying a real estate property in the Philippines involves thorough due diligence to understand the fees, tax liabilities, and legal requirements and avoid incurring additional expenses when buying a property.
- When you know your tax obligation when buying a property, you can prepare for your budget and pay your Tax due before the due date.
- Other tax rates vary depending on the property’s location (LGU rates apply).
- When unsure of what or how much, hire a PRC-licensed Real Estate Broker, Realtor, or Agent to see to it smooth transactions and compliance with standard practices in buying properties in the Philippines.
MC Dela Fuente Realty has been in the business since 1997, helping several property buyers compute taxes and fees when buying a property in Cebu, Philippines, either from an individual seller or from a Real Estate Developer.
Other Real Estate Services we offer in Cebu
- Land Title Transfer
- Estate Tax: Extrajudicial Settlement among Heirs
- Real Estate Property Appraisal
- Yearly Real Property Tax Payment
- Reissuance of Lost Owner’s Duplicate Copy of the Title
- Registration and Cancellation of Mortgage Annotation
- Land Title Due Diligence (Verification of Title, Tracing back of Ownership; Technical Description of the Title)
- Property Land Survey
- Project Selling (House & Lot, Vacant Land, Condominiums, Townhouses, and Memorial Lots)
Ma. Corazon A. dela Fuente
Licensed Real Estate Broker in Cebu, Philippines since 1997
REB License #: 0006953
PTR #: 3595138
DHSUD #: CVRFO-B-12/18-0673
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