Philippines – Property Taxes

What taxes and fees apply when buying a property in the Philippines?

Every transfer of real property in the Philippines — whether through an outright sale, a gift, inheritance, or another mode of conveyance — sets in motion a series of taxes and fees levied by both national and local authorities. Knowing which costs fall to the buyer and which to the seller is essential for accurate financial planning before any contracts are signed.

Documentary Stamp Tax (DST) — The closest Philippine equivalent to stamp duty in other jurisdictions is the Documentary Stamp Tax, calculated at 1.5% of the property’s value. It must be settled as part of the BIR’s one-time transaction procedure before a new title can be registered in the buyer’s name. The tax base is the higher of the agreed selling price or the property’s fair market value or assessed value. Although both parties are technically liable under Philippine law, it is customary in practice for the buyer to shoulder this cost.

Local Transfer Tax (LTT) — The city or municipality in which a property sits imposes a local transfer tax at the point ownership changes hands. Rates differ by jurisdiction: provinces may levy up to 0.5% of the higher of the selling price or fair market value, while cities and municipalities within Metro Manila may charge up to 0.75%. This is conceptually similar to municipal stamp duties found in some European countries, though it is remitted to the local government rather than a national body. Buyers conventionally settle this charge, although it can be subject to negotiation.

Registration Fees — Fees payable to the Registry of Deeds for registering the transfer and issuing a new Transfer Certificate of Title (TCT) in the buyer’s name amount to roughly 0.3% to 0.6% of the property value (as of early 2026).

Notarial Fees — As of early 2026, notarising a deed of sale and associated documents in Manila typically costs between ₱5,000 and ₱30,000 (approximately USD 90 to 530). A conveyancing lawyer who oversees the entire transfer process will generally charge more. A notarised Deed of Absolute Sale is a legal prerequisite for completing the ownership transfer.

VAT on New Properties — For 2025, residential lots priced above ₱3,600,000 and residential house-and-lot or condominium units priced above ₱15,000,000 (subject to annual inflation adjustment) are ordinarily subject to 12% VAT. Sales of residential properties below the VAT threshold, or sales by individuals not engaged in the real estate trade (i.e., disposing of a capital asset), are typically VAT-exempt.

Who pays what — a summary:

• Seller’s usual burden: Capital Gains Tax (CGT), real estate broker’s commission, legal fees, notarial fees (often shared), and any outstanding Real Property Taxes and association dues.
• Buyer’s usual burden: Documentary Stamp Tax (DST), Local Transfer Tax (LTT), Registry of Deeds registration fees for title transfer, the buyer’s own legal fees, and miscellaneous title-processing costs.

Worked example (₱5,000,000 property in Metro Manila, capital asset, as of 2025):

Note: These figures are illustrative only. The actual tax base uses the highest of the selling price, BIR zonal value, or assessed value. Verify current rates with the BIR and your local government unit.

The Philippines does not currently provide a first-time buyer tax exemption or a reduced transfer tax rate, meaning all purchasers pay identical rates irrespective of how many properties they have previously owned. There is likewise no general distinction in transfer tax rates between resident and non-resident buyers for most transaction taxes.

What taxes and fees apply when selling a property in the Philippines?

Whether you are a Philippine resident or a foreign national based overseas, selling property in the Philippines brings its own set of taxes and costs that require careful budgeting. The single largest expense for most sellers is Capital Gains Tax (discussed in detail in the next section), but a number of additional obligations also apply.

Capital Gains Tax (CGT) — Where a property qualifies as a capital asset — meaning it is not used in the course of a business — the seller must pay a flat 6% capital gains tax calculated on the gross selling price or fair market value, whichever is higher. This must be settled within 30 days of the deed of sale being notarised, using BIR Form 1706.

VAT (if applicable) — Where VAT is chargeable, it applies alongside capital gains tax because the two taxes target different elements of the transaction. Although VAT is technically the seller’s liability, it is ordinarily incorporated into the gross selling price and effectively passed on to the purchaser.

Broker’s Commission — Beyond tax obligations, sellers should set aside funds for a real estate broker’s commission of 3–5%, as well as legal fees, notarial fees, and various administrative charges.

Outstanding Real Property Taxes — Any unpaid real property tax arrears must be cleared before transfer taxes can be processed. Sellers are expected to settle all outstanding balances prior to or at completion of the sale.

As of early 2026, the combined cost of selling a residential property in Manila typically falls between 8% and 12% of the sale price, with capital gains tax and broker’s commission accounting for the majority. This compares broadly with selling costs in other Asian property markets, though the Philippine CGT is notably a final tax levied on the full gross selling price rather than on the actual profit generated.

Where real estate is classified as an ordinary asset — for instance, stock-in-trade held by a developer — the transaction is instead subject to creditable withholding tax (CWT) at rates of 1.5% to 6% depending on the seller’s status, 12% value added tax, and 1.5% DST. One of the most frequently encountered and expensive compliance errors is incorrectly treating property as a capital asset when it is legally classified as an ordinary asset.

Payment deadlines:

• Capital Gains Tax must be remitted within 30 days of the sale.
• Documentary Stamp Tax must be paid within 5 days after the end of the month in which the sale occurred.
• Local Transfer Tax deadlines differ between cities and municipalities, but payment is generally required within 60 days of notarising the deed of sale.

How does capital gains tax work on property in the Philippines?

Under Philippine tax law, Capital Gains Tax (CGT) is a specific, final tax imposed on the sale, exchange, or other disposal of real property situated in the Philippines that is classified as a capital asset. It is charged at a rate of 6% on whichever is the higher of the gross selling price (GSP) or the fair market value (FMV). This differs markedly from capital gains tax regimes in many other countries, where the levy is computed on the actual profit — that is, the difference between the sale price and the original acquisition cost. In the Philippines, CGT functions as a transaction-based tax applied to the full selling price or market value, regardless of what the seller originally paid for the property.

The 6% rate is applied to the highest of three possible values: the gross selling price recorded in the Deed of Absolute Sale; the Fair Market Value as determined by the BIR’s Zonal Valuation; or the Assessed Value established by the Provincial or City Assessor. Whichever of these three figures is greatest becomes the tax base.

Worked example (as of 2025): A seller agrees on a sale price of ₱4,500,000 for a residential house. The applicable BIR zonal value for that property is ₱5,000,000. Because the zonal value exceeds the agreed price, CGT is computed on ₱5,000,000: 6% × ₱5,000,000 = ₱300,000 CGT due. Always check the prevailing BIR zonal values for your property’s specific location via the BIR website before estimating your liability.

CGT is a “final tax,” meaning that once it has been paid, the seller is not required to declare the gain again on their annual income tax return. There is no distinction between short-term and long-term holding periods affecting the CGT rate — the flat 6% applies however long the property has been owned. There is also no indexation relief for inflation.

Principal residence exemption: A CGT exemption is available on the sale of a principal residence where all of the following conditions are met: the property sold is the taxpayer’s principal place of residence; the seller is a natural person, not a corporation; the full proceeds are used to acquire or construct a new principal residence within 18 months of the sale date; the taxpayer notifies the BIR in writing of their intention to claim the exemption within 30 days of the sale; and the exemption is invoked no more than once every ten years.

If the entire sale proceeds are reinvested in a new principal residence within the 18-month window, the transaction can be fully exempt from CGT. If only a portion of the proceeds is reinvested, CGT applies proportionately to the amount not utilised.

There is broadly no difference in real property tax treatment between residents and non-residents — both are liable to the same 6% capital gains tax rate. The principal distinction is that non-residents are barred from accessing certain reliefs, notably the principal residence exemption available to those selling their main home.

For sales of condominium units or buildings where the seller is a foreign corporation, the 6% CGT does not apply. Any gain derived by a foreign corporation from such a disposal of a capital asset would instead be subject to 25% corporate income tax.

Always confirm current CGT rates and the applicable filing forms with the Bureau of Internal Revenue (BIR) before entering into any transaction, as rules and procedures are subject to change.

Are there any ongoing annual property taxes in the Philippines?

All owners of Philippine real estate are subject to an annual recurring charge known as Real Property Tax (RPT), with the applicable rate determined by where the property is located. In broad terms, this is comparable to council tax in the United Kingdom or local government rates in Australia, though its calculation method differs.

The RPT rate is 1% of the assessed value for properties situated in provinces, and 2% of the assessed value for properties located in Metro Manila (as of 2025). The tax is computed on the assessed value, which represents a prescribed percentage of the current fair market value and varies according to the property’s actual use and zoning classification.

Primary responsibility for the administration of real property tax rests with provinces and cities, including oversight by the Department of Finance. Property owners receive their tax bills from their local city or municipal treasurer’s office rather than from any central national authority.

Owners may choose to pay in four equal quarterly instalments, with each payment due on or before the last day of the relevant calendar quarter. Many property owners opt to pay the full year’s RPT in January in order to benefit from early payment discounts offered by certain local government units — it is advisable to confirm this option with your specific municipality.

Before a certificate of title over a parcel of land can be transferred to a purchaser, the Registry of Deeds requires a Certificate of Full Payment of Real Property Tax issued by the City or Municipal Treasurer. This means sellers cannot complete a transfer unless all RPT arrears have been settled.

Unlike the US property tax model, where assessed values are often revised frequently at county level and can rise substantially year on year, RPT assessments in the Philippines tend to be updated less regularly. That said, the government has introduced reforms under Republic Act No. 12001 to modernise the property valuation framework. Verify the current assessed value of your property with your local assessor’s office.

How does inheritance tax apply to property in the Philippines?

Following the enactment of the Tax Reform for Acceleration and Inclusion (TRAIN) Law, Philippine estate tax was simplified to a single flat rate of 6% on the net estate. This is considerably more straightforward than the tiered inheritance tax structures found in countries such as Japan or France, and in contrast to the UK inheritance tax system, the Philippine estate tax does not vary according to the kinship between the deceased and the beneficiaries.

Estate tax applies to all real property located in the Philippines regardless of whether the deceased was a resident or non-resident of the country. The assets forming part of the gross estate are valued at their fair market value as at the date of the decedent’s death. For citizens or residents of the Philippines, the net estate is arrived at by subtracting from the gross estate a standard deduction of ₱5,000,000 (as of 2025), which requires no supporting documentation to claim.

Estates with a net value below ₱200,000 are exempt from estate tax (as of 2025). Other allowable deductions include funeral expenses, judicial expenses, the decedent’s debts and liabilities, and a family home deduction — verify the current limits for each deduction with the BIR.

The estate tax return must be filed and the tax paid within one year of the owner’s death, using BIR Form 1801. Extensions may be granted in certain circumstances involving genuine hardship.

Non-residents are also required to file an estate tax return. Where a non-resident is an heir but the executor of the estate is based in the Philippines, the return may be filed with an Authorised Agent Bank associated with the Revenue District Office covering the executor’s place of residence. Where there is no executor in the Philippines — as is often the case when the deceased was not a Philippine resident — the return should be filed under the jurisdiction of RDO No. 39 South Quezon City.

Philippine law recognises compulsory heirs who are legally entitled to defined portions of an estate, which may restrict what portion remains freely disposable by will. This civil law concept of “forced heirship” is analogous to the réserve héréditaire under French law and may come as a surprise to those from legal traditions that give testators complete freedom to distribute their estate as they wish.

Always confirm the current estate tax rates, applicable deductions, and filing requirements with the Bureau of Internal Revenue (BIR) or a qualified Philippine tax adviser, as thresholds are subject to change by legislation.

How does gift tax apply to property transfers in the Philippines?

In the Philippines, the tax on gifts is referred to as “donor’s tax.” It is imposed on the gratuitous transfer of real, personal, tangible, or intangible property between living persons — that is, transfers made without any monetary consideration passing in return. It is distinct from estate and inheritance tax in that it applies during the donor’s lifetime rather than upon death.

Donor’s tax is charged, assessed, collected, and remitted on transfers of property by gift from any person — whether resident or non-resident — at a flat rate of 6% on the cumulative value of donations exceeding ₱250,000 within a calendar year, irrespective of the relationship between donor and recipient (as of 2025). This represents a simpler framework than donor’s tax regimes in some countries, where rates may vary depending on whether the recipient is an immediate family member or an unrelated party.

The annual tax-free allowance covers donations with a total value of up to ₱100,000 (as of 2025). It should be noted that the ₱250,000 threshold cited above refers to total gifts made across the calendar year; donations of up to ₱100,000 per recipient per year may qualify for a lower exemption — confirm the precise interaction of these thresholds with the BIR, as applicable regulations can overlap.

Every person — whether a resident citizen, non-resident citizen, or non-resident alien — is required to file a donor’s tax return if they make a gift. Where a non-resident makes the transfer, the return may be filed either with the Philippine Embassy or Consulate in the country where the donor is domiciled at the time of transfer, or directly with the Office of the Commissioner.

Certain transfers are exempt from donor’s tax, including donations made to the national government and gifts directed towards educational, charitable, religious, cultural, and other qualifying non-government organisations.

If you are contemplating gifting Philippine property — whether to a family member or to a third party — it is strongly recommended that you consult a Philippine tax lawyer beforehand, as the interplay between donor’s tax, capital gains tax, and the land ownership restrictions applicable to foreign nationals can give rise to complex obligations.

How is rental income from property taxed in the Philippines?

Individual income tax in the Philippines follows a graduated progressive schedule, with rates ranging from 15% to 35% for persons earning more than ₱250,000 annually (as of 2025). Rental income received by individual property owners is generally subject to this regular income tax schedule and must be declared in the owner’s annual income tax return.

A 12% VAT is imposed on residential property leases meeting certain conditions. Landlords whose annual gross rental receipts exceed the VAT registration threshold — which should be confirmed with the BIR, as it is periodically revised — must register for VAT and charge it on top of rent. Those falling below the threshold are typically liable for percentage tax instead.

Deductible expenses for landlords — Depreciation on rental property may be set against income for income tax purposes. Recognised depreciation methods include the straight-line method, declining balance method, sum-of-the-years-digits method, unit of production method, and the operating day method. Other commonly deductible expenses include repair and maintenance costs, property management and agent fees, real property tax paid on the rented premises, and interest on mortgage financing obtained for the rental property — confirm the complete list of allowable deductions with the BIR or a qualified accountant.

Income-generating expenses are deductible in computing taxable income. However, unlike some jurisdictions that permit general expense deductions with minimal formality, Philippine tax law demands rigorous documentation and itemisation of all business expenditure. Retaining all receipts and records in good order is essential.

Short-term rental platforms: Revenue generated through platforms such as Airbnb is treated as ordinary rental or business income and falls within the same income tax framework. Hosts may additionally need to register as a business and comply with local government licensing requirements — check with your city or municipal hall as well as the BIR for current obligations.

Non-resident landlords — Rental income received by non-resident aliens not engaged in trade or business in the Philippines is subject to a flat rate of 25% on gross income (as of 2025). Non-residents who are engaged in trade or business are taxed under the progressive schedule. Always verify your precise residency classification with a Philippine tax adviser.

Example calculation (individual resident landlord, as of 2025): Annual net rental income (after allowable deductions) of ₱600,000 would be subject to income tax at progressive rates. The initial ₱250,000 is exempt; the next ₱150,000 is taxed at 15%; income between ₱400,000 and ₱800,000 is taxed at 20% on the excess over ₱400,000. Always confirm the current tax brackets with the BIR, as thresholds are subject to revision.

Are there any tax advantages or incentives for buying property in the Philippines?

The Philippines does not presently offer a first-time buyer tax exemption or a preferential transfer tax rate, so all purchasers face the same charges regardless of whether the acquisition is their first property or one of many. Nevertheless, several incentive frameworks and exemptions may be relevant depending on the nature of your transaction.

Principal residence CGT exemption — As outlined earlier, individual sellers (not corporations) can avoid the 6% CGT entirely by reinvesting the full sale proceeds of a principal residence into a new principal residence within 18 months. While this relief technically benefits sellers, it has a significant bearing on long-term ownership strategy for those who expect to upgrade or relocate.

VAT exemption on affordable housing — Transactions involving residential properties below the VAT threshold are ordinarily exempt from VAT. Buyers of lower-value properties — residential lots priced below ₱3,600,000 and house-and-lot or condominium units priced below ₱15,000,000 (as of 2024–2025) — therefore do not incur the 12% VAT that applies to higher-value new-build purchases.

Special Economic Zones (SEZs) — Businesses operating within Special Economic Zones may qualify for a range of tax incentives, including income tax holidays, a 5% gross income tax on earnings after the holiday period, and exemptions from customs duties and VAT on qualifying goods and services. Investors who acquire or develop property within a registered SEZ may benefit from these provisions, though the rules are detailed and have been further refined by the CREATE MORE Act (R.A. 12066, enacted 2024).

CREATE MORE Act (2024) — Enacted in 2024, the CREATE MORE Act (R.A. 12066) strengthens and clarifies tax incentives available to investors and exporters, reduces corporate income tax to 20% for qualifying firms under the Enhanced Deductions Regime, expands allowable deductions, and streamlines VAT zero-rating for registered activities. Property developers and investors operating through registered investment structures may find their tax position improved under this legislation.

There are no specific tax concessions for foreign nationals purchasing real estate in the Philippines in the form of reduced transfer or property taxes. Both residents and non-residents are subject to identical transaction tax rates. Expatriates exploring investment-visa pathways should obtain professional advice on how any associated property requirements interact with the Philippine tax framework.

What are the tax implications for foreign nationals buying property in the Philippines?

Foreign nationals are subject to the same transaction taxes as Philippine citizens when acquiring property — there are no additional surcharges or elevated rates imposed solely on non-citizens. However, significant restrictions on what foreigners may legally own shape how foreign buyers must structure their acquisitions.

Land ownership restrictions — Only Filipino citizens or corporations in which at least 60% of the outstanding capital stock is held by Philippine nationals may own land in the Philippines. Foreign investors may acquire an interest in land, residential houses and lots, or commercial buildings and lots by establishing or investing in a Philippine corporation, provided their equity stake does not exceed 40% of total capital.

Condominium ownership — Where the property is a condominium, foreigners may own up to 40% of the units in any given building on the basis of floor area. This is the most common route through which foreign nationals hold direct property interests in the Philippines, and condominium purchases are subject to the same DST, transfer tax, and registration fee regime as other property transactions.

Capital gains tax for foreign sellers — Tax residency status — Philippine resident versus non-resident — can bear on certain tax treatments, though for real property capital gains, the 6% rate generally applies to all individual sellers of capital assets regardless of residency. The most significant distinction is that non-residents are ineligible for certain reliefs, in particular the principal residence exemption.

Foreign corporations — Where a condominium unit or building is sold by a foreign corporation, the 6% CGT does not apply. Any gain arising from such a disposal would instead be subject to 25% corporate income tax.

Double taxation treaties — The Philippines maintains tax treaties with a number of countries. Under these agreements, capital gains realised by residents of the other contracting state from the disposal of property other than immovable property are generally not taxable in the Philippines. However, gains from the sale of Philippine real estate (immovable property) are typically taxable in the Philippines regardless of treaty provisions — always seek advice from a professional familiar with both relevant jurisdictions.

Repatriation of sale proceeds — While the applicable taxes and costs are broadly the same for foreign and domestic sellers, foreign nationals residing overseas face additional practical considerations, including the need for a Special Power of Attorney (SPA) authorising a local representative to execute the Deed of Absolute Sale on their behalf. The repatriation of funds may also require documentation confirming that the original investment was made through official banking channels — consult the Bangko Sentral ng Pilipinas for current requirements.

Foreign nationals should always engage a qualified Philippine tax lawyer and, where relevant, a tax adviser in their country of residence, to understand how Philippine property income and gains are treated under any applicable double taxation agreement and their own domestic laws.

How do I complete the tax steps when buying property in the Philippines?

The following process sets out the principal tax and registration steps involved in a standard residential property purchase in the Philippines. Always engage a qualified Philippine lawyer or licensed real estate professional to guide you through the specifics of your transaction.

1. Execute and notarise the Deed of Absolute Sale (DOAS) — Both the buyer and seller (or their duly authorised representatives) sign the DOAS before a notary public. The date of notarisation starts the clock on all subsequent tax payment deadlines.
2. Pay Capital Gains Tax (seller) — CGT must be settled within 30 days of the date the Deed of Absolute Sale is notarised, using BIR Form 1706 (Capital Gains Tax Return for Individual).
3. Pay Documentary Stamp Tax (buyer, customary) — DST falls due within 5 days after the close of the month in which the document was executed, remitted via BIR Form No. 2000 at an Authorised Agent Bank (AAB) or Revenue District Office (RDO).
4. Apply for the Certificate Authorising Registration (CAR/eCAR) — Only once CGT, Documentary Stamp Tax, and related charges have been paid will the BIR issue the Certificate Authorising Registration (CAR), which the Register of Deeds requires in order to effect the title transfer.
5. Pay Local Transfer Tax (buyer, customary) — Present the CAR and supporting documents to the local City or Municipal Treasurer’s Office and remit the Local Transfer Tax. Payment is ordinarily due within 60 days of notarising the deed of sale, though specific deadlines vary by jurisdiction.
6. Obtain tax clearance from the local government unit — Once the CAR is in hand, it is submitted to the Local Treasurer’s Office to obtain a tax clearance from the LGU confirming that Local Transfer Tax and Real Property Tax obligations have been met.
7. Register the title at the Registry of Deeds — Submit the CAR, tax clearance, DOAS, and all other required documents to the Registry of Deeds. Pay registration fees (approximately 0.3%–0.6% of the property value). A new Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) is then issued in the buyer’s name.
8. Update the Tax Declaration — Visit the local Assessor’s Office to have the Tax Declaration amended to reflect the new ownership details, and ensure that the Real Property Tax receipt confirms all payments are current. This step completes the transfer process.

Frequently asked questions: property taxes in the Philippines

Do I pay capital gains tax if I sell my Philippines property as a non-resident?

In most respects, residents and non-residents are treated the same when it comes to real property taxes — both pay the same 6% capital gains tax rate on the disposal of a capital asset. The key difference is that non-residents cannot claim certain reliefs, such as the principal residence exemption. Consult the BIR or a Philippine tax adviser for guidance specific to your situation.

Can I deduct mortgage interest on rental income in the Philippines?

Interest charges on a mortgage taken out to finance a rental property are generally allowable as a business expense when computing taxable rental income. However, Philippine tax rules demand thorough documentation and itemised substantiation of all business expenses, so maintaining comprehensive records of every interest payment is essential. Confirm the current deductibility rules with the BIR or a qualified accountant.

Is there a wealth tax on property in the Philippines?

No — the Philippines does not levy an annual wealth tax or net worth tax on property holdings. The closest recurring charge is the annual Real Property Tax (RPT), set at 1% of assessed value for properties in the provinces and 2% for properties in Metro Manila (as of 2025).

What happens if I inherit property in the Philippines but live abroad?

Non-resident heirs are required to file an estate tax return. If you are a non-resident heir but the estate’s executor resides in the Philippines, the return can be filed with an Authorised Agent Bank linked to the Revenue District Office covering the executor’s location. Estate tax is charged at a flat 6% of the net estate, with a standard deduction of ₱5,000,000 available to estates of Philippine residents. It is advisable to engage a Philippine lawyer with experience in cross-border succession matters.

Are there any exemptions from capital gains tax when selling my primary home in the Philippines?

An exemption from CGT on the sale of a principal residence is available to natural persons (not corporations) who reinvest the entire sale proceeds in acquiring or constructing a new principal residence within 18 months, give written notice to the BIR within 30 days of the sale, and invoke the exemption no more than once in any ten-year period. Non-residents are not eligible for this exemption.

How is property gifted to a family member taxed in the Philippines?

Donor’s tax applies at a flat rate of 6% on total gifts exceeding ₱250,000 in any calendar year, regardless of whether the recipient is a family member or an unrelated party (as of 2025). Every person — whether a resident citizen, non-resident citizen, or non-resident alien — is required to file a donor’s tax return when making a gift. Verify the current annual exemption threshold with the BIR before proceeding.

Do I need to pay VAT when buying a new condominium unit in the Philippines?

For 2025, residential house-and-lot and condominium units with a selling price above ₱15,000,000 are ordinarily subject to 12% VAT. Units priced below this threshold are typically VAT-exempt for individual purchasers. Confirm the prevailing threshold — which is subject to annual inflation adjustment — with the BIR or the developer before signing any purchase agreement.

Can a foreign national own a house and land in the Philippines outright?

Only Filipino citizens or corporations in which at least 60% of the outstanding capital stock is owned by Philippine nationals may hold title to land in the Philippines. That said, any person including a foreigner may own a building outright; if that building is a condominium, foreign ownership is permitted for up to 40% of the units in any given project, calculated on the basis of floor area. Foreign nationals seeking to establish property interests in the Philippines should obtain independent legal advice on the most suitable and legally compliant ownership structure.