1. Capital Gains Tax (CGT)
The Capital Gains Tax is generally paid by the seller when selling real property classified as a capital asset. It is 6% of the higher of the property’s selling price, zonal value, or fair market value.
2. Documentary Stamp Tax (DST)
The Documentary Stamp Tax is typically the buyer’s responsibility. It is 1.5% of the higher of the selling price, zonal value, or fair market value and must be paid before the transfer of ownership can be completed.
3. Transfer Tax
The Transfer Tax is imposed by the local government where the property is located. The rate generally ranges from 0.5% in provinces to 0.75% in cities and Metro Manila, based on the higher of the selling price or fair market value. This fee is usually paid by the buyer.
4. Registration Fee
After taxes are settled, the property must be registered with the Registry of Deeds. Registration fees vary depending on the property’s value based on the Land Registration Authority (LRA) fee schedule and are commonly shouldered by the buyer.
5. Notarial Fee
The Deed of Absolute Sale and other legal documents must be notarized to become legally enforceable. Notarial fees are negotiable but are commonly around 1% to 2% of the property’s selling price or agreed value. The parties may agree on who pays this cost.
6. Real Property Tax (Amilyar)
The Real Property Tax is an annual tax paid by the property owner to the local government. Any unpaid real property taxes must generally be settled before the title can be transferred to a new owner.
7. Broker’s Commission
If a licensed real estate broker is involved in the transaction, a professional commission—typically 3% to 5% of the selling price—may apply. This fee is not a government tax and is usually paid by the seller, unless otherwise agreed.
Summary of Common Tax Responsibilities
| Tax or Fee | Typical Rate | Usually Paid By |
|---|---|---|
| Capital Gains Tax (CGT) | 6% | Seller |
| Documentary Stamp Tax (DST) | 1.5% | Buyer |
| Transfer Tax | 0.5%–0.75% | Buyer |
| Registration Fee | Based on LRA schedule | Buyer |
| Notarial Fee | 1%–2% (negotiable) | Buyer or Seller (by agreement) |
| Real Property Tax (Annual) | Varies by LGU | Property Owner |
| Broker’s Commission | 3%–5% (negotiable) | Seller |
Note: The allocation of taxes and fees may be modified by mutual agreement between the buyer and seller and should be clearly stated in the Deed of Sale. Tax rates and requirements may also vary depending on the property’s classification, location, and applicable laws
