Homebuying Guide




This is the standard sharing of expenses between the buyer and the seller when transferring the real estate property title (TCT - Transfer Certificate of Title or CCT - Condominium Certificate of Title) to a new owner: 

The SELLER pays for the:
  • Capital Gains Tax equivalent to 6% of the selling price on the Deed of Sale or the zonal value, whichever is higher. (Withholding Tax if the seller is a corporation)
  • Unpaid real estate taxes due (if any).
  • Agent / Broker's commission.

The BUYER pays for the cost of Registration:
  • Documentary Stamp Tax - 1.5% of the selling price or zonal value or fair market value, which ever is higher.
  • Transfer Tax - 0.5% of the selling price, or zonal value or fair market value, which ever is higher.
  • Registration Fee - 0.25% of the selling price, or zonal value or fair market value, which ever is higher.
  • Incidental and miscellaneous expenses incurred during the 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").

The "Deed of Sale" or "Deed of Absolute Sale" is the document showing legal transfer of real estate property ownership. The deed of sale is then taken to the Registry of Deeds to be officially recorded after paying the documentary stamp, transfer tax and registration fees. Always verify from the Registry of Deeds the authenticity of a Transfer Certificate of Title before buying a property. If the seller only has a tax declaration, be extra cautious and check with neighbours, the Barangay captain or anyone in the know in the community to verify the seller/owner's true identity and the property's history.

Your Agent / Broker will usually do the registration process (sometimes for a fee). However, all government taxes, transfer fees and incidental or miscellaneous expenses will be shouldered by the buyer.

Documents needed when transferring the title (TCT or CCT) to the new owner:
  • Certified true copy of the title
  • Notarized copies of the Deed of 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 registration feesAn 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, indefeasible and imprescriptible.
GUIDE FOR OVERSEAS FILIPINOS

Former natural-born Filipinos who are now naturalized citizens of another country can buy and register, under their own name, land in the Philippines but limited in land area (see below). However, those who avail of the Dual Citizenship Law can buy as much land as any other Filipino citizen.

Under Republic Act 9225 (Dual Citizenship Law of 2003), former Filipinos who became naturalized citizens of foreign countries are deemed not to have lost their Philippine citizenship, thus enabling them to enjoy all the rights and privileges of a Filipino.

Steps to Gain Dual Citizenship:

If you are in the Philippines, file a "Petition for Dual Citizenship and Issuance of Identification Certificate (IC) pursuant to RA 9225” at the Bureau of Immigration (BI) and for the cancellation of your alien certificate of registration.

Those who are not BI registered and overseas should file the petition at the nearest embassy or consulate.

Requirements: 
  • Birth certificate authenticated by the National Statistics Office (birth certificate from the NSO can be requested online and mailed to you)
  • Accomplish and submit a “Petition for Citizenship and Issuance of Identification Certificate (IC) pursuant to RA 9225” to a Philippine embassy, consulate or the Bureau of Immigration.
  • Pay a $50.00 processing fee, schedule and take an "Oath of Allegiance" before a consular officer.
  • The Bureau of Immigration in Manila receives the petition from the embassy or consular office. The BI issues and sends an Identification Certificate of citizenship to the embassy or consular office.
If a former Filipino who is now a naturalized citizen of a foreign country does not want to avail of the Dual Citizen Law, he or she can still acquire land based on BP (Batas Pambansa) 185 & RA (Republic Act) 8179 but limited to the following:

For Residential Use (BP 185 - enacted in March 1982):
  • Up to 1,000 square meters of residential land.
  • Up to one (1) hectare of agricultural of farm land.

For Business / Commercial Use (RA 8179 - amended the Foreign Investment act of 1991):
  • Up to 5,000 square meters of urban land.
  • Up to three (3) hectares of rural land.

GUIDE FOR FOREIGNER'S

By law, foreigners don't have the right to acquire land in the Philippines. Only Filipino citizens can own land (there have been many proposals to amend this law but of this writing, the law remains unchanged.) The simplest way for a foreigner to acquire real estate properties is to have a Filipino spouse purchase a property in his/her name.

Exceptions:

Corporations or partnerships that is at least 60% Filipino owned are entitled to acquire land in the Philippines. An exception to this rule, is foreign acquisition of a Philippine real estate in the following cases:
  • Acquisition before the 1935 constitution.
  • Acquisition thru hereditary succession if the foreign acquire is a legal or natural heir. This means that when you are married to a Filipino citizen and your husband/wife dies, you as the natural heir will become the legal owner of his/her property. The same is true for the children. Every natural child (legitimate or illegitimate) can inherit the property of his/her Filipino father/mother even if he/she is not a Filipino citizen.
  • Purchase of not more than 40% interest in a condominium project.
  • Purchase by a former natural-born Filipino citizen subject to the limitations prescribed by law. (natural born Filipinos who acquired foreign citizenship is entitled to own up to 1,000 square meter of residential land, and 1 hectare of agricultural or farm land) 
  • Filipinos who are married to aliens who retain their Filipino citizenship, unless by their act or omission they have renounced their Filipino citizenship.
Owning of houses or buildings is legal as long as the foreigner does not own the land on which the house is build. 

Setting up a corporation with 40% of the stocks in the foreigner's name and 60% to Filipinos is a good alternative. There must be a minimum of 5 stockholders, and foreigner can have the Filipino stockholders sign blank transfer of the stocks for security. 

Rent

The land can be leased by the foreigner or a foreign corporation on a long term contract for an initial 50 year period and renewable every 25 years. A foreigner can rent a lot and at the same time legally own the house on the rented land.

Condominiums

The Condominium Act of the Philippines, R.A. 4726, expressly allows foreigners to acquire condominium units and shares in condominium corporations up to 40 % of the total and outstanding capital stock of a Filipino owned or controlled condominium corporation.

Those who claim that foreigners can own a house & lot in the Philippines have a condominium title to their property. There are a very few single-detached homes or Townhouses in the Philippines with condominium titles. Most condominiums are mid to high rise buildings. 

If you wish to stay permanently in the Philippines or if you frequent the Philippines and stay for long periods. Avail of the government's Special Resident Retirement Visa (SRRV).

Special Resident Retirement Visa (SRRA) is a privilege granted to foreigners who would like to have a permanent resident status in the Philippines. For investing in the Philippines, foreigners can enter and leave the country as many times and as long as one wishes, including family members. With a Special Resident Visa, a holder can live, do business, study in the Philippines indefinitely.

Requirements for Special Resident Retirement Visa

Principal Applicant:
  • Application Form
  • Passport with valid entry to the Philippines
  • National Bureau of Investigation (NBI) Clearance or Police Clearance (to be authenticated by the Philippine Embassy)
  • Medical Clearance (if applicant is abroad, this clearance must be authenticated by the Philippine Embassy)
  • 6 pieces 6" x 6" pictures
  • 6 pieces 1" x 1" pictures
  • Bank Certification from an accredited bank of the Philippine Retirement Authority of bank deposit (US$ 50,000 for 50 years old & above, $75,000 for 35 to 49 years)
  • Processing fee: US$ 1,500
Spouse / Dependent:
  • Application Form
  • Passport with valid entry to the Philippines
  • NBI Clearance or Police Clearance (to be authenticated by the Philippine Embassy for 18 years old and above)
  • Medical Clearance (if applicant is abroad, this clearance must be authenticated by the Philippine Embassy)
  • 6 pieces 6" x 6" pictures
  • 6 pieces 1" x 1" pictures
  • Marriage Certificate (authenticated by the Philippine Embassy) for spouse.
  • Birth Certificate (authenticated by the Philippine Embassy) for dependents.
  • In Lieu of Marriage or Birth Certificates:
  • Family Register (for Koreans)
  • Household Register (for Taiwanese)
  • Certificate of Relationship (for P.R.O.C.)

Fees:

Service fee of $300 each for spouse or dependent (up to 3 dependents)
For families with more than 3 dependents, additional $ 15,000/dependent

Immigration conversion fee:
  • Php: 7,600 for spouse and children 16 to 20 years old.
  • Php: 7,350 for children 14 to 15 years old.
  • Php: 6,850 for children 13 years old and below
  • PLRA ID card ($10) for spouse and/or dependent
  • Immigration express fee of Php 500 per person (elective)
Note: The required investment money (US$ 50,000 for 50 years old & above, $75,000 for 35 to 49 years) to avail of the Special Resident Retirement Visa (SRRA) must be deposited in a bank accredited by the Philippine Retirement Authority. This deposit can be withdrawn after 6 months but must be invested in the Philippines. It can be used to buy properties (condominiums) stocks, securities, etc.

Tips Before Buying Real Estate in the Philippines

Here are tips a buyer must remember before buying any property in the Philippines, specially if you are buying a single property from an individual:
  1. Make sure the "Transfer Certificate of Title" is authentic. The easiest way to check if the title to the property you are buying is authentic is by getting "Certified True Copy" of the title from the Register of Deeds. This office is usually located at the city or municipal hall where the property is located. Ask the seller of the property for a photocopy of the title -you will need the title number and the name of the owner to get a certified true copy of the title from the Register of Deeds.
  2. Verify that title is clean - meaning the property is not mortgaged (no liens & encumbrances on the property). You can see that at the back of the title with the heading "Encumbrances". This page must be empty if you are told that the title is "clean". But sometimes the space for the technical description of the property on the front page of the title is not enough and the description of the property is continued on the "Encumbrances" page, this is of course all right.
  3. Make sure that the land described on the title is really the land that you are buying. You can validate this at the Register of Deeds or by hiring a private land surveyor or a geodetic engineer. Land titles don't have any street name and number to pin point a property, it is a must to confirm that the actual property you are buying matches the technical description on the Transfer Certificate of Title.
  4. Make sure that the sellers are the real owners. If you are buying from an individual property owner, ask for identification papers like passport or driver's license, it is also a good idea to talk to the neighbors or the Barangay Captain to confirm the identity of the sellers (you might as well ask some history of the property).
  5. Confirm that the yearly real estate taxes are paid. Ask for certified true copies of the Tax Declaration and original Tax Receipts to confirm that real estate tax payments are up to date.
If the above check list is in order, it is generally safe to proceed with the purchase of real estate in the Philippines.