It is very common for an OFW to buy a new property in the Philippines after a few years of earning a better income from abroad.
We didn’t immediately realized that it is easier to find a property that you wants to own than to get it registered in your name after paying a large sum of money as it does not ends there. Most of us are not familiar with the whole process of registering a property to the name of the new Owner. Here are a few steps that may help you:
STEP 1 -DEED OF ABSOLUTE SALE
Anyone between the Seller and Buyer (or their Lawyers, if any) may prepare the Deed of Sale as long as it has been executed before and Notarized by a Notary Public.
a.) If you are a Buyer, let me remind you that before giving all the money to the Seller be sure that you got from him some important documents that you would need in the registration of the property under your name such as a copy of his validID, a recent CTC and TIN or a copy of TIN Car original copy of all Real Property Tax Receipts in his possession.
b.) If the Seller is a Corporation, you would need from them a notarized secretary’s certificates containing the resolution of their board of directors approving the sale and a certificate from the Securities and Exchange Commission (SEC) stating that its articles of incorporation have been registered with the SEC.
STEP 2 –CITY ASSESSOR’S OFFICE (Located in the City Hall or Municipal Hall)
Secure the following:
a.) Certified True Copy of Tax Declaration (House and Lot)
b.) Certificate of No Improvement (If property is vacant lot)
c.) Two Original Copies – 1 for BIR and 1 for Registry of Deeds
STEP 3 – LAND TAX DIVISION OF CITY TREASURER’S OFFICE (Located in the City Hall or Municipal Hall)
Secure the following:
a.) Tax Clearance
Note: In order to obtain a Tax Clearance, the Seller must pay first all arrears on Property Tax (if any and must be updated as of document of sale). Therefore, it is important that you got hold of the original of the official receipts evidencing payment by seller of realty taxes of the current and preceding years, before you gave him the full payment of the sale.
We had an experience that the Seller was able to gave us the Property Tax Receipt of the current year however, upon application of Tax Clearance it was discovered that the previous five years was not paid!
STEP 4 – BUREAU OF INTERNAL REVENUE
Submit the following:
- Tax identification number (TIN) of seller and buyer;
- Notarized deed of absolute sale/document of transfer, but only photocopied document shall be retained by the BIR;
- Certified true copy of the latest tax declaration issued by the City Assessor’s Office for the land and improvement applicable to the taxable transaction;
- Owner’s copy (for presentation purposes only) and photocopy (for authentication) of the Original Certificate of Title (OCT), or the certified true copy of the Transfer Certificate of Title (TCT);
- Sworn declaration of “with Improvement” by at least one (1) of the transferees, or certificate of “with Improvement” issued by the City Assessor’s Office.
You (and/or the Seller, depends on the agreement) have to pay the following:
a.) Capital Gains Tax (6% for individual seller) or Witholding Tax (7.5% if seller is a corporation) – it is the Seller’s responsibility to pay the Capital Gains Tax (CGT) or Witholding Tax unless the Buyer agrees otherwise
b.) Documentary Stamps Tax (1.5% of the selling price or zonal value or fair market value, which ever is higher) – Payment for DST is responsibility of the Buyer
You shall received the following:
- The Certificate Authorizing Registration
- The Original copy of the Deed of Absolute Sale stamped received by the BIR
- Original Copies of the BIR Return Forms 1706 (CGT) and 2000 (DST) stamped received by the BIR
i.) Capital Gains Tax and Documentary Tax shall be computed based on Selling Price (per Deed of Sale), or Market Value of Tax Declaration, or BIR Zonal Value, whichever is higher.
ii.) If the Buyer agrees to pay the Capital Gains Tax, it very important that you get the Seller’s Tax Identification Number (TIN) and a copy of his ID
iii.) Forms for payment of Capital Gains Tax can be secured from the BIR or may be downloaded from the BIR website http://www.bir.gov.ph
iv.) Payment for Capital Gains Tax and Documentary Stamps can only be paid at the BIR Regional Office or BIR authorized banks where the property is located. It can be paid either in cash or manager’s check.
v.) Capital Gains Tax shall be filed and paid to the BIR within thirty days from the date of sale, otherwise there will be interest and penalty.
vi.) Documentary Stamps Tax shall be paid on or before the 5th day of succeeding month from the date of sale.
STEP 5 – MUNICIPAL TREASURER’S OFFICE (Located in the City Hall or Municipal Hall)
Pay the following:
a.) Transfer Tax is computed as 1/2 of 1% (0.5%) of the Selling Price or Zonal Value or Fair Market Value of Tax Declaration, whichever is higher. – Payment of Transfer Tax is responsibility of the Buyer
i.) The transfer tax must be paid at the CTO not later than 60 days from the date of execution of the Deed of Absolute Sale or the notarization date thereof, whichever is earlier.
ii.) Prepare the following requirements:
- Certificate Authorizing Registration from the Bureau of Internal Revenue
- Tax clearance certificate from the Treasurer’s Office
- Official receipt of the Bureau of Internal Revenue (for documentary stamp tax)
- Photocopy of Deed of Sale
- Photocopy of Transfer Certificate of Title (TCT)
- Photocopy of Tax Declaration
STEP 5 – REGISTRY OF DEEDS (Located in the City Hall or Municipal Hall)
Pay the following:
a.) Registration Fee – 0.25% of the selling price, or zonal value or fair market value, which ever is higher. – Payment of Registration Fee is responsibility of the Buyer
Apply for registration and submit the following documents:
- Copy of deed of absolute sale;
- Official receipt evidencing payment of transfer tax;
- Certificate Authorizing Registration from the BIR (CAR) including official receipts for payment of DST and CGT;
- Real property tax clearance from the City Treasurer’s Office;
- Original copy of owner’s duplicate of TCT (in the name of the seller);
- Original or certified true copy of the latest tax declaration;
If Seller is a corporation, include the following:
- Notarized secretary’s certificate containing resolution of the board of directors of the seller approving the sale;
- Notarized secretary’s certificate containing resolution of the board of directors of the buyer approving the sale;
- Articles of incorporation of the buyer and by-laws; and
- Certificate from the SEC that the articles of incorporation of the buyer have been registered.
A new Certificate of Title under the New Owner’s Name will be issued by Registry of Deeds. Be sure to double check the spelling of names and other information in the new TCT before receiving the new TCT.
STEP 6 – MUNICIPAL ASSESSOR’S OFFICE (Located in the City Hall or Municipal Hall)
Secure the following:
a.) New Tax Declaration
i.) Prepare the following requirements:
- Photocopy of notarized deed of sale
- Copy of latest tax declaration (in the name of seller)
- Tax clearance certificate of real property taxes from the CTO
- Certificate authorizing registration from the BIR
- Photocopy of official receipt of transfer tax payment (original copy to be presented)
- The transfer certificate of title (TCT) issued by the RD (in the name of the buyer)
Hope this helps! Good luck with your transactions as I tell you, it was not that easy. 🙂 But if you have question, please post it below and I will try my best to answer them.