Real Property Tax (RPT): The Annual Tax
Property tax in the Philippines, known locally as 'real property tax' (RPT), is a levy imposed on the value of a property. It applies to all types of real estate, including land, buildings, improvements, and machinery. The tax rate ranges from 1% to 2% of the assessed value depending on the LGU. The assessed value is typically 20–80% of market value. RPT is due by January 31 of each year, with discounts for early payment.
Capital Gains Tax: 6% on Property Sales
CGT is 6% of the gross selling price or the zonal value/fair market value (whichever is higher). By law, CGT is the seller's obligation. Note that CGT in the Philippines applies to the gross selling price — not the profit — which is a key distinction from CGT in most other countries. For corporate sellers, Creditable Withholding Tax applies instead.
Documentary Stamp Tax: 1.5% on Transfers
DST is 1.5% of the selling price or zonal value (whichever is higher), paid by the buyer. It is due within 5 days from the close of the month when the Deed of Sale was notarized. For mortgage transactions, an additional DST of 0.2% applies to the loan amount. DST is non-negotiable and must be paid before title transfer can proceed.
Income Tax on Rental Income
Rental income earned in the Philippines is subject to Philippine income tax. For non-resident foreign individuals, rental income is taxed at a flat 25% final withholding tax. For resident foreign individuals, progressive rates of 0–35% apply. Philippine residents may opt for the 8% flat tax on gross receipts under the TRAIN Law. Double taxation treaty benefits can reduce withholding rates to 10–15% for qualified investors.
Estate Tax and Succession Planning
Under the TRAIN Law (RA 10963), estate tax in the Philippines is a flat 6% of the net estate value. This applies to Philippine real property held by both residents and non-residents. Proper estate planning — including preparation of wills, designation of beneficiaries, and structuring of corporate ownership — can minimize the administrative burden and cost of property transfer to heirs. The Estate Tax Amnesty Program has provided relief for estates with unpaid taxes.
