Roberto Dela Cruz
Philippine Tax & Finance Advisor
Capital Gains Tax, Documentary Stamp Tax, Real Property Tax, rental income tax — everything foreign investors need to know about Philippines property taxes, including double taxation treaties with Japan, Korea, Germany, and Australia.
Capital Gains Tax (CGT) — 6%
CGT is 6% of the selling price or the zonal value/fair market value (whichever is higher). By law, CGT is the seller's obligation and must be paid within 30 days of the sale. In practice, it is frequently negotiated — buyers sometimes absorb CGT in exchange for a lower purchase price. For corporations selling property, Creditable Withholding Tax (CWT) at 6% applies instead of CGT. Important: CGT applies to individual sellers. If you're selling a condo unit you purchased as an individual, budget for this cost.
Documentary Stamp Tax (DST) — 1.5%
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.
Real Property Tax (RPT) — Annual
RPT is an annual tax assessed by the local government unit (LGU) at 1–2% of the assessed value. The assessed value is typically 20–80% of market value, depending on the property classification and location. For Metro Manila, the rate is 2%; for provinces, it's 1%. RPT is due quarterly or annually. Unpaid RPT accrues penalties of 2% per month. As a foreign property owner, you are responsible for paying RPT regardless of whether you're in the Philippines.
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 (those staying 180+ days/year), progressive rates of 0–35% apply. If you use a property management company, they typically handle withholding tax compliance. Annual gross rental income below PHP 3M may qualify for the 8% flat tax option under the TRAIN Law.
Double Taxation Treaties
The Philippines has tax treaties with Japan, South Korea, Germany, and Australia that prevent the same income from being taxed twice. Japan: Rental income taxed at max 10% in Philippines; Korea: max 10%; Germany: max 15%; Australia: max 15%. To claim treaty benefits, you must obtain a Tax Residency Certificate from your home country and file a Tax Treaty Relief Application (TTRA) with the BIR. This process takes 3–6 months — plan ahead.
How to File Taxes as a Non-Resident Property Owner
Non-resident property owners must obtain a Philippine TIN (Tax Identification Number) from the BIR. For rental income, your property manager or tenant is required to withhold and remit taxes on your behalf. You must file an Annual Income Tax Return (BIR Form 1700 or 1701) if you have taxable income in the Philippines. Engaging a local CPA or tax consultant is strongly recommended — fees typically run PHP 15,000–30,000/year for straightforward cases.
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