Faq

What are the additional expenses which I have to shoulder when I purchase a property?
The additional expenses which you have to pay for include taxes, fees, and association dues.

What are the applicable taxes and fees when I purchase a property?
0The typical taxes/transaction cost in the sale of real property from the developer to a buyer are the following:

Income/Creditable Withholding Tax
The developer is subject to a 30% income tax payable to the Philippine Bureau of Internal Revenue (BIR) on income derived from the sale of property. As a general rule, the buyer is required to withhold 5% of the purchase price, zonal value or TD value of the property, whichever is higher, to be credited to the income tax of the developer. The developer may cause such withholding to be made on behalf of the buyer and remitted to the BIR.

Value-added Tax
Value-added tax at the rate of 12% of purchase price, zonal value or TD value of the property, whichever is higher, is payable on each sale of real property to the BIR.

Documentary Stamp Tax
Documentary stamp tax at the rate of 1.5% of the purchase price, zonal value, or TD value of the property, whichever is higher, is payable on the execution of the DOS to the BIR.

Local Transfer Tax
Local transfer tax is imposed by the local government unit where the property is located generally at the rate of 50% of 1% of the purchase price, zonal value, or TD value of the property, whichever is higher.
Registration fees are payable to the Register of Deeds where the property is located at the rate of P8,796.00 for the first P1.7million plus P90.00 for every P20, 000.00 or fraction thereof in excess of P1.7 million.

How much will my association dues be?
The typical association due cost for lot is P25/sqm, for condominiums is P75-90/sqm.

What additional expenses will I have to shoulder if I re-sell my property?
The typical expenses in the re-sell of real property are the following:

Income Tax
If the Seller is a corporation, or individual who is a Philippine resident, engaged in the real estate business, such Seller is subject to a 30% income tax payable to the BIR on income derived from the sale of property. As a general rule, the buyer is required to withhold 5% of the purchase price, zonal value or TD value of the property, whichever is higher, to be credited to the income tax of the Seller.
If the Seller is a corporation, or individual (whether or not a Philippine resident), not engaged in the real estate business and the property was not used in the ordinary course of the corporation’s or individual’s business, the property is a capital asset and the sale is subject to a 6% capital gains tax based on purchase price, zonal value or TD value of the property, whichever is higher.

Value-Added Tax
If the Seller is a corporation or individual engaged in the real estate business, the sale is subject to value-added tax at the rate of 12% of purchase price, zonal value or TD value of the property, whichever is higher.
If the Seller is a corporation or individual not engaged in the real estate business and the property was not used in the ordinary course of the corporation’s business, the sale is not subject to value-added tax.

Documentary Stamp Tax
Documentary stamp tax at the rate of 1.5% of the purchase price, zonal value, or TD value of the property, whichever is higher, is payable upon the execution of the DOS to the BIR.
Local Transfer Tax
Local transfer tax is imposed by the local government unit where the property is located generally at the rate of 50% of 1% of the purchase price, zonal value, or TD value of the property, whichever is higher.

Registration Fees
Registration fees are payable to the Registry of Deeds where the property is located at the rate of P8,796.00 for the first P1.7million, plus P90.00 for every P20,000.00 or fraction thereof in excess of P1.7 million.
Sale of Shares in a Corporation Owning Real Property
The sale of shares is typically subject to the following transaction costs:
Capital Gains Tax
The sale of shares, whether the Seller is an individual or corporation, is generally subject to a final tax at the rate of 5% for the first P100, 000 of net gain derived from the sale, and 10% on the net gain in excess thereof.

Documentary Stamp Tax
Documentary stamp tax on the transfer of shares are payable at the rate of 0.75 for every 200.00, or fraction thereof, based on the par value of the shares.

Other Modes of Unloading Property
Assets (whether shares or real property) may be disposed of through donation or inheritance. The transfer of property through donation is subject to donor’s tax at graduated rates which is imposed on the fair market value of the property. In the case of real property, the fair market value at the time of the donation shall be whichever is the higher of the zonal value and the TD value of the property. The donor’s tax upon a donor who was a citizen or resident at the time of donation shall be credited with the amount of any donor’s tax of any character and description imposed by the authority of a foreign country, subject to certain limitations.
The transfer of property through inheritance is subject to estate tax based on the total value of the net estate. The net estate is the total gross estate of the deceased less allowable deductions. In the case of real property, the fair market value at the time of death shall be whichever is the higher of the zonal value and the TD value of the property. The estate tax imposed under Philippine tax laws shall be credited with the amounts of any estate tax which the nonresident may have paid to the authority of a foreign country, subject to certain limitations.

What is a consular notarization (consularization)? What does execution of documents mean?
Under Philippine law, the purchase of real property must be in a public instrument in order for the purchase to be registered with the Register of Deeds. Thus, the Contract to Sell and Deed of Sale shall only be considered public instruments in the Philippines if attested by a notary public and, if executed outside the Philippines, authenticated by the Philippine consul as to the due execution of the relevant document or instrument in the country where such document or instrument was executed.
Notarization is the process by which the person executing the document personally appears in person before a Philippine notary public and represents to such notary public that the signature on the instrument or document was voluntarily affixed by him for the purposes stated in the instrument or document, declares that he has executed the instrument or document as his free and voluntary act and deed and, if he acts in a particular representative capacity, that he has the authority to sign in that capacity. Consularization is the process by which the consular agent or officer in the foreign service of the Philippines stationed in the country where the record is kept authenticates a document by the seal of its office. A document is deemed consularized when executed before and notarized by a foreign notary, and such notarization is authenticated by the Philippine consular agent or officer, or when directly authenticated by such Philippine consular agent or officer, in either case, sealed by the seal of the office of the Philippine consul. A listing of consular offices may be found iin the website of the Philippine Department of Foreign Affairs (DFA):http://www.dfa.gov.ph
Execution of documents means the signing and accomplishment of documents under the proper, legally prescribed conditions, such as before witnesses if required.

Who may execute documents?
Age
Under Philippine law, only persons of legal age (18 years and above) are allowed to enter into contracts. A minor may, however, be allowed to purchase real property from his/her own funds if represented by a legal guardian. The legal guardian is required to furnish a bond in such amount as the court may determine, but not less than 10% of the value of the property or annual income of the minor, to guarantee the performance of the obligations prescribed for the guardian.
The guardian purchasing the property on behalf of the minor must submit a Certificate of Finality of the Order of the court appointing him/her as guardian of the minor child and approving the bond posted by him in compliance with the requirements of the Family Code of the Philippines.

Status
Under Philippine law, all property acquired during the marriage is presumed to be community property of the married couple, unless it is proved that the couple agreed in a marriage settlement to be governed by another type of property regime prior to their marriage. Thus, in the absence of a pre-nuptial agreement, the contract shall be executed, and the property registered, either (1) in the names of “Spouses Mr. X and Mrs. X” if bought from the common funds of the spouses, or (2) in the sole name of “Mr. X, married to Mrs. X,” where Mr. X buys the property using his own funds. This rule applies even if the married spouses are separated in-fact (i.e., not legally separated).
However, if the spouses are legally separated, or their marriage has been annulled or declared null and void, the property may be registered solely in the name of the spouse buying the property upon submission of the Certificate of Finality or Entry of Judgment of the decision of the court granting the legal separation or annulment of marriage and the separation of properties.
For married persons, the property may be registered solely in the name of the spouse buying the property upon submission of a duly executed pre-nuptial agreement.
If the property was acquired in the name of a Philippine citizen or former natural-born Philippine citizen who is married to a foreigner, the Philippine citizen is required, as a precondition to the registration of the property in his or her name, to execute a Certificate of Paraphernal Property which states that the property was purchased by the Filipino spouse with his or her own money. In such case, the document shall be executed, and the property registered, in the name of the Philippine citizen or former natural-born Philippine citizen, with the spouse’s name indicated as being “married to” such Philippine citizen or former natural-born Philippine citizen.

Citizenship
The discussion on “Who may Own Real Property” applies in the determination of whether a Philippine citizen, foreigner, or former natural-born Philippine citizen may execute agreements for the sale and purchase of private lands.
The child of a natural-born Philippine citizen who subsequently loses his Philippine citizenship may acquire private land in the Philippines provided; he or she is of legal age and is a Philippine citizen. The citizenship of the child is determined, however, by the circumstances prevailing at the time of his or her birth, such as the date of his or her birth and the citizenship of the child’s parents and such other factors as may be applicable under Philippine law.
Representation through an Attorney-in-Fact
If the buyer wishes to transact through his or her representative, Philippine law requires that a Special Power of Attorney (SPA) be executed by the buyer in favor of such representative to act as his or her attorney-in-fact. The SPA shall bear the signature of the buyer and the specimen signature of the qualified representative, and expressly specify the authority of the qualified representative to, among others, sign the sale documents and obtain and receive, for and on behalf of the buyer, the owner’s duplicate of the certificate of title to the property.
Documents executed by the buyer submitted in support of his or her personal circumstances must be certified and/or attested by a notary public and, if executed outside the Philippines, must be authenticated by the Philippine consul as to the due execution of the relevant document or instrument in the country where such document or instrument was executed.

What documents will prove my ownership when I purchase a property?
Ownership of a subdivision lot is evidenced by a transfer certificate of title (TCT) issued by the Register of Deeds of the relevant city or municipality where the subdivision project is located. Ownership of a condominium unit is evidenced by a condominium certificate of title (CCT) issued by the Register of Deeds of the relevant city or municipality where the condominium project is located.
Ownership of a single-detached house or townhouse constructed on a subdivision lot is evidenced by a Tax Declaration (TD) issued by the City Assessor of the city or municipality where the project is located. Subdivision lots and condominium units are also covered by a TD. The TD shows the assessed value of the property which is used as basis for charging the real property tax (RPT) imposable on the property.
Upon the payment of the relevant taxes and fees to the government units and agencies, and obtaining the necessary clearances to register the property from the BIR and the local government unit concerned, the TCT or CCT shall be transferred from the name of the developer to the buyer by the appropriate Register of Deeds.
The TD covering the lot and/or dwelling unit or condominium unit shall be transferred by the appropriate City Assessor from the developer to the buyer upon submission of the sale documents and the BIR tax clearance authorizing the registration of the property in the name of the buyer.
The TD for a subdivision lot in the name of the buyer is issued after the issuance of the covering TCT. The TD for a dwelling unit, whether a single-detached house, townhouse, or a condominium unit, is issued only after the local government unit has issued an occupancy permit which allows the occupancy of the same by the owner of the unit.

What is a Contract to Sell, Deed of Sale, Transfer Certificate of Title (TCT), Condominium Certificate of Title (CCT), and Tax Declaration (Tax Dec)?
A Contract to sell or CTS is a document where developer promises to transfer to the buyer the ownership and physical possession of the property upon the buyer’s fulfillment of the terms of the sale, and the buyer obliges himself to pay the purchase price and comply with the other terms and conditions of the sale. Once the property is paid in full, a Deed of Sale (DOS) is executed by the developer and buyer.
A Deed of Sale or DOS is a document executed when buyer pay the developer in cash (whether using his or her own funds or through funds barrowed from bank or financing institutions). In the DOS, the developer transfer ownership of the property to the buyer, subject to the compliance by the buyer with the Deed of Restrictions or Master Deed with Declaration of Restrictions governing the project and the other terms and conditions of the sale.
A Transfer of Certificate of Title (TCT) is a proof of ownership of a subdivision lot issued by the Register of Deeds of the relevant city or municipality where the subdivision project is located.
A Condominium Certificate of Title is proof of ownership of a condominium unit issued by the Register of Deeds of the relevant city or municipality where the condominium project is located.

What are the documents required for setting up a corporation?
The Securities and Exchange Commission (SEC) websitehttp://www.sec.gov.ph/ provides a listing of all the documentary requirements and the procedural steps for incorporation a domestic corporation.

What are the documents I have to submit to close the purchase transaction?
Please see the list of requirements, based on whether you are buying a lot, a house-and-lot or a condominium.

What are the documents I have to sign to close the purchase transaction?
You will have to sign the Contract to Sell (CTS) which will be sent to you after you have paid for the purchase. You will then return the signed CTS to Lawyer firm
If you will register the sale under the name of another person or corporation, then you must sign, have notarized, and submit to Lawyer firm 3 original copies of the Special Power of Attorney (SPA). The SPA and CTS will have to be authenticated at the Philippine Consulate nearest you, as that is a requirement for the Philippine courts to recognize the validity of signed documents originating from overseas.

What are Articles of Incorporation and by-laws of Membership Clubs?

The Articles of Incorporation constitutes the charter of the corporation and is the contract between the stockholders and the corporation as well as fellow stockholders