How to buy land in the Philippines as a foreigner: Comprehensive guide

The Philippines is frequently at the top of the list of prospective foreign buyers regarding land. With its stunning landscapes, thriving urban centers, and an ever-increasing appeal as a popular tourist destination, it’s no wonder that interest in Philippine real estate is on the rise. However, as with any investment, buying land in the Philippines comes with rules and regulations. This article will discuss how to buy land in the Philippines as a foreigner.

Land ownership restrictions for foreigners

There are severe restrictions on foreign land ownership in the Philippines. Land ownership is typically forbidden to foreigners under the Philippine Constitution and Public Land Act. This restriction stems from a national policy meant to protect the country’s heritage and guarantee that land stays in the hands of Filipino nationals.

However, as long as Filipino citizens hold at least 60% of the outstanding capital stock, commercial entities such as corporations can buy land in the Philippines. Even in cases where there is some foreign investment, this rule guarantees majority control by the Filipino people. Therefore, cooperative structures and corporate partnerships with Filipino citizens provide a legal avenue for foreign involvement in land use and development, even while foreign direct land ownership is forbidden.

Options to buy land in the Philippines as a foreigner

Buying land in the Philippines as a foreigner can be challenging due to regulatory restrictions. However, there are legal ways to navigate these challenges. Those wondering how to buy land in the Philippines as a foreigner have four options.

Option 1: Lease agreements

In the Philippines, land ownership by foreigners is typically forbidden. Leasing agreements provide a helpful substitute. A foreign national may sign a lease with a Filipino landowner for a maximum of the 50-year initial term under the Investor’s Lease Act of the Philippines. Foreigners can use a land lease agreement to lease land for business or personal use.

Option 2: Corporate ownership

Corporate ownership is another popular strategy to buy land in the Philippines. The Securities and Exchange Commission (SEC) requires the establishment of a domestic corporation before you may lawfully trade in the land market. At least 60% of the company’s shares must, however, be owned by Filipinos. Only 40% of the company will be under foreign ownership and control. Following SEC approval, the corporation can buy agricultural land in the Philippines and other real estate. After that, foreigners can use their ownership share in the corporation to enjoy the land.

Option 3: Marrying a Filipino citizen

Foreigners can purchase land if they are married to a Filipino citizen, but their spouse will own the title. You are not permitted to be listed on the Transfer Certificate of Title (TCT) but may be on the contract or Deed of Sale. Foreigners will inherit the land if their spouse passes away. Still, as foreign nationals are not permitted to hold land, they must sell it quickly, give ownership to their children, or give it to Filipino relatives if the couple is childless.

Option 4: Heritage

The Philippine Constitution provides a limited exemption that permits foreigners to inherit land through hereditary succession. If you are an heir by hereditary succession, legally or naturally, you can inherit land in the Philippines. This may happen if the land owner dies without a will and you are named in their “Last Will and Testament” or through intestate succession.

What documents are required when buying a lot in the Philippines?

Understanding the documentation to buy land in the Philippines ensures a smooth and secure transaction. These documents validate the legality of the sale and protect both the buyer’s and the seller’s interests. Here are five documents needed when buying a lot in the Philippines:

• Deed of absolute sale: This notarized legal instrument confirms your acquisition and holds evidence of the land’s transfer to your name, which should be officially recorded at the Registry of Deeds.
• Deed of adjudication with sale: This document records the agreement among heirs to dispose of a piece of inherited land, safeguarding against potential ownership challenges.
• Certificates of title: Proof of land ownership received from the Registry of Deeds, with a Transfer Certificate of Title for lots or houses and a Condominium Certificate of Title for condominium units.
• Tax declaration: This attests to the seller’s adherence to land tax payments when planning to purchase land in the Philippines. Before acquisition, the new landowner must obtain an updated declaration under their name from the municipal assessor’s office.
• Contract to sell: This preliminary binding promise enables a buyer to prevent the land from being marketed until the payment is completely fulfilled. It lays out the terms and conditions the parties agreed upon for the transaction to purchase land in the Philippines.

7 steps in buying a lot in the Philippines

Buying land in the Philippines can be a rewarding investment, but it can also be challenging, especially for foreigners. However, foreigners can buy land in the Philippines by following our 7-step guide below.

Step 1: Verify ownership

The initial step is to confirm who owns the land. Obtain a copy of the title from the Register of Deeds to verify the ownership details for purchasing land in the Philippines. The title will reveal the owner’s name and other critical information. Always obtain a copy of the title from the seller to show the Register of Deeds.

Step 2: Double-check potential issues

Given the significant financial investment, it’s crucial to perform real estate due diligence and double-check for any potential issues:

• Verify the land description matches official records.
• Obtain a copy from the seller.
• Ensure there are no disputes regarding access.
• Confirm the seller’s authenticity.

Step 3: Obtain a notarized and signed deed of sale

A notarized and properly signed deed of sale is vital to purchase land in the Philippines. This document details which party is responsible for paying property sale taxes.

Step 4: Resolve BIR fees

Before visiting the BIR (Bureau of Internal Revenue) branch, check their website for requirements. Within 30 days of signing the Deed of Sale, the designated party must pay any outstanding fees and submit necessary paperwork, including:

• Original and photocopy of the Deed of Absolute Sale.
• Original and photocopy of the Transfer Certificate of Title.
• Tax Declaration for Land and Improvement.
• Buyer and seller’s tax ID number.

Step 5: Process transfer taxes

The BIR representative will calculate your Capital Gains Tax and Documentary Stamp Tax. You must also sign BIR Form 1706 and BIR Form 2000 to buy land in the Philippines. Submit these documents to the municipal or city treasurer’s office or an authorized bank for processing.

Step 6: File CGT and DST documents

Submit your Capital Gains Tax (CGT) and Documentary Stamp Tax (DST) documents to the BIR to receive a certificate of authorization to register.

Step 7: Get a copy of the new tax declaration

Finally, the municipal or provincial assessor’s office must obtain a copy of the new tax declaration to buy land in the Philippines. Typically, the new documentation becomes available five days after submission.

Expert assistance for buying land in the Philippines

Navigating the process of buying land in the Philippines as a foreigner can be challenging, but our experienced team is here to help. We offer comprehensive support, from understanding legal requirements and finding the perfect plot to ensuring a smooth transaction. Whether you need guidance on the documentation process or help with property selection, we provide personalized assistance tailored to your needs. You can also email us directly at [email protected] for more detailed inquiries and support. Reach out to us today and take the first step towards owning land in the Philippines with confidence!

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