Navigating the complexities of real estate transactions can be daunting, especially in foreign countries with unique laws and regulations. If you are pondering how to sell property in the Philippines, this guide is designed to simplify the process for you, particularly if you’re a foreigner. We’ll walk you through the necessary steps, legal requirements, and what to expect regarding taxes and additional costs.
How to sell property in the Philippines?
Selling property in the Philippines involves several procedural steps, from preparing the necessary documentation to closing the deal with the final buyer. As a foreigner who wants to know how to sell property in the Philippines, it’s crucial to understand that the law on the sale of real estate property in the Philippines has specific stipulations regarding property ownership and sales, particularly that foreigners are not allowed to own land, but can own buildings or houses. This factor significantly influences the process of selling property or land in the Philippines, making it essential to have a trusted real estate agent or legal advisor if you’re dealing with property sales as a non-Filipino citizen.
Can foreigners sell property in the Philippines?
Foreigners who legally own property in the Philippines can sell their property, including condominium units, houses, and other real estate. The selling process for foreigners follows the standard legal procedures as for Filipino citizens, including settling any taxes and fees, preparing the necessary documentation, and legally transferring ownership to the buyer.
Can foreigners sell land in the Philippines?
Foreigners are generally not allowed to own land in the Philippines, but they can legally own buildings or houses on the land. If a foreigner has legally acquired land through inheritance or previously held Filipino citizenship, they can sell the land in the Philippines. The procedure of selling land in the Philippines as a foreigner is the same as for Filipino citizens.
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Requirements for selling property or land in the Philippines
As a foreigner, selling property in the Philippines requires navigating certain legal restrictions. While you cannot own and sell land in the Philippines, you can own and sell property units, such as condominiums or apartments, as long as Filipino citizens own 60% of the condo project.
Foreigners who want to sell their property units in the Philippines must coordinate with the condominium corporation and comply with the requirements for selling property in the Philippines. The same counts for Filipinos or legal entities who want to sell their land or lot; they must comply with the requirements for selling land in the Philippines.
Documents needed to sell property by the owner
Before initiating selling property in the Philippines, ensure you have the following documents:
- Certified True Copy of the property title.
- Tax Declaration and Real Estate Tax Clearance for the current year.
- Certificate Authorizing Registration and official receipts from the Bureau of Internal Revenue.
- If applicable, a Special Power of Attorney (if a representative is acting on your behalf).
Additional documents may be required for corporations or if the property involves more complex aspects.
Selling property in the Philippines in 7 steps
The procedure in selling property in the Philippines differs from other countries. To successfully sell your property in the Philippines, follow these steps:
Step 1: Preparation of legal documents
Start by gathering all necessary documents, including the property title, tax declarations, and clearance. Ensure all details are accurate and up-to-date.
Step 2: Property assessment
Have a real estate agent or professional appraiser assess your property to determine its current market value, considering factors like location, condition, and recent market trends. This is an essential step in selling property in the Philippines, as you want to receive the best price for your property.
Step 3: Engaging a real estate agent
Hiring a real estate agent can streamline the process if you’re not well-versed in local real estate transactions. The agent will market the property, communicate with potential buyers, and arrange viewings. Foreigners who don’t know how to sell property in the Philippines benefit from working with an agent.
Step 4: Marketing and property viewings
Your real estate agent in the Philippines will handle the marketing and property viewings, ensuring the property is presentable and accommodating property viewings for potential buyers.
Step 5: Receiving a Letter of Intent
Once a buyer is interested, they’ll submit a Letter of Intent. Review it carefully, possibly with a legal advisor, before accepting.
Step 6: Finalizing the sale
Prepare the Deed of Absolute Sale and other closing documents. Both parties will sign, and the buyer will settle the payment according to the payment schedule.
Step 7: Transferring ownership
After the sale, transfer the property ownership to the buyer. This process involves registering the sale with the local government, paying necessary taxes, and obtaining new property titles and tax declarations. Ensure to collect these documents after the property sale:
- Letter of Intent from the buyer (includes the price, payment schedule, earnest money, and terms and conditions).
- Contract to Sell.
- Deed of Absolute Sale.
- Endorsement Letter.
- Certificate Authorizing Registration.
Taxes to pay when selling a property in the Philippines
Property owners can earn money when selling property in the Philippines. However, there are also several taxes and costs related to selling real estate. Knowing the taxes to be paid when selling a property in the Philippines is crucial before starting the selling process.
Foreigners selling property in the Philippines are subject to several taxes, including:
- Capital Gains Tax: This tax is 6% levied on the property’s selling price, zonal value, or fair market value, whichever is highest.
- Ordinary Assets Tax: Properties used for trade or business and income-generating are classified as ordinary assets. This tax is 6% of withholding taxes, income tax, 12% VAT, and documentary stamps tax.
Ensure you understand which taxes to pay when selling a property in the Philippines. Working with a real estate agent or legal agent who can guide you through the tax regulations is highly advisable.
Other costs of selling property in the Philippines
Aside from taxes, additional costs of selling property in the Philippines include:
- Broker’s commission: Typically, this is around 3-5% of the selling price.
- Documentary Stamp Tax: This is 1.5% of the selling price or zonal value, whichever is higher.
- Transfer Tax: Rates vary depending on the local government unit.
- Registration Fee: This fee depends on the selling price of the property.
Understanding these steps and requirements allows you to navigate the complexities of selling property in the Philippines more confidently and efficiently, ensuring compliance with local laws and regulations. Always consider seeking advice to facilitate the process and protect your interests.
Sell property in the Philippines with Own Property Abroad
Do you want to sell your property in the Philippines? Knowing how to sell property in the Philippines can be challenging, especially for foreigners. Own Property Abroad can assist you and ensure a seamless and hassle-free property journey. Thanks to our knowledge and experience in the local market, we can help with legal requirements, find suitable buyers, negotiate the best deals, and close deals.
With our expert team, you won’t have to navigate the complexities of the Filipino market alone. For further information on how we can assist you, kindly drop your details below or email us at email@example.com. Let’s start working on your property success story today!
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What are the taxes to be paid when selling a property in the Philippines?
When selling property in the Philippines, sellers are responsible for the Capital Gains Tax, which is 6% of the gross selling price or the current fair market value, whichever is higher, and possibly an Ordinary Assets Tax. Additionally, they must pay the Documentary Stamp Tax, Transfer Tax, and Registration Fee, the rates of which vary depending on local regulations and the property’s assessed value.
How to sell agricultural land in the Philippines?
To sell agricultural land in the Philippines, you must first verify the land’s classification and secure necessary documents like the land title and tax declarations. Clearance from the Department of Agrarian Reform is essential to ensure the land adheres to agricultural standards. After meeting these requirements, you can engage with potential buyers, negotiate terms, and finalize the sale, providing all corresponding taxes and fees are settled.
Can I sell my land to the bank in the Philippines?
Yes, you can sell your land to a bank in the Philippines. The process involves appraising the property, agreeing on a price, and preparing the required documents, including the land title and tax declarations. The sale is finalized through a Deed of Absolute Sale, with the bank processing the payment and the property title being transferred accordingly.
Is there a law against selling property you don’t own in the Philippines?
Absolutely, the Philippines has strict laws against selling property not legally yours. Such fraudulent activities can lead to serious legal charges, including fraud or estafa, as these acts are criminal offenses under the country’s penal code. Proper documentation proving legitimate ownership is mandatory before initiating any sale.
How to sell the rights of land ownership in the Philippines?
Selling the rights of land ownership in the Philippines typically involves a Deed of Assignment, a document that details the agreement between buyer and seller. This process transfers possession rights but does not alter the official land title. Both parties must agree on the terms, and all applicable taxes and fees should be paid accordingly. Ensure you have all the documents needed to sell land by the owner.
How to sell a lot in the Philippines?
Selling a lot in the Philippines requires securing the official land title, recent tax declarations, and potentially enlisting a real estate broker’s help. The broker can assist in evaluating the property’s market value, facilitating viewings, and reaching potential buyers. The sale process concludes with drafting a Deed of Absolute Sale, settling all pertinent taxes and fees, and officially transferring the property title to the new owner.