Navigating the complexities of real estate transactions can be daunting, especially in foreign countries with unique laws and regulations. If you are wondering 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% and 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 includes withholding taxes (6%), income tax, 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 protected]. 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.
21 Responses
The heirs of a property are selling the inherited piece of land. Does the buyer need to know how the sale of the property (payment) will be distributed among the heirs?
Its illegal for a foreigner to own land and yes there are ways to control the property but you are still at risk for anti dummy law prosecution. I highly recommend you dont get involved in buying land in the philippines especially without free title with heir. I have been dealing with a legal battle for 2 1/2 years and has been a nightmare. If you want to own property, look for a Condominium where you can legally own and you will save yourself a huge headaches
Can you tell the buyer they are responsible for the capital gains tax on selling agricultural land in the Philippines?
Hi Lena,
The seller has to pay the Capital Gains Tax in the Philippines, for any type of real estate (also agricultural land).
Regards,
Matt
By default, capital gains tax is on the account of the seller. But if it will benefit you by negotiating for a good price this way, then you can shoulder the payment of such by discounting the amount of your payment to the seller.
Usually, they wanted the net proceeds of the sale and wanted the buyer to process that requirements of transfer of ownership.
If you know how to untangle as messy documentation of a property, you can negotiate for a lower price.
Condo just got finished in Cebu Philippines, planning on selling it. While waiting for a buyer, considering renting it out until the condo is sold. As a foreigner who not in the country most of the the time… Do I need to declare my rental income?
lets say I rented it out for 3 Month and a buyers buy it. Do I need to declare a rental income to get a Certification authoring Registration (CAR), even if it doesn’t hit the 250000php/year?
Still waiting on my title deed to be transfer under me… but can I still sell the condo while waiting and just transfer it to the new buyer?
As a individual foreigner investor, how do I pay my capital tax gain to the BIR or even my rental income( If I need to get the CAR?
Hi JQ,
As a foreign property owner in the Philippines, you must declare all rental income to the Bureau of Internal Revenue (BIR), regardless of the amount or rental duration. To sell your property, you need a Certification Authorizing Registration (CAR) from the BIR, confirming that all taxes related to the sale have been paid. While you can enter into a sale agreement during the title deed transfer process, the final transfer to the buyer can only occur once the title is in your name. It’s important to consult with a local tax consultant or real estate lawyer for managing capital gains tax and rental income tax, ensuring legal compliance.
You can contact us at [email protected] to get assistance from our legal agents, who are experienced with these matters.
^ Matt
How much is the market value of agricultural land in the Philippines
Hi Christina,
The market value of agricultural land in the Philippines varies greatly depending on location, accessibility, and other factors. We can help you with the valuation. Please send an email to [email protected] with specific details about the land in question.
^ Matt
How do I find someone trustworthy to process the land that was bought by my mother together with her dad but have not transfer the title to their names and they are both dead, I got all the receipts showing all paid for and the the signature of the seller confirming fully paid off, I’m the only heir and would like it to be transfer to my name, how do I go about processing it.
Hello Tap, you can email us at [email protected] to get assistance with this. We can help you to obtain the land title and to transfer it to yourself.
Hi! How much tax will the government deduct from my commission as part of the broker side? I live in the US but Im also a dual citizen. I have a commission from the property that my relative is selling. Do I have to pay taxes when I deposit the money to my bank in the Philippines or in the US? If yes, how much tax do I need to pay and what are the documentation needed in order for the bank to accept it.
Hi Sheila,
In the US, commission income is taxed as ordinary income, subject to your total income tax bracket, which can range from 10% to 37%. As a dual citizen, you’re subject to US tax on global income but can avoid double taxation by claiming a Foreign Tax Credit for taxes paid in the Philippines. In the Philippines, commission income is also subject to income tax, with rates ranging from 0% to 35%. If you deposit the money there, you might need to pay taxes depending on Philippine tax laws and your tax residency status.
You’ll need to report this income and potentially pay taxes in both countries. Necessary documentation includes the commission statement and tax receipts if taxes are withheld. If you need assistance, please don’t hesitate to contact us at [email protected].
Hello, my husband’s parents left a ton of property in siquijor under their names but they did not transfer the title to the heirs which is the children. Now the siblings (aunt/uncle) trying to claim the property. Any suggestions on how we can fight the property ? Thanks
Hello Nhajo,
In cases like this, it’s important to legally establish the heirs’ rights to the property. Consult with a lawyer specializing in estate law in the Philippines to guide you through the process of settling the estate and transferring the titles to the rightful heirs. This often involves filing a petition for settlement of estate in court, proving heirship, and possibly mediation if there’s a dispute among family members. Gathering all documents related to the property and any wills or agreements made by the deceased will be crucial.
Acting quickly and getting professional legal assistance is key to resolving such disputes.
Hi Matt – my parents (dual citizenship) own a house in the Philippines and are doing some estate planning as they are in their 80’s. The house is currently occupied by my dad’s family, and he would like to buy them a new house to live in (hoping for less than half of proceeds from existing house). Not sure if you have any suggestions on relocating family members to minimize complications of selling a home and potentially buying another. My siblings and I were born in the U.S. so assuming a new property or at least one with land we could not inherit in the future. Also, there are 3 rentals attached to the current property (not sure of notification process to renters) that we would like to sell. What’s the best way to minimize taxes and buy a new home without having to send new money to the Philippines which may be taxed. Is there a way to arrange it so no new funds get sent and minimize taxes on sale of existing home with purchase of new home?
Hi AI,
It’s great that your parents are thinking ahead. When relocating family members in the Philippines and dealing with property sales, the key is careful planning. For selling the occupied house and buying another, consider using the proceeds from the sale directly for the purchase to avoid the need for additional funds. This approach can help minimize tax implications, as capital gains tax will be due on the sale, but reinvesting in property can be efficient.
Regarding the inheritance aspect, while foreign citizens cannot own land in the Philippines, they can inherit buildings or land through succession if the heirs are legal heirs under Philippine law. It might be wise to consult a local estate planner or lawyer to navigate these specifics and ensure a smooth transition.
For the rental units, notifying tenants should follow local laws, usually requiring written notice a few months in advance, depending on the lease agreements.
Engaging a local tax advisor or attorney could provide strategies to minimize taxes and ensure the property sale and purchase are handled efficiently, considering your parents’ dual citizenship and your situation as U.S.-born heirs.
Hi Matt, if you’re selling a property in the philippines and the broker is asking for 5% commission. That would be divided to seller broker and buyer, correct? That means 2.5% paid to seller agent and 2.5% paid to buyer’s.
In the Philippines, the total broker’s commission is typically shared between the seller’s and buyer’s agents unless agreed otherwise. Each side typically gets 2.5%.
Hi Matt, what is the best way to get the funds from a property sale in the Philippines? I live in the States and the property was just sold. Can the money be wired to my bank and what documents are needed?
Hi Delia, for transferring funds from a property sale in the Philippines to the U.S., the proceeds can indeed be wired to your U.S. bank account. You’ll need the official sale documents and possibly a bank clearance or certificate of the source of funds to facilitate the transfer.