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COSTS WHEN BUYING REAL ESTATE IN DUMAGUETE, , THE PHILIPPINES

costs when buying real estate in Dumaguete the philippines

WHAT ARE THE COSTS WHEN BUYING REAL ESTATE IN DUMAGUETE?

A clear guide to transaction Fees

images 1 When buying real estate in Dumaguete, often people get confused, frustrated and overwhelmed , so I would like to share with you a basic overview of what you should expect in regards to fees and costs when purchasing property in the Philippines

Usually there is a standard sharing of expenses between the purchaser and the seller when transferring the real estate property title (TCT – Transfer Certificate of Title or CCT – Condominium Certificate of Title) to a new owner: The BUYER and SELLER usually pays for the following, however when buying real estate in Dumaguete, or anywhere else in the Philippines, this comes down down to a negotiation between both parties on who will bear what costs.

  • Capital Gains Tax equivalent to 6% of the selling price on the Deed of Sale or the zonal value, whichever is higher. (Withholding Tax if the seller is a corporation).
    Though here in the Philippines it is called a capital gains tax it really has no correlation to the realized net gain of sale price less purchase price. In Reality it is simply a VAT(value added or sales tax). In most cases when buying real estate in the Philippines, it is common practice to undervalue the sale price, but this is of course highly illegal and should be avoided. – PAID TO THE BUREAU OF INLAND REVENUE (BIR)
  • Unpaid real estate taxes due (if any).
    We of course know it by the name property tax and there must be document proof of a zero balance due for the transaction to proceed. – PAID TO THE BUREAU OF INLAND REVENUE (BIR)
  • Agent / Broker’s commission.
    The standard commission paid to real estate agents or brokers is 5%. Ths should have been agreed to and dcuent by way of a Memorandum of Agreement (MOA) , prior to the property being listed and paid out directly from the proceeds of the sale. It is important that confirmation of commission payment is provided to the purchaser in order to protect them from future claims by the real estate agent. – PAID TO REAL ESTATE AGENT/BROKER The BUYER pays for the cost of Registration:
  • Documentary Stamp Tax – 1.5% of the selling price or zonal value or fair market value, which ever is higher.
    PAID TO THE BUREAU OF INLAND REVENUE (BIR)
  • Transfer Tax – 0.5% of the selling price, or zonal value or fair market value, which ever is higher.
    PAID TO THE BUREAU OF INLAND REVENUE (BIR)
  • Registration Fee – 0.25% of the selling price, or zonal value or fair market value, which ever is higher.
    PAID TO THE REGISTRY OF DEEDS (RD)
  • Incidental and miscellaneous expenses incurred during the registration process.
    USUALLY PAID TO THE REGISTRY OF DEEDS (RD) Costs that are split between Purchaser and Seller
  • Legal fees. usually the standard rate is 1% of the selling, but this can be negotiable depending on the Attorney PAID TO THE ATTORNEY If you are buying real estate in Dumaguete – contact us

 

(2) Comments

  1. Very hard to say what is the tax footprint on a household. There are numerous value added taxes on virtually every product or service purchased, which would have to be figured into the equation. there is also income tax which is very complicated and varies dependent on many factors. If property is owned then there is a yearly property tax bill and if it is rented, of course the tax is included in the lease amount. If property is purchase there is both the capital gains tax and documentary stamp tax, but really these are both just value added taxes.

    In most western countries there are usually pretty accurate stusdies done to provide some statistics that could answer a question like this, but here in the Philippines, anything close to statistics in this , or most other regards are basically non existent, or if they do exist probably skewed to reflect some partisan politics.

    Sorry I could not answer your question any better than this.

    Gord

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