Legal Aspects of Buying property in the Philippines
Ownership laws in the Philippines does not allow foreigners to own land, but allows the ownership of apartments in high-rise buildings as long as the foreign proportion in a apartment block does not exceed 40%.
Foreigners that want to purchase Philippines property can buy a house but not the land on which it is built. A long lease on the land of up to 50 years which is renewable for another 25 years can usually be arranged.
Land can be acquired through a corporation as long as the maximum foreign ownership in the corporation does not exceed 40%.The largest area that may be acquired for residential purposes is 1,000 square meters in urban areas or one hectare in rural areas.
Buying a property from a developer is simple as the property can be initially purchased through a preliminary contract which binds the buyer and vendor to the purchase and details the full conditions of the sale such as the exact details of the property, payments and time of possession.
It is always recommended to use a lawyer when buying property not only in the Philippines but anywhere in the world.
Legal Procedures for the transfer of title on Philippines property:
1.Owner and Buyer agree on the transaction details.
2.Deed of Absolute Sale is created by a lawyer and notarized.
3.A Land Tax Declaration is obtained from the Bureau of Internal Revenue (BIR) for submission to the city or municipal Assessor’s office to assess the market value of the property
4.The Buyer pays real estate tax to the City Treasurer’s Office.
5.Transfer taxes are paid by the buyer to the Assessors Office.
6.Capital Gains Tax and Documentary Stamp tax are paid to BIR.
7.The Registry of Deeds issues a new title in the name of the new owner.
8.The new owner then requests tax declaration from the Assessors office.
The whole process of registering property may take around a month to complete. The titles must be registered in the same province as the property and ownership of condominium units is confirmed by the Condominium Certificate of Title (CCT).
•Local transaction tax is levied at 6% of gross selling price or fair market value, whichever is higher.
•Income and capital gains tax is charged at 25%.
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