Taxes Associated With Owning A House

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It is everyone’s dream to have a house of their own but being a homeowner goes beyond having the money to buy the house. It also requires yearly upkeeps and maintenance, as well as annual realty taxes. Although some people come armed with this knowledge when
looking for available properties in Philippines, a few are still unaware of the specifics of the taxes associated with owning a house.

Below are the taxes and a guide on their computation.

  • Taxes upon purchase. Before buying a house that is on sale in Philippines, it is better to clarify whether the purchase price already includes the income tax, value-added tax, documentary stamp tax, and local transfer tax. The income tax is often 30% of the purchase price or zonal value of the property, whichever is higher, and payable to the Bureau of Internal Revenue. The value-added tax is 12% of the purchase price or zonal value of the property, whichever is higher, and also payable to the BIR. The documentary stamp tax is 1.5% of the purchase price or zonal value of the property, whichever is higher, and also payable to the BIR upon execution of the deed of sale. The local transfer tax is around 0.25% to 0.75% of the purchase price or zonal value of the property, whichever is higher, and payable to the local government where the property is located.
  • Realty tax. Real estate property owners have to pay real estate tax for as long as they own a particular real estate property. This realty tax is paid every year and depends on the rate set by the local government where the property is located and the assessed value of the property. The usual rate for cities and Metro Manila municipalities is not more than 2% of the assessed value of the property while for provinces the rate is not more than 1% of the assessed value of the property.
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2 thoughts on “Taxes Associated With Owning A House

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