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Local Taxation

Basic Realty Tax = 1% to 2% of Assessed Value
Special Education Fund Tax = 1% of Assessed Value
Idle Land Tax = not to exceed 5% of Assessed Value (Section 236, RA 7160)
Payment of Realty Tax = March 31 / June 30 / Sept 30 / December 31
Prompt Payment Discount = maximum of 20% of total tax; deadline is on or before
January 31 of the taxable year
 Payment Under Protest:
o Should be filed within 30 days
o Decision should be made within 60 days
o Refund may be given within 2 years
 Interest on Unpaid Tax = 2% per month, not to exceed 36 months
 Redemption period for properties sold through auction = One year from date of
certificate of sale
National Taxation
 Installment Sale = total amount paid in first year of payments is 25% or less of total
selling price
 Deferred Payment Sale = total installment paid in first year of payments is more than
25% of total selling price
 Documentary Stamp Tax on Sale = 1.5% of Tax Base
 Documentary Stamp Tax on Mortgage = P20.00 for the first P5,000 plus P10.00 for every
succeeding P5,000 or a fraction thereof, or (Amount of Mortgage x 0.002) + P10.00
 Capital Gains Tax = 6% of Tax Base
 Creditable Withholding Tax (for real estate developers and dealers):
 1.5% – if selling price is P500,000.00 and below
 3.0% – if selling price is more than P500,000.00 and but less than or equal to P2 Million
 5.0% – if selling price is more than P2.0 million
 6.0% – if seller is not habitually engaged in sale of real estate, regardless of selling price
 Percentage Tax = 3% of Gross Receipts
 Value-Added Tax (VAT) = 12% of selling price before VAT
 Donor’s Tax = from 2% to 15% (up to 4th degree of consanguinity)
 30% if the donee is a stranger (beyond the 4th degree of consanguinity)
 Estate Tax = from 5% to 20% of net estate subject to tax
i. Rule on Sales on Installment [RR No. Sec. 4.106-3 of RR No. 16-05 as amended by Sec. 3 of
RR No. 4-07]
Installment sale of residential house and lot or other residential dwellings with gross selling
price exceeding P1,000,000.00, where the instrument of sale (whether the instrument is

the sale thereof shall be subject to VAT being a transaction incidental to the taxpayer’s main business. Provided. Installment payments.000) shall be adjusted to its present value using the Consumer Price Index. the amount of One million pesos (P1.4. including interests and penalties. the buyer of the property can claim the input tax in the same period as the seller recognized the output tax. that not later than January 31.000. shall be subject to ten percent (10%) output VAT. 7279. Correlate with Sec. including the interests and penalties for late payment. regardless of the amount of the aggregate rentals received by the lessor during the year. See also rule on sale of real property use in business (Sec. lease of residential units where the monthly rental per unit exceeds 10k but the aggregate of such rentals of the lessor during the year do not exceed . 2.000) and below: Provided. as published by the national Statistics Office (NSO). actually and/or constructively received. as published by the NSO. iii. subject to the provisions of Sec. actually and/or constructively received starting February 1. even if the real property is not primarily held for sale to customers or held for lease in the ordinary course of trade or business but the same is used in the trade or business of the seller. In case of installment sale. ii. 2005. That not later than January 31st of the calendar year subsequent to the effectivity of this Act and each calendar year thereafter. 14 (l) of RR No.nominated as a deed of absolute sale.000. 2009 and every three years thereafter.106-4 hereof. the amount of 10k shall be adjusted to its present value using the consumer price index. not withstanding. Lease of Residential Units – [Sec. However. deed of conditional sale or otherwise) was executed prior to November 1. otherwise known as the Urban Development and Housing Act of 1992. Sale of real property on installment plan means sale of real property by a real estate dealer. 2006 shall be subject to twelve percent (12%) output VAT.109-1 (B)(q) of RR No. the seller shall be subject to output VAT on the installment payments received. the initial payments of which in the year of sale do not exceed twenty-five (25%) of the gross selling price. 4-07) (1) Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business. The foregoing. 109 on exempt sales of Real Property (w) Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business or real property utilized for low-cost and socialized housing as defined by Republic Act No. and other related laws. Correspondingly. 4. 16-05] Lease of residential units with a monthly rental per unit not exceeding 10k. house and lot and other residential dwellings valued at One million pesos (P1.

some are leased out for a monthly rental per unit of not exceeding P10. developing..00 per unit. leasing or sub-leasing of real property. including the use or lease of properties  On importation of goods – twelve percent (12%) based on the total value used by the Bureau of Customs in determining tariff and customs duties. Otherwise. his tax liability will be as follows: 1.00 per month per unit shall be exempt from VAT regardless of the aggregate annual gross receipts.  On export sales and other zero-rated sales – 0% . hotels and hotel rooms. plus customs duties. What real estate transactions are subject to Value Added Tax (VAT)? Those involving sale. dormitories.00. provided.000. The following are the tax rates of VAT:  On sale of goods and properties – twelve percent (12%) of the gross selling price or gross value in money of the goods or properties sold. and other charges. the VAT shall be based on the landed cost plus excise taxes. and buildings or parts or units thereof used solely as dwelling places (e. motel rooms.5M shall be likewise exempt from VAT.000. excise taxes. The gross receipts from rentals not exceeding P10.000. however the same shall be subjected to 3% percentage tax. such as tax to be paid by the importer prior to the release of such goods from customs custody. leasing or sub-leasing of real property. per person in the case of dormitories.000. The following are liable to pay VAT:  Those who are engaged in the business of selling.00) exceeds P1. The term ‘unit’ shall mean an apartment unit in the case of apartments. boarding houses and bed spaces. The gross receipts from rentals exceeding P10.g.500.00 while others are leased out for more than P10. bartered or exchanged  On sale of services and use or lease of properties – twelve percent (12%) of gross receipts derived from the sale or exchange of services.000. The term ‘residential units’ shall refer to apartments and houses & lots used for residential purposes. rooms and bed spaces) except motels.1. developing.000. In cases where a lessor has several residential units for lease. lease or sub-lease of real property by persons engaged in the business of selling. and per room in case of rooms for rent. house in the case of residential houses.  Those licensed to engage in real estate brokerage business based on their commission. that where the customs duties are determined on the basis of quantity or volume of the goods. if any. if any.00 per month per unit shall be subject to VAT if the aggregate annual gross receipts from said units only (not including the gross receipts from units leased for not more than P10. the gross receipts will be subject to the 3% tax imposed under Section 116 of the Tax Code. 2.