Introduction to the Real

Property Tax Administration

(RPTA)
Definition of terms

Real Estate – the physical land and all those items, which are attached to the land. It is physical, tangible
entity which can be seen and touched, together with all additions on, above or below the ground.

Real Property – includes all the rights , interests and benefits related to the ownership of real estate is
evidenced by a Title, Free Patent or Tax Declaration in the absence of Certificate of Title.

Four Kinds of Real Property

□ Land
□ Buildings and other structures
□ Machinery
□ Plant

Commonly used terms

□ Penalty – The interest imposed o unpaid RPT from the year it was due. 2% is imposed for every
month but shall not exceed 72% or 36 months.
□ Barangay Share (Municipality) – 25% share of barangay governments received from the collection
of Basic Real Property Tax.
□ Barangay Share (City) – 30% share of barangay governments received from the collection of Basic
Real Property Tax.
□ Cost-to-Collection Ratio – the amount spent to collect 1 peso.
□ Property Class – For purposes of real property taxation, properties are classified into Residential,
Agricultural, Commercial, Industrial, Mineral and Timberlands.
□ Property Sub-Class – The actual use of the property per given property classification.
□ Base Unit Value – the value per square meter of land or building or value per hectare for
agricultural lands and Timberlands.

Real Property Tax Administration (RA 7160)

Important provisions:
□ Power to Levy Real Property Tax
- Section 232 of the LGC authorizes LGUs to levy an annual ad valorem tax on real property.
□ Administration of Real property Tax
- Section 200 of the LGC authorizes the provinces, cities, and municipalities within the
Metropolitan Manila Area to administer real property taxation.
□ Preparation of Schedule of Fair Market Values.
- Section 212 requires the preparation of and enactment to an ordinance a schedule of fair market
values prior to the conduct of a general revision.
□ Appraisal of Real Property
- Section 201 provides the appraisal of properties at the current and fair market value. The DOF
promulgates rules and regulations for the classification, appraisal, and assessment of real
property.
□ General Revision of Assessments
- Section 219 requires the undertaking of a general revision of real property assessments within
two(2) years after the effectivity of the LGC Code and every three(3) years thereafter.
□ Actual Use of Real Property as Basis for Assessment
- Section 217 provides that properties be classified, valued and assessed based on its actual use
regardless of location, ownership, and use.

Computing Market Value(MV)

□ For Buildings:

MV = Area x Base Unit Value

Where: MV - market value of the property
Area - in square meters for all Classes of properties.
Base Unit Value – the value of property per square meter for all classes of properties.
Assessment levels

□ Assessment Level is the percentage applied to the Market Value(MV) to determine the taxable
value of the property.
□ Section 218 provides that the assessment levels to be applied to the fair market value of real
property to determine its assessed value shall be fixed by ordinances of the sangguniang concerned but
shall not exceed that of which is provided in the LGC.

□ Assessment Levels
□ (a) On Lands:

CLASS ASSESSMENT LEVELS

□ Residential 5%
□ Agricultural 20%
□ Commercial 12%
□ Industrial 12%
□ Mineral 40%
□ Timberland 10%

Four Phases of RPTA:

□ Phase 1- PROPERTY IDENTIFICATION

□ Phase 2-APPRAISAL AND ASSESSMENT
□ PHASE 3- RECORDS MANAGEMENT
□ PHASE 4- COLLECTION AND ENFORCEMENT

Phases of RPTA

□ Phase I: Real Property Identification

Property identification includes tax mapping and field ocular inspection to accurately identify the
attributes of real properties.

□ Phase II: Appraisal and Assessment Process

Assessment is the determination of the value of a property, or proportion thereof subject to tax,
including the discovery, listing, classification, and appraisal of properties.
Appraisal is the valuation of property as of a specific date for a specific purpose.

□ Phase III: Records Management

-Data and other information gathered from the field including the taxable assessed values are
translated into usable records for purposes of records keeping, reporting, and inventory.
There are two records:

□ Technical records
□ Non-Technical Records.
□ Technical records:
Tax Maps (TM), Tax Map Control Rolls (TMCR), Tax Declarations (TD),
Field Appraisal and Assessment Sheets (FAAS), and Reports of reappraisal.

□ Non-technical records:

Journal of Assessment Transactions (JAT), Property Record Forms (PRF), Assessment Roll (AR),
Journal of Cancelled Assessment (JCA), Notice of Assessment and Tax Bill (NATB), and Real
Property Tax Order of Payment (RPTOP).

□ Treasury records:

Notice of Assessment and Tax Bill (NATB), Real Property Tax Account Register (RPTAR), Real
Property Tax Order of Payment (RPTOP), Notice of Delinquency and others pertinent to
administrative and judicial functions.

□ Phase IV. Tax Collection and Enforcement

 The collection portion of this phase includes billing, collection and recording of regular and
delinquent accounts.

The enforcement portion of this phase includes administrative proceedings as well as the
application of Judicial remedies.

USES OF THE SEF TAX

□ The organization and operation of extension classes and the creation of new positions for
teachers;
□ School infrastructure projects;
□ Teachers salaries and benefits;
□ Preparation and printing of textbooks and other publications;
□ Purchase, improvement and repair of vocational equipment;
□ Establishment of printing plant;
□ Purchase of teaching materials and other teaching aids;
□ Implementation of program for citizenship development and adult education;

Uses of SEF

□ Operation and maintenance of public school;

□ Construction and repair of school buildings, facilities and equipment;
□ Educational Research;
□ Purchase of books and periodicals; and
□ Sports development.
□ Educational research;
□ Scholarships; and
□ Promotion of physical education.

CALCULATING AND ANALYZING TAX COLLECTIBLES

□ Fair Market Value (FMV) – The value of a property as agreed by the buyer and a seller in arm’s
length transaction. It is commonly based from a schedule of fair market values if the property
characteristics suits the criteria for the said schedule.
□ Assessment Level(AL) – The rate applied to property value subject for real property tax, as
approved by local ordinance.
□ Assessed Value (AV) – The resulting value subject to RPT after applying the Assessment Level.

CALCULATING AND ANALYZING TAX COLLECTIBLES

□ Total Assessed Value – The aggregate of every taxable real property located in each barangay.
□ Tax Rate – The rate to be imposed to the Assessed Value to arrive at the tax due. Maximum of 1%
basic tax for Municipalities and Component Cities or a maximum of 2% for Cities. An additional of
1% rate is imposed for Special Education Fund that accrues to the Local School Board.
□ Total Collectible – The total amount of taxes due for collection for the current year and including
previous taxes and penalties.

COMPUTING THE TAX DUE

□ For Lands:

MV = Area x Base Unit Value Where: MV - market value of the property

Area - in sq.m. for residential, commercial, industrial, mineral and special properties and hectares for
agricultural and timberland.

Base Unit Value – the value of property per unit area.

Example: for residential land Poblacion,Rosario

□ Area=500 sq.m
□ 2nd class residential
□ Unit value(UV)= 950/sq.m
□ MV=Area x U.V.
MV= 500 x 950 =475,000
□ AV= MV x AL
Av= 475,000 X 5%
AV = 23,750
□ Tax due = 23,750 x 2%
= 475

COMPUTATION OF MARKET VALUE

For agricultural land: 3rd class

Example : rice land without irrigation UV = 106,560/ha.

Area = 3.0000has.
MV = 3.0000 x 173,780
=521,340
AV = 521,340 x 20%
=104,270
Tax due = 104,270 x 2%
= 2,085.40

COMPUTATION OF MARKET VALUE

□ For Machinery:
□ MV = Acquisition cost + cost of freight, handling and installation
□ Where: MV - market value of the property
□ Acquisition cost – price in peso or foreign currency converted to peso at the time of purchase.
□ Cost of freight, handling or installation (10% of acquisition cost) – added cost over and above the
price of machinery when delivered and installed at the site.

COMPUTATION OF ASSESSED VALUE

□ AV = MV x AL
□ Where: AV – Assessed Value
□ MV – Market Value
□ AL – Assessment Level not exceeding those prescribed under the LGC

REQUIREMENTS TO DECLARE REAL ESTATE

1. For newly surveyed alienable and disposable lands(A&D)

-approved survey plan from DENR.
-xerox copy of the Certificate of Title , approved application or Certification from DENR .
-Sworn statement duly accomplished and signed by owner, administrator or authorized
representative.

2. for new assessment on buildings

- Sworn Statement duly accomplished and signed by owner.
- inspection report of Municipal Assessor
-picture of the building
-building plan and building permit
-cost estimate of material and labor cost of the building

3. for new assessment on machineries:

-official receipt (OR) of the machinery
-inspection report of the Municipal Assessor
-Sworn Statement duly signed by the owner
-freight and handling, insurance , brokerage and installation costs
Importance of taxation

Tax is the lifeblood of the government. It will be used to finance infrastructure projects of the
government like farm to market roads, bridges and other structures.

Sharing of the proceeds of the tax dues

□ Province - 35%
□ Municipality - 40%
□ Barangay - 25%
TOTAL - 100%

Tax Rate on RPT

Levy =2% of the assessed value (AV) 1% - Basic Tax

1% - SEF

The Fundamental Principles in the appraisal, assessment, levy and the collection of the Real Property
Tax

1. Real property should be appraised at its current and fair market value;
2. Real property shall be classified for assessment purposes on the basis of its actual use.
3. Real property shall be assessed on the basis of a uniform classification within the local
government unit.
4. The appraisal, assessment, levy and collection of the real property tax shall not be let to any
private person;
5. The appraisal and assessment of real property shall be equitable

What is a Real Property Tax?

□ Real Property Tax is a regular ad-valorem tax on real property such as lands and other improvements,
buildings and other structures, and machineries, not specifically exempted by existing laws.
□(Ad valorem tax is determined on the basis of a fixed proportion of the value of the property).

What is meant by appraisal and assessment of real property?

□Appraisal is the act or process of determining the value of property as of a specific date for a specific
purpose.
□Assessment is the act or process of determining the value of a property, or proportion thereof subject to
tax, including the discovery, listing, classification, and appraisal of the property.

Classification of real properties for assessment purposes.

□For purposes of assessment, all real properties such as land and other improvements, buildings and
other structures, and machineries, shall be classified as Residential, Agricultural, Commercial, Industrial,
Mineral, Timberland, and Special. (RACIMTS)

Public land titling project

RA 10023 Residential Free Patent

-administrative procedure in land titling
- processing of patent in 120 working days at CENRO level
-covers public land zoned as residential and townsites
DENR – AO NO.2011-06 prescribing the guidelines for the implementation public land titling in partnership
with LGU’s.

Land Classification

47%- Agricultural(agricultural, residential and commercial)

50%- Forest Land
3%- unclassified
Mga sumbanan ug gitugutan nga sukod sa yuta(residential)

□ Alang sa mga dagkong syudad (urbanized cities) ang sukod dili mulapas sa 200 sqm
□ Sa ubang syudad ang sukod dili mulapas sa 500 sqm
□ Nag una ug segunda klase(1st,2nd) nga munisipyo ang sukod dili mulapas ug 750 sqm.
□ Sa ubang munisipyo ang sukod dili mulapas sa 1000 sqm.

Mga kinahanglanon sa interesadong aplikante

❖ Kopya sa aprobadong plano nga gihimo sa usa ka lisensyado nga geodetic engineer
❖ Kopya sa technical description sa maong luna sa yuta nga aplayan (LMB form 700-2A/700-2B)
❖ Mapa sa yuta (Sketch Map) nga mutudlo sa sa insaktong utlanan( boundary)
❖ Affidavit of two disinterested persons
❖ Alang sa isolated nga application, sertipayan sa Regional Trial Court nga ang maong luna sa yuta
walay pending nga kaso.

Asa man ta mo apply?

□ Bisitahi ang Municipal Assessment Office (MASSO) sa inyong mga lugar.

□ Land Management Unit (LMU) nga nahimutang sa buhatan sa Provincial Assessor ning lalawigan sa
Agusan del Sur.