All You Need to Know About Real Estate Tax
July 21, 2022
What are the fees and taxes you need to know as a homeowner
In the excitement of buying a home, it’s normal for people to gloss over the details of buying one such as fees and taxes that must be paid whenever you’re purchasing a property. In contrast, smart homebuyers research to understand every step of the purchase with the help of a broker or real estate professional. They consider the current market conditions and the taxes they may encounter to reach a smart choice. Here are a few of the most important fees to take note of if you’re looking to buy a property yourself:
Capital Tax Gains
The seller pays for this. CTG is the tax the seller has to pay for the transaction of a real estate property. It is six percent of the selling price or the fair market price, whichever is higher. (The fair market price, or the zonal value, is the real estate value set by the Bureau of Internal Revenue.) For example, if a property sells at P1 million, but the BIR sets its zonal value at P2 million, then the CGT will be computed based on the 2 million.
Documentary Stamps Tax
The seller or the buyer may pay this tax, though it's usually whoever benefits most that pays it. DST is the tax on the documentation of the sale. It is 1.5 percent of the selling price or the fair market price, whichever is higher.
Again, the buyer shoulders this fee. This refers to the tax the buyer pays to the local Registry of Deeds where the house or property stands. It serves to legally register the transfer of ownership. Expect this to amount to around one percent of the selling price.
Real Estate Tax
Now that you’ve bought your home, you will be responsible for paying Real Estate Tax or Amelyar. You need to pay this yearly installment basis is also accepted) so that the local government doesn’t auction off your property. This tax provides funds for the LGU to underwrite basic public services. You, the owner, or the administrator of your unit pays for this at the city municipal treasurer’s office where your property is located. To calculate how much you’ll pay just use this simple equation: RET (Real Estate Tax) = RET rate x Fair Market Value. RET rate is usually two percent in Metro Manila and one percent in the provinces. Pro tip: You should pay your RET and Special Education tax on time because most cities and municipalities offer discounts ranging from 10% to 20% of the basic tax on early full payment or quarterly payments of Real Property Tax and Special Education Fund Tax.
These fees are part of the financial considerations you must consider when buying your dream home. Other important factors are the property’s location, developer portfolio, the surrounding community, amenities, and the lifestyle it nurtures. For a safe, secure, and sensible home, you can trust Avida Land. With Filipino families in mind, Avida offers thoughtfully-designed homes in strategic locations where convenience meets comfort. Its portfolio includes condominiums and residential communities with landscaped parks, sustainability features, and all the amenities for a well-lived life. Whether you’re looking for your first home or a bigger space for your growing family, you will be sure to find a home in Avida. Learn more about Avida’s latest developments visit their official website.