Whether you are a buyer or a seller these are the documents and processes you need to know in transferring of a title in the Philippines. This is the standard sharing of expenses between the buyer and the seller when transferring the real estate property title (TCT – Transfer Certificate of Title or CCT – Condominium Certificate of Title) to a new owner.
The SELLER pays for the:
Capital Gains Tax equivalent to 6% of the selling price on the Deed of Sale or the zonal value, whichever is higher. Withholding Tax if the seller is a corporation
Real estate taxes due up to date of sale.
The BUYER pays for the cost of Registration:
Documentary Stamp Tax – 1.5% of the selling price or zonal value or fair market value, whichever is higher.
(To get the zonal value of your property, you may check it at bir.gov.ph.)
Transfer Tax – 0.5% – 0.75 % of 1 % of the selling price or zonal value, whichever is higher.
Registration Fee – 0.25% of the selling price, or zonal value, whichever is higher.
Incidental and miscellaneous expenses incurred during the registration process.
The above sharing of expenses is the standard practice in the Philippines. However, buyers and sellers can mutually agree on other terms as long as it is done during the negotiation period (before the signing of the “Deed of Sale”).
Other cities also charge a city tax or business tax prior to transferring a property. This is about 0.45% of the selling price or zonal value, whichever is higher.
STEPS TO TAKE
The Notarized Deed of Absolute Sale is brought to the Bureau of Internal Revenue for the Computation of Capital Gains Tax / Withholding Tax and Documentary Tax. BIR will compute for the amount needed to be paid for capital gains tax. This will be the final price needed to be paid. Next step is payment of Taxes at a bank accredited by the BIR then you bring back the deposit slip to BIR and wait for the CAR (Certificate of Authority to Register). Nowadays, BIR is also asking for the previous CAR from the sale of the property from the previous owner. CAR may be released by BIR from 1 week to 1 month depending on their load as well as other factors like having a system malfunction at times. The key is to follow up the release diligently.
Pay Transfer Fees at City Treasury (and in some cities the business tax also).
Pay Registration Fees at The Registry of Deeds and have Transfer of Ownership officially recorded.
Registry of Deeds issue new Transfer Certificate of Title / or Condominium Certificate of Title. (Some Registry of Deeds need Clearance from Condo/Subdivision Corporation or Association that all dues are fully paid prior to the release).
Your Agent / Broker will usually do the registration process (sometimes for a fee). However, all government taxes, transfer fees and incidental or miscellaneous expenses will be shouldered by the buyer.
Documents needed when transferring the title (TCT or CCT) to the new owner:
Certified true copy of the title / and
Notarized copies of the Deed of Sale
Certified true copy of Tax declaration of the property
Receipt from Bureau of Internal Revenue that the capital gains tax and documentary stamps have been paid
Certificate of Authority to Register (CAR)
Receipt of payment of the transfer tax and registration fees
Condo or Subdivision Association Clearance
An adapted form of the “Torrens” system of land registration is used in the Philippines. The system was adapted to assure a buyer that if he buys a land covered by an Original Certificate of Title (OCT) or the Transfer Certificate of Title (TCT) issued by the Registry of Deeds, the same will be absolute, indefeasible and imprescriptible.