A closer look at Real Property Tax (RPT) in the Philippines
At the beginning of the new year, it’s time to pay the annual property tax. There are various taxes and fees on houses in the Philippines, including but not limited to Local Transfer Tax (name change tax), Registration Fee (registration fee), Documentary Stamp Tax, Value Added Tax, Capital Gains Tax, etc., etc.
Today I will tell you in detail: Real Property Tax (RPT)
What is property tax?
Real Property Tax (RPT), also known as real estate tax, is a basic tax that owners must pay every year.
According to the Philippine Local Government Code, local government units and municipal governments in the Philippines have the authority to levy real property taxes. In addition, they have the authority to appraise all real estate within their jurisdiction.
Real estate tax is the main source of revenue for the government. The purpose of tax collection is also to maintain various government expenditures, complete public facilities and provide various benefits. It can also be regarded as taking money from the people and using it for the people.
When will it be paid?
Collection and payment begin every year from January 1st after the New Year. If you choose to pay in one lump sum, you can enjoy discounts ranging from 10-20%, but the specific discounts will vary every year and depend on the location. According to the government's arrangement, relevant discount information will be released around the end of December every year.
In addition to paying in one lump sum, you can also choose to pay in four quarterly installments. The specific payment times are as follows, but there is no way to enjoy discounts.
First Quarter: On or before March 31
Second Quarter: On or before June 30
Third Quarter: On or before September 30
Fourth Quarter: On or before December 31
Where to pay?
Owners can go to the city hall where the property is located to pay, but they need to queue up. To avoid wasting time, it is recommended that owners make an appointment in advance.
Some city halls will open bank payment methods and allow owners to pay online.
Finally, we come to the most important thing: how much should we pay?
Let me first give you a formula:
Total real estate tax = [total assessed value] x RPT rate x preferential discount (paid in advance) + late payment fee (if not paid on time in the previous year).
The following is an analysis of the composition of the formula:
1. First of all, we must first clarify the RPT rate. The RPT in metro Manila is different from that in surrounding areas. The current RPT rate is as follows:
• 1% for each province
• 2% in Metro Manila
Property taxes in the Philippines will vary depending on the tax rates in different regions. Even in the capital Manila, different tax rates in different cities will affect property taxes.
2. Calculate the total appraised value of the property
To determine the assessed value of a property, take the property's market value
Only common assessment levels are listed here
• Residential: 20%
• Agriculture: 40%
• Commercial, industrial and mining: 50%
• Hospitals and water bodies: 10%
4. Late payment fees
Late payments of property taxes that are not paid on time will incur a late payment fee, a monthly surcharge of 2% (2%) on late payments, up to a maximum of 72% or not exceeding 36 months
Key point: Failure to pay real estate taxes may result in being flagged, or even the house being auctioned off by the government in accordance with the law, so timely payment is crucial.
Information you need to bring
If you are paying your property taxes in the office, you will need to bring valid identification, a copy of your latest tax return and official receipt, and only cash will be accepted.
If you are a first-time payer, you will need to obtain a copy of last year's tax return and official receipt from the property developer, which is usually given to the owner at closing.
The above is everything you need to know about property taxes. Here is a reminder:
Please arrange your time reasonably and pay in time to avoid being deducted late fees.