Filing Real Property Tax in the Philippines

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MOST of the local governments in the United States implement a millage rate on property tax. This tax serves as a principal source of income. In the Philippines, only a few real estate brokers are engaging in this kind of business. Well, do you know how to Filing Real Property Tax in the Philippines? This article will be a big help to you!

If you’re planning to sell or buy real properties, you should read this first before finding a buyer or broker. You may visit the BIR Homepage for more details.

Definition of Real Property

These properties are either movable or immovable. It includes land, building, machinery, and other improvements affixed or attached to real property.

Real Property Tax Rate

Tax rates depend on the location, either in a city or province. Every province, city or municipality should impose a uniform rate of real property tax.

  1. Note, in Manila, and other cities, the real property tax rate should be not less than one-half (1/2) of one percent (1%) but not more than two percent (2%) on the assessed value of the real property.
  2. While the tax rate in provinces should be at the rate not less than one-fourth (1/4) of one percent (1%) but not more than one-half (1/2) of one percent (1%) of the assessed value of real property.

There are other special levies on real properties.

  • First, One percent (1%) annually is imposed on real property to accrue to the special education Fund under Republic Act No. 5447. You shall add to the real property tax imposed by the local government.
  • The second is an additional tax on idle lands. These idle lands include agricultural lands more than five hectares in an area suitable for cultivation, dairying, an inland fishery which ¾ remains uncultivated and urban land more than five hectares square, which 2/3 are still unused as certified by the provincial or city assessor.


Real Property Tax  Exemptions in the Philippines

Not all real properties sold or bought are subject to real property tax. Here are some of those properties that are not subject to this tax. These exemptions are based on chapter IV of Real Estate Taxation.

  1. Real Property owned by the Republic of the Philippines or any of its political subdivisions and any government-owned corporation.
  2. Non-profit cemeteries or burial grounds
  3. Charitable institutions, churches, personage or convents appurtenant, mosques, and other improvements attached to it.
  4. Land acquired by grant, purchase, or lease from the public domain for conversion into dairy farms for five years from the time of conversion.
  5. The machinery of a new preferred industry as certified by the Board of Investments used or operated for industrial, agricultural, manufacturing, or mining purposes within the first years of the operation.
  6. Perennial trees and plants of economic value, except those planted principally to grow.

Real Property Tax Valuations

Whether taxable or not, all real property is appraised at the current and fair market value prevailing depending on the location. In real property, the assessed value shall not increase once every five years without new improvements to increase the value.

While machinery is appraised according to the current market value, it is determined based on the original cost of newly acquired machinery. If you previously used the machinery, the current market value is determined by dividing the current market value over the remaining economic life and multiply by the replacement or reproduction cost.

Buildings, Machinery, and Other Improvements are appraised at a certain percentage of the assessment level should not be less than the assessed level for lands nor more than eighty percent (80%) of the market value, except buildings used exclusively for residential purposes.

real property tax rate valuations


Deadline of Payment of Real Property Tax

The real property tax becomes due and payable on the first day of January, and from the same date, said tax and all penalties accrue.

All sums due from any landowner or owner as payment of special levy shall be payable to the provincial or city treasurer or his deputy in the same manner as the ordinary annual tax imposed on real property. Failure to pay will be paying the same penalties for delinquency, and it is enforceable in the same means.

Payment of real property tax is at the taxpayer’s discretion to pay at an instalment or lump sum. The four instalments are due and payable on or before March, June for the second, September for the third, and the last instalment in December.

To know other rulings on a transfer of real properties as a donation by gratuitous transfer, you can read how to file donor’s tax under TRAIN law 2018.


Definition of Terms

Agricultural Land -land devoted principally to raising crops such as rice, corn, sugar cane, tobacco, coconut, etc.

Appraisal– is the act or process of determining the value of the real property.

Assessment level– is the percentage applied to the market value to determine the taxable or assessed value of the property.

Assessed value- the value placed on the taxable property by the assessor for ad valorem tax purposes. Taxable value is computed by multiplying the assessed value by the tax rate.

Economic life- a life of the property to use Improvements- Any amounts added to the property to extend useful life.

Market Value- is the price that a seller is willing to sell, and the buyer is willing to buy.

Original Cost- the acquisition cost or the purchase price

Replacement or reproduction cost- a cost that is incurred on current prices in acquiring a substitute property. Also, the cost of reproducing a new replica property based on current prices with the same or similar material.

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