Tax On Transfer of Real Properties
Tax On Transfer of Real Properties
Tax On Transfer of Real Properties
Definition/Nature
Transfer tax is levied on real properties which are subject to sale, donation,
barter or any mode of transfer of ownership or title of real property. This is pursuant to
Section 135 of the Local Government Code of 1991 (LGC). This kind of tax
distinguishes it from real properties which are classified as capital asset subject to a
capital gains tax (final tax) of 6%.
Payment of transfer tax is necessary because the evidence of its payment is
required by the Register of Deeds of the province concerned before registering any
deed. This is also required by the provincial assessor before cancelling an old tax
declaration and issuing a new one in its place. Furthermore, it should not be confused
with the transfer tax which is paid to the local government and the transfer taxes due to
the BIR (which may either be donors or estate taxes).
Real property,as used in the Code shall refer to Land, Building, and Machineries
intended by the owner of the land or building for industry or work which may be carried
on in a building/s or a piece of land which tend directly to meet the needs of the said
industry or work. Buildings shall refer to structures more or less permanently attached to
a place of land excluding those that are merely superimposed on the soil.
RATE
or
50% of 1%
WHICHEVER IS HIGHER
Exemptions
Documentary requirements
Tax Clearance
Before registering any deed, the Register of Deeds of the City shall
require presentation of the evidence of payment of this tax. Likewise, the City
Assessors office makes the same requirement before cancelling an old tax
declaration and issuing a new one.
Notary Public
A notary public shall furnish the City Treasurer with a copy of the deed of
transfer of the real property within thirty (30) days from the date of notarization.
Step
1
Prepare the
notarized
deed of sale
and related
documents
Procedure
Time to
Complete
Associated
Costs
1 Day
1-3% of
property
value
1 Day
Obtain tax
clearance
certificate of
The documentation shall include an
Real
Property Tax original of the official receipt evidencing
from the City payment by seller of realty taxes.
Treasurers
Office (CTO)
3
Obtain
certified true
copy of
latest tax
declaration
and
certificate of
with
improvemen
t from the
City
Assessors
Office (CAO)
4
Obtain
Certificate
Authorizing
Registration
(CAR) from
the Bureau
of Internal
Revenue
(BIR)
Doc. Stamp
Tax
Php 15
1 Day
Per RPU
Php 100
Cert. of
improvement
Php 100
Verification
fee
Php 60
DST per
RPU
Php 15
Tax
Clearance
Php 100
21 Days
Certification
Fee
Php 100
Doc. Stamp
Tax
Php 15
Pay
documentar
y stamp tax
and
creditable
withholding
tax (CWT) at
an
authorized
agent bank
(AAB).
Pay the
transfer tax
at the CTO.
1 Day
DST for
every Php
1000 value
of property
Php 15
CWT of 6%
of
SP/FMV/ZV
(higher)
1 Day
.50% (50%
of 1%) of
the property
price
7
Secure
registration
with the
Register of
Deeds (RD)
7 Days
Registration
Fee
(Rf:table)
Legal
research
fee
(1% of RF)
Judicial
Form Fee
Php 60
IT Fee
Php 2580
Primary
Entry Fee
for Copy of
Deed of
Sale
Php 30
RF for
specific
documents
Php 540
Issuance of
Title Fee
Php 60
registered.
The Register of Deeds has been
fully computerized since December 9, 2009
as a result of the Land Registration
Authority's land titling computerization
project.
8
Obtain new
tax
declaration
over the
building and
the land in
the name of
buyer from
CAO
documentation
shall
include:
7 Days
Per RPU
and
Document
(DST)
Php 115
Step 6 shows the general procedures and requirements of filing and payment of
the transfer tax by the taxpayer.
Failure to pay the transfer tax required on time, as well as the prescribed
barangay clearance fees shall both subject the taxpayer to a surcharge of 25% of the
amount due, and an additional 2% monthly interest upon the unpaid balance due to
delinquency. But in no case shall the total interest on the unpaid amount or portion
thereof exceed thirty-six (36) months (which is a total of 72% interest).
Sample Computations
Mr. Pantaleon Revamonte IV owns a condominium in Brgy.(state name of barangay and
municipality) with a floor area of 50sqm and a selling price of Php 2,000,000.00 The
existing market value as per tax declaration is currently at Php 1,000,000.00.
Since the selling price is higher than the market value, we shall use the selling price to
compute the transfer tax:
Iloilo City Transfer Tax Rate: 0.5% [that is, 50% of 1%]
Transfer Tax = 0.05% x 2,000,000 = Php 10,000.00