When buying a property in the country, it’s best to be cautious and follow all legal requirements. This will help protect you from an anomalous transaction and any run-ins with the law.
Real property ownership by a foreigner
Real estate ownership by a foreigner is limited to non-land properties, such as buildings or condominiums. You may own a house or building, but not the land where it was built.
However, foreigners may still own land under the following circumstances:
1. Inheritance – if your spouse is a Filipino citizen who owns land, you may inherit the land on your spouse’s death
2. As a corporation – you may subscribe to a domestic corporation with at least 60% Filipino ownership, and purchase land under the corporation’s ownership
Proofs of ownership
The primary proofs of ownership for real estate properties in the Philippines are as follows:
1. Ownership of land – Transfer Certificate of Title or Original Certificate of Title
2. Ownership of a condominium – Condominium Certificate of Title
3. Ownership of buildings and houses – Tax Declaration
Process for real estate deed transfer
The following are the general procedures involved in the purchase and transfer of land, building, and condominium ownership in the Philippines:
1. For land purchases, obtain a certified true copy of the land title from the Registry of Deeds. This is usually done by the seller.
2. Check for any encumbrances against the property.
3. Prepare the Deed of Sale and have it notarized. This may be done by either the buyer or seller.
4. If the property is to be sold and/or purchased by a corporation, the Registry of Deeds also requires both the buyer and seller to present a secretary’s certificate of the corporation board’s resolution approving the sale.
5. The seller pays any tax arrears with the Treasurer’s Office and obtains a Tax Clearance Certificate. Simultaneously, a certified true copy of the latest tax declaration is obtained from the Assessor’s Office.
6. A computation of the applicable Documentary Stamp Tax and Capital Gains Tax is obtained from the BIR.
7. Based on computed tax amounts, the Documentary Stamp Tax (DST) and Capital Gains Tax are filed with a BIR-authorized bank. This may be done by either the buyer or seller, depending on their agreement.
8. Once the taxes are paid, the buyer or seller obtains a Certificate Authorizing Registration (CAR) with the BIR. The following documents should be submitted to the BIR:
a. Notarized Deed of Absolute Sale (document of transfer)
b. Certified true copy of the latest Tax Declaration
c. Original Certificate of Title or certified true copy of the Transfer
Certificate of Title
d. “With Improvement” declaration or certificate
9. The BIR releases the CAR, along with the following:
a. The original Deed of Absolute Sale with the BIR stamp
b. The DST with the BIR stamp
10. The Transfer Tax is paid at the City or Municipality Treasurer’s Office
11. The buyer applies for the Transfer of Certificate of Title (TCT) with the Registry of Deeds
12. Once the TCT is obtained, the buyer secures a new tax declaration for the property from the Assessor’s Office