Property in the Philippines

While the real estate market in the Philippines has rebounded after the Asian crash of several years ago, there are some things to understand about the market for international investors.  First and foremost, foreigners are not allowed to own land in the Philippines. If an investor wants to purchase property, however, there are several ways to do it.

If an investor is married to a Philippine citizen, then the property may be in the citizen’s name. Foreigners may rent land and build upon it, with a maximum lease of 50 years and renewable for another 25. Corporations that are not more than 40% foreign owned may buy property. Also, condominiums, apartments or townhomes may not be more than 40% owned by foreign interests. Former Filipinos may purchase property in certain circumstances.

When buying off-plan or new property, it is important to make sure the builder and developer are legitimate. This is a prime example of when an IDIP, or International Developer Information Pack, is a great resource for a potential buyer. This will provide the buyer with information on the developer to make an informed decision.

In order to have 100% ownership of a condominium or townhouse, the foreign investor must have a Special Resident Retiree’s Visa, or SSRVisa. This is a non-immigrant residency visa and the holder may live in the Philippines as long as they want.

The buying process in the Philippines is rather cumbersome in addition to the legal requirements. Once a property is found, the owner and buyer sign a Deed of Absolute Sale (DOAS) and have it notarized. At this time a Land Tax Declaration is secured from the Bureau of Internal Revenue and submitted to the local assessor’s office. The assessor’s office will perform an assessment of the property and transfer taxes are paid to that office. The buyer also pays the local real estate tax to the city treasurer’s office.

After closing, a capital gains tax and Documentary Stamp Tax are paid to the Bureau of Internal Revenue. The capital gains tax is really just another name for a local transaction tax, which is 6% of the selling price. Once all taxes are paid, the Registry of Deeds cancels the old title and issues a new one in the buyer’s name. The buyer obtains a copy of the title and requests a tax declaration from the assessor’s office. Ownership is indicated by a Transfer Certificate of Title.

Because the process is cumbersome and the title process not clear, it is important to obtain the services of a local lawyer to help guide you through the process and perform the due diligence on the property.