How to estimate Capital gains Tax, Documentary Stamp Tax, Transfer fees and others fees in the transfer of real property

 

How to estimate Capital gains Tax, Documentary Stamp Tax, Transfer fees and others fees in the transfer of [REAL PROPERTY]

(12%)  TWELVE PERCENT 

This is the magic number that you should remember in estimating the amount of money you will spend in transferring the real property or having the title under your name. 

If you're a first time buyer of a real  property in the Philippines, you may be wondering about the other expenses that you may incur in the transfer. Sometimes, it is scary to think that we might go over budget or we may no longer be able to afford the other expenses, but if you know how to estimate the costs then we can prepare for it. 

Here's how to compute---

First determine the following values:

1) Contract Price- deed of sale

2) Zonal Value- download this from BIR's website.

-- Whichever is higher between these two values will be our tax base. 

When you already know your tax base, you will now compute your taxes and fees.

For example, If you bought a property for One Million pesos and this value is higher than the zonal value, The estimate total cost for the transfer is estimated at:

1,000,000 x 12%= 120,000.

If you are wondering why 12% is our magic number here is why:

1) How to compute Capital Gains Tax: 

Capital gains tax is 6% of the selling price or zonal value whichever is higher. 

Formula:

Tax Base x 6% = CGT

Ex.

1,000,000 x 6% = 60,000

2) How to compute Documentary Stamp Tax:

Documentary Stamp Tax is 1.5% of of the selling price or zonal value whichever is higher.

Our formula is: Tax base x 1.5% = DST

1,000,000 x 1.5% = 15,000

3) How to compute transfer fees 

Transfer fees is .005 (50% of 1%)   of the property's worth or .0075 ( 75% of 1%) if the property is in Metro Manila.

Our formula is:

Tax base x .005 or .0075= Transfer Fees

1,000,000 x .005= P5,000.00 ( If property is in Outside Metro Manila) 

or

1,000,000 x .0075 = P7,500 (If property is in Metro Manila)

3)  How to estimate  Register of Deeds fees:

To be honest, Register of Deed Fees is not fixed unlike BIR fees where there is a fixed percentage to pay. In my experience, RD's computation sometimes changes. It goes up or down. 

What brokers, agents and lawyers do is estimate the cost at 5% 

Example: 

1,000,000 x 5%= 50,0000

Summary 

CGT - 6%

DST- 1.5%

RD-5%

Transfer fees- .005  or .0075

Total: more or less 12%  of Tax Base

Not included in the above estimates are the expenses for notarial fees, transportation, photocopies, stamps, certifications, tax declaration, tax clearance etc. 

I hope you now have an idea on how much it will cost you to transfer your property. If you have any questions regarding the transfer of your property you can email us here:

mjfranco@lacsamanalaw.com 

earlfrancistexon@lacsamanalaw.com

patrick@lacsamanalaw.com

krizzygayle@lacsamanalaw.com 

Book  can also an online or face to face consultation at our Facebook page here