A Philippine legal-practice article on the rules, the math, the process, and the common issues.

I. What “Real Property Tax” Covers (House + Land Are Often Separate)

In Philippine local taxation, Real Property Tax (RPT) is a local tax imposed by provinces, cities, and municipalities within Metro Manila on real property, which generally includes:

Land
Buildings (your “house”)
Other improvements (e.g., perimeter walls, paved yards, major installations that are not mere movable fixtures)
Machinery (more relevant to commercial/industrial property)

A common surprise: the land and the house/building are usually assessed separately (separate Tax Declarations) and then taxed annually based on their respective assessed values. A house may have its own Tax Declaration even if the land is under another person (e.g., lease situations), though this depends on the facts and assessor’s practice.

II. Legal Framework (Philippine Context)

RPT is governed primarily by the Local Government Code of 1991 (Republic Act No. 7160) and local ordinances passed by the relevant Sanggunian (local legislative body).

Think of it as a two-layer system:

National law sets the ceiling and structure (what can be taxed, maximum rates, assessment level caps, procedure, penalties, remedies).
Local ordinances supply the details (the approved Schedule of Fair Market Values, any allowed discounts, administrative rules, collection procedures, and local classifications consistent with law).

III. The Core Formula (The Computation Everyone Should Know)

Step 1: Determine the Fair Market Value (FMV)

FMV is the value assigned by the LGU assessor based on the Schedule of Fair Market Values (SFMV) enacted by local ordinance.

For land, FMV is usually based on location, zoning, classification, and area.
For buildings, FMV is often derived from replacement cost new (based on building type/materials/floor area) less depreciation, using the LGU’s building valuation schedules.

Important: Your property’s zonal value (BIR) and your purchase price are not the same thing as the LGU FMV for RPT purposes. They may correlate, but they are different valuation systems.

Step 2: Convert FMV to Assessed Value

This is where many people get lost. The tax base for RPT is usually Assessed Value (AV), computed as:

[ \textbf{Assessed Value} = \textbf{Fair Market Value} \times \textbf{Assessment Level} ]

Assessment Level is a percentage determined by law/ordinance based on:

the property’s classification (residential, commercial, industrial, etc.), and
for some property types (especially buildings), sometimes the FMV bracket.

In practice, “actual use” controls classification more than title labels. A “residential” titled property used as a commercial rental building may be assessed as commercial depending on the assessor’s findings.

Step 3: Apply the Tax Rates

RPT is commonly composed of:

Basic RPT (imposed by province/city/MM municipality)
Special Education Fund (SEF) Tax (commonly called “additional 1%”)

So the annual tax is generally:

[ \textbf{Annual RPT} = (\textbf{Assessed Value} \times \textbf{Basic Rate}) + (\textbf{Assessed Value} \times \textbf{SEF Rate}) ]

IV. The Rates (Basic + SEF)

A. Basic RPT Rate (Maximums)

Provinces: up to 1% of assessed value
Cities and Municipalities within Metro Manila: up to 2% of assessed value

B. SEF Tax Rate

Commonly 1% of assessed value (additional levy earmarked for education)

Practical “Rule of Thumb” Totals

Outside Metro Manila, in a municipality (province level): often 2% total (1% basic + 1% SEF)
In a city or Metro Manila municipality: often 3% total (2% basic + 1% SEF)

Exact rates should still be checked against the LGU ordinance (the law provides ceilings; the LGU sets the actual rate within the ceiling).

V. Assessment Levels (Why Two Houses With Same FMV Can Be Taxed Differently)

A. Classification is Based on Actual Use

The assessor typically classifies property by actual use, e.g.:

Residential
Commercial
Industrial
Agricultural (rare for a house unless it’s a farm structure on agricultural land)
Special classes (e.g., hospitals, cultural, scientific—depending on local and statutory rules)

B. Assessment Levels: Two Common Patterns

Because assessment levels can differ by property type and value bracket, your LGU’s assessment tables matter. In broad strokes:

Land often uses relatively stable assessment levels by classification (residential land commonly lower than commercial/industrial land).
Buildings/improvements may use either:
- a flat assessment level by classification, or
- a progressive schedule based on FMV brackets (common for residential buildings).

The Local Government Code sets maximum assessment levels and allows LGUs to adopt levels at or below those ceilings via ordinance.

Practical takeaway: When computing your house tax, you need:

the FMV of the house/building per the assessor, and
the assessment level that applies to that FMV and classification.

VI. Worked Examples (Typical Computations)

Example 1: House in a City (3% total assumed: 2% basic + 1% SEF)

FMV of house (building): ₱2,000,000
Assessment level (residential building, assumed): 30%
Assessed value: ₱2,000,000 × 30% = ₱600,000

Annual tax:

Basic: ₱600,000 × 2% = ₱12,000
SEF: ₱600,000 × 1% = ₱6,000
Total annual RPT (building only): ₱18,000

Then you repeat the same steps for the land Tax Declaration, and add both totals.

Example 2: House in a Municipality Outside Metro Manila (2% total assumed: 1% basic + 1% SEF)

FMV of building: ₱1,500,000
Assessment level: 20%
Assessed value: ₱300,000

Annual tax:

Basic: ₱300,000 × 1% = ₱3,000
SEF: ₱300,000 × 1% = ₱3,000
Total: ₱6,000 (building only)

VII. When and How It’s Paid

A. Accrual and Due Dates

RPT is annual and typically accrues on January 1 of each year.

It can usually be paid:

Annually in full, or
Quarterly installments, commonly due on or before:
- March 31
- June 30
- September 30
- December 31

B. Discounts for Prompt/Advance Payment

LGUs may grant discounts by ordinance (commonly for advance payment or early payment). The discount rate and eligibility are local policy.

VIII. Penalties for Late Payment (Delinquency)

If unpaid after the due date, the amount becomes delinquent and typically accrues:

Interest/penalty: commonly 2% per month on the unpaid amount
Maximum: commonly capped at 36 months (effectively up to 72% interest at the ceiling)

LGUs also have collection remedies, including:

Administrative collection
Levy on the property
Public auction sale
Forfeiture in certain cases if no bidder (subject to rules)
The tax is typically a lien on the property (meaning it “sticks” to the property and can affect transfers)

This is why buyers and banks insist on updated tax clearances and official receipts.

IX. The Assessment Process (Why Your RPT Can Change Even If You Didn’t Renovate)

A. General Revision / Updating of Values

LGUs periodically conduct a general revision of assessments and update SFMVs through ordinance. When this happens, FMVs and assessed values can change across many properties.

B. Reassessment Triggers

A property can be reassessed due to:

New construction / building improvements
Change in actual use (residential to commercial, etc.)
Correction of errors
Subdivision/consolidation
Damage/destruction (which may justify reduced FMV if properly documented)

C. Duty to Declare Improvements

Owners are generally expected to declare new buildings and improvements for assessment. If an un-declared improvement is discovered, the assessor can assess it and the treasurer can collect taxes accordingly, subject to the rules on retroactivity and local procedure.

X. Exemptions and Special Treatment (Very Fact-Dependent)

A. Common Constitutional/Statutory Exemptions (General Categories)

Real property may be exempt if it is:

Owned by the Republic or its political subdivisions (subject to rules and beneficial use)
Actually, directly, and exclusively used for:
- Religious purposes
- Charitable purposes
- Educational purposes
- Certain other constitutionally protected uses

Critical phrase: actually, directly, and exclusively used — partial commercial use can jeopardize exemption at least for the portion used commercially.

B. How Exemptions Work in Practice

Exemption is not automatic just because an owner is a church/school/charity.
LGUs commonly require documentation and periodic validation.
If the property is leased to a taxable person or used to generate commercial income, exemption issues arise quickly.

XI. Other Impositions Related to Real Property

A. Idle Land Tax (When Applicable)

LGUs may impose an additional tax on idle land under conditions defined by law and ordinance (more common for large tracts rather than typical house-and-lot, but it can apply depending on size/use).

B. Special Levy / Special Assessment (Benefit Levy)

For land specially benefited by public works (roads, drainage, etc.), LGUs may impose a special levy—a charge separate from basic RPT/SEF, usually tied to the cost of the improvement and allocated among benefited properties under local rules.

XII. Remedies: What You Can Do If You Think It’s Wrong

A. Disputing the Assessment / Classification / FMV

If you believe:

the FMV is excessive,
the property is misclassified (e.g., residential treated as commercial),
the assessment level was misapplied,
the area, type, or depreciation was computed incorrectly,

you generally challenge the assessment through administrative boards (commonly starting with the Local Board of Assessment Appeals within the statutory period). Missing deadlines can be fatal to the remedy.

B. Disputing the Collection / Taxability

If the dispute is about:

payment computation,
penalties,
exemption recognition,
collection enforcement,

there are remedies that often require payment under protest within strict timelines (common structure: pay first, then protest within the required period, then appeal further if denied).

Practical tip: “Assessment disputes” and “collection disputes” follow different procedural tracks. File the right remedy—or you can lose on procedure even if you are substantively right.

XIII. Practical Checklist: How to Compute Your Own RPT From Your Papers

Grab your latest Tax Declaration(s) and/or assessment notices. For each (land and building):

Find the FMV (sometimes labeled “Market Value”).
Find the Assessment Level (%).
Compute Assessed Value = FMV × Assessment Level (if not already stated).
Apply the Basic Rate and SEF Rate applicable to your LGU.
Add land tax + building tax.
If paying late, compute interest based on months delinquent (subject to caps).
Check if any discount applies for advance/full payment.

XIV. Common Pitfalls (Why People Get Unexpected Bills)

Only checking the land TD and forgetting the building TD (or vice versa).
Assuming purchase price determines RPT (it doesn’t; assessor schedules do).
Not updating the declaration after renovations—then facing back assessments.
Being classified as commercial because of rentals or business permits at the address.
Paying late and underestimating how fast monthly interest accumulates.
Missing appeal/protest deadlines and losing the right to contest.

XV. Bottom Line

Annual RPT on houses in the Philippines is fundamentally a local tax computed using a two-step base (FMV → Assessed Value) and two main components (Basic RPT + SEF). The math is simple; the complexity lies in valuation schedules, classification by actual use, assessment levels, local ordinances, and procedural deadlines for challenges.

If you want, paste the key lines from your Tax Declaration (FMV/assessment level/classification and whether you’re in a city vs province/MM municipality), and I can compute the RPT exactly from those figures and show the breakdown for land + building + any delinquency/discount scenarios.