Real Property Tax (RPT), colloquially known as amilyar, is a local tax levied by provinces, cities, or municipalities within the Metropolitan Manila Area on real properties such as land, buildings, machinery, and other improvements. This tax is a primary revenue source for Local Government Units (LGUs) to fund public services and infrastructure.
The governing law for RPT is Republic Act No. 7160, otherwise known as the Local Government Code (LGC) of 1991.
1. Imposition and Tax Rates
The RPT consists of two main components:
- Basic Real Property Tax: The primary tax for general funds.
- Special Education Fund (SEF): An additional $1%$ tax on the assessed value of the property, the proceeds of which are exclusively used for the maintenance and operation of public schools.
Current Statutory Rates:
- Provinces: Not exceeding $1%$ of the assessed value.
- Cities/Municipalities in Metro Manila: Not exceeding $2%$ of the assessed value.
2. Calculation of Real Property Tax
The tax is not based on the market price you paid for the property, but on its Assessed Value. The formula is as follows:
$$\text{Assessed Value} = \text{Fair Market Value} \times \text{Assessment Level}$$
The Assessment Level is a percentage fixed by local ordinances, which varies depending on the property's classification (residential, commercial, industrial, or agricultural). Once the Assessed Value is determined, the tax is computed:
$$\text{RPT Payable} = \text{Assessed Value} \times \text{Applicable Tax Rate}$$
3. Payment Schedule and Discounts
RPT accrues on the first day of January each year. Taxpayers have two options for payment:
- Annual Payment: Paid in full on or before January 31.
- Quarterly Installments:
- 1st Quarter: On or before March 31
- 2nd Quarter: On or before June 30
- 3rd Quarter: On or before September 30
- 4th Quarter: On or before December 31
Tax Discounts: LGUs are authorized to grant discounts for early or prompt payments. If the basic RPT and SEF are paid in advance (before the deadline), the LGU may grant a discount not exceeding $20%$ of the annual tax due.
4. Delinquency and Penalties
A property becomes delinquent if the tax is not paid upon the expiration of the periods mentioned above. The LGC imposes a heavy interest penalty to discourage late payments.
- Interest Rate: $2%$ per month on the unpaid amount.
- Maximum Penalty: The interest shall continue to accrue until the delinquent tax is paid, but the total interest shall not exceed 36 months or $72%$.
Note: Failure to pay the tax does not just result in interest; it subjects the property to administrative or judicial remedies for collection.
5. Remedies for Collection of Delinquent Taxes
When a taxpayer fails to settle their obligations, the LGU can exercise its "Tax Lien" on the property, which is superior to all other liens or encumbrances. The government may employ the following:
Administrative Action
- Distraint of Personal Property: The Treasurer may seize personal property (tangible or intangible) of the delinquent taxpayer to satisfy the tax debt.
- Levy on Real Property: The Treasurer issues a warrant of levy. The description of the property is written, and the levy is advertised for public auction.
Judicial Action
The LGU may file a civil case in a court of competent jurisdiction for the collection of the delinquent tax.
6. Public Auction and the Right of Redemption
If the tax remains unpaid after the levy, the property is sold at a public auction to the highest bidder.
| Phase | Description |
|---|---|
| Notice of Sale | Posted in the main entrance of the provincial/city/municipal hall and in a public place in the barangay where the property is located. |
| Auction | The property is sold to satisfy the tax, penalties, and costs of the sale. |
| Certificate of Sale | Issued to the purchaser, containing a description of the property and the amount paid. |
The Right of Redemption: The owner of the delinquent property has the right to redeem the property within one (1) year from the date of the registration of the sale. To redeem, the owner must pay:
- The total amount of delinquent tax and penalties.
- The costs of the sale.
- Interest of $2%$ per month on the purchase price from the date of sale to the date of redemption.
If the property is not redeemed within this one-year period, the title is consolidated in favor of the purchaser, and the original owner loses all rights to the property.
7. Important Considerations
- Tax Declaration: Always ensure the Tax Declaration is in the current owner's name to receive notices.
- Condonation: Occasionally, the national government or local Sanggunian may pass ordinances for "Tax Amnesties" or condonation of penalties during calamities or economic crises.
- Protesting an Assessment: If a taxpayer disagrees with the assessment, they must first pay the tax under protest. A written protest must be filed with the Treasurer within 30 days of payment. If the Treasurer denies the protest, the taxpayer may appeal to the Local Board of Assessment Appeals (LBAA).