Moving property ownership from a seller to a buyer—or through inheritance or donation—is a rigorous process in the Philippines. It involves multiple government agencies, specifically the Bureau of Internal Revenue (BIR), the Local Government Unit (LGU), and the Land Registration Authority (LRA) through the Register of Deeds.

Failing to calculate these costs accurately can lead to delays, penalties, or the inability to secure a new Transfer Certificate of Title (TCT). Here is a comprehensive guide to the taxes and fees involved in a standard sale of real property.

Internal Revenue Taxes (National Level) These taxes are paid to the BIR to secure a Certificate Authorizing Registration (CAR), which is the primary requirement for the Register of Deeds to issue a new title.

Capital Gains Tax (CGT) CGT is imposed on the "presumed" gain realized by the seller from the sale of a capital asset.

Rate: 6%

Basis: The Gross Selling Price or the Fair Market Value (FMV), whichever is higher.

Note: FMV is determined by either the BIR (Zonal Value) or the City/Provincial Assessor (Market Value).

Responsibility: Usually the Seller, unless the parties agree otherwise in the Deed of Absolute Sale.

Documentary Stamp Tax (DST) DST is an excise tax on the documents, instruments, and papers evidencing the sale.

Rate: 1.5%

Basis: Same as CGT (Selling Price or FMV, whichever is higher).

Responsibility: Usually the Buyer, though this is negotiable.

Local Government Taxes (LGU Level) Once the BIR taxes are settled, the buyer must coordinate with the City or Municipal Treasurer’s Office.

Local Transfer Tax This is a tax imposed on the sale, donation, or any other mode of transferring real property ownership.

Rate: * 0.50% of the property value (for provinces).

0.75% of the property value (for cities and municipalities within Metro Manila).

Basis: The Selling Price or the FMV, whichever is higher.

Deadline: Generally within 60 days from the date of execution of the deed.

Registration Fees (LRA Level) The final step is with the Register of Deeds. These fees cover the entry of the transfer in the primary entry book and the issuance of the new physical title.

Registration Fee The LRA uses a graduated table for registration fees based on the consideration (selling price). Generally, it averages around 0.25% of the property value.

Miscellaneous Fees IT Fees: Fees for the LRA's computerized system (around ₱300–₱600).

Certification Fees: Small administrative costs for the issuance of the new TCT.

Summary of the Computation Table To visualize the total burden, assume a property in a city sold for ₱5,000,000, and its BIR Zonal Value is ₱5,500,000. The computation will be based on the higher value (₱5,500,000).

Tax/Fee Rate Estimated Cost Capital Gains Tax 6% ₱330,000 Documentary Stamp Tax 1.5% ₱82,500 Local Transfer Tax 0.75% ₱41,250 Registration Fee ~0.25% ~₱13,750 Total Estimated Costs ~8.5% ₱467,500 Important Considerations

Classification of Property The taxes above apply to Capital Assets (usually residential properties). If the property is an Ordinary Asset (used in business, or by a real estate developer), it is subject to Creditable Withholding Tax (CWT) and Value Added Tax (VAT) instead of CGT. VAT is currently 12% if the property value exceeds the statutory threshold.
Notary Fees The Deed of Absolute Sale must be notarized to be a public document. Notary fees are typically 1% to 2% of the selling price, though this is often negotiable with the notary public.
Real Property Tax (Amilyar) The seller must ensure that the Real Property Tax for the current year is paid in full. The Register of Deeds will require a Tax Clearance before processing the transfer.
Deadlines and Penalties CGT: Must be filed and paid within 30 days from the date of notarization.

DST: Must be filed and paid by the 5th day of the month following the date of notarization.

Late payments incur a 25% surcharge (50% for fraudulent cases) plus 12% annual interest.

Would you like me to draft a checklist of the specific documents required by the BIR to obtain the Certificate Authorizing Registration (CAR)?