I. Overview and Legal Framework

Real Property Tax (RPT) is a local tax imposed on real property—land, buildings, machinery, and other improvements—under the Local Government Code of 1991 (Republic Act No. 7160) and its implementing issuances. RPT is a primary revenue source of local government units (LGUs) and is assessed and collected at the provincial, city, and municipal levels, depending on where the property is located.

Although commonly called “land tax,” RPT is not limited to land. In practice, RPT on a parcel may include:

Land (the ground itself)
Improvements (e.g., houses, buildings, fences, paved areas)
Machinery (for industrial, commercial, or agricultural operations, when taxable)

This article focuses on the Philippine rules on how RPT is computed and how it is paid, with emphasis on land.

II. What Counts as “Real Property” for RPT Purposes

A. Taxable Real Property

As a rule, all real property not expressly exempt is taxable. Real property includes:

Land
Buildings and other structures
Machinery
Other improvements attached to or integrated with the land

RPT attaches to the property itself and is generally a lien that can follow the property regardless of changes in ownership, subject to the rules on notice and enforcement.

B. Key Concept: Location Controls

RPT is levied and collected by the LGU where the property is located. If you own property in multiple cities/municipalities, each has its own assessments, bills, and payment records.

III. Who Is Liable to Pay Real Property Tax

RPT is chargeable to the owner or administrator of the property, typically:

The registered owner (as shown in the tax declaration or registry documents), or
The beneficial owner or person with actual possession in some cases, depending on local practice and the nature of the arrangement.

In transactions (sale, donation, succession), parties often allocate RPT responsibility contractually, but the LGU will generally look to the recorded taxpayer/owner on its records unless updated.

IV. The RPT Computation: The Core Formula

At its simplest, the annual basic RPT is computed as:

RPT Due = Assessed Value × RPT Rate

Where:

Assessed Value depends on:

Fair Market Value (FMV), and
Assessment Level (a percentage applied to FMV)

RPT Rate depends on whether the property is in:

A province/municipality, or
A city/Metro Manila municipality

So, computation is typically:

Assessed Value = Fair Market Value × Assessment Level Basic RPT = Assessed Value × Basic Tax Rate

After that, possible additions apply:

Special Education Fund (SEF) tax (commonly 1% of assessed value)
Special levies (e.g., for public works benefiting the property, when properly imposed)
Penalties/interest for late payment

V. Determining Fair Market Value (FMV)

A. The LGU Schedule of Fair Market Values (SMV)

For RPT purposes, FMV is not whatever you believe the property could sell for on the open market. It is typically based on the LGU’s Schedule of Fair Market Values (SMV) enacted through a local ordinance, supported by appraisal tables and classification rules.

FMV is determined by the assessor using:

Classification (residential, agricultural, commercial, industrial, mineral, timberland, special)
Location (barangay/zone)
Land area
Use and productivity (especially for agricultural land)
Other factors per the SMV

B. Actual Use Rule

A critical principle: assessment is generally based on actual use. Even if a title or zoning calls it one thing, if the actual use differs, the classification for taxation may follow the actual use.

C. Reassessment Cycles

The law contemplates periodic general revision of property assessments (commonly understood as at set intervals), but timing and implementation vary by LGU in practice. When an LGU updates its SMV and conducts a general revision, assessed values can change materially.

VI. Assessment Level: Converting FMV to Assessed Value

Assessment Level is the legally defined percentage applied to FMV to arrive at Assessed Value. Assessment levels vary by:

Property type (land, buildings, machinery)
Classification (residential, agricultural, commercial, etc.)
In some cases, value brackets or use

For land, assessment levels differ across classifications (e.g., residential land versus commercial land), and the assessor applies the proper level as provided under the Local Government Code and relevant ordinances/issuances.

Example (Illustrative Only): If FMV = ₱1,000,000 and assessment level = 20% Assessed Value = ₱1,000,000 × 0.20 = ₱200,000

Then apply the tax rate to ₱200,000—not to ₱1,000,000.

VII. The RPT Rate (Basic Tax)

The basic RPT rate depends on the LGU category:

A. Provinces (and municipalities within provinces)

The basic rate is generally up to 1% of assessed value.

B. Cities and municipalities within Metro Manila

The basic rate is generally up to 2% of assessed value.

These are ceilings; the exact rate is fixed by local ordinance within legal limits.

VIII. Additional Impositions Commonly Added

A. Special Education Fund (SEF)

LGUs commonly levy an additional SEF tax (often 1% of assessed value) for education-related funding. It is billed and collected together with basic RPT, but accounted for separately.

B. Special Levies (Benefit-Based)

An LGU may impose special levies for specific public works projects that directly benefit particular properties (e.g., certain infrastructure improvements), subject to statutory requisites such as notice, hearing, and proper apportionment.

C. Idle Land Tax (Where Applicable)

LGUs may impose an idle land tax on certain lands that meet statutory definitions of “idle,” within limits and subject to local ordinance and conditions. Applicability depends on factual circumstances and local enactments.

IX. Worked Example: Typical Annual RPT Bill Structure

Assume:

FMV of land: ₱1,500,000
Assessment level (illustrative): 20%
Assessed value: ₱300,000

If property is in a province (basic rate 1%):

Basic RPT = ₱300,000 × 1% = ₱3,000
SEF (commonly 1%) = ₱300,000 × 1% = ₱3,000
Total (before penalties/discounts) = ₱6,000

If in a city/Metro Manila (basic rate 2%):

Basic RPT = ₱300,000 × 2% = ₱6,000
SEF (commonly 1%) = ₱3,000
Total = ₱9,000

Actual figures depend on your LGU’s SMV, classification, assessment level, and local rate ordinances.

X. When RPT Accrues and the Taxable Year

RPT is typically annual. It accrues on January 1 of each year and becomes payable for that year, subject to installment options and local billing practices.

XI. How and When RPT Is Paid

A. Where to Pay

Payment is made to the LGU treasurer (or authorized collecting agents), usually at:

City/Municipal Treasurer’s Office
Sometimes designated banks, payment centers, or online portals (if offered by the LGU)

B. Payment Schedules and Installments

RPT is commonly payable:

Annually (one-time), or
Quarterly installments (four equal installments during the year)

Even if paying in installments, most LGUs treat timely payment per installment due date as compliance.

C. Early Payment Discounts

Many LGUs grant discounts for advanced or early payment (often if paid within a prescribed early period). Discount rate and period depend on local ordinance.

D. Documentary Reference: Tax Declaration (Not the Same as Title)

RPT is tracked using the Tax Declaration and property index number details maintained by the assessor and treasurer. Tax declaration is not conclusive proof of ownership like a Torrens title, but it is central for assessment and billing.

XII. Penalties for Late Payment

Late payment generally results in:

Interest/penalty computed monthly up to a statutory cap (commonly applied until a maximum is reached)
Possible additional fees depending on local rules, but still within statutory authority

Penalties attach to the tax due and accumulate over time. Even if the owner changes, delinquent taxes can remain a lien on the property.

XIII. What Happens if RPT Is Not Paid: Delinquency and Enforcement

A. Tax Lien

Unpaid RPT creates a lien that is superior to many other claims, subject to statutory rules.

B. Remedies of the LGU

LGUs have remedies to collect delinquent RPT, including:

Administrative action such as levy on the property
Public auction (tax delinquency sale) following statutory notice and procedural requirements

C. Redemption

After a delinquency sale, the law provides a redemption period (subject to rules on payment of taxes, interest, and costs). Failure to redeem may allow consolidation of ownership in favor of the purchaser, following legal processes.

Because tax delinquency sales are strictly regulated, procedural compliance (proper notices, publication, posting, and documentation) is crucial and often litigated.

XIV. Common Situations Affecting Land Tax Computation

A. Newly Declared or Previously Undeclared Property

If property is newly declared (or discovered), the assessor may:

Issue an assessment based on current schedules, and
In some cases, assess back taxes subject to legal limits and circumstances

B. Subdivision, Consolidation, or Change in Boundaries

After subdivision or consolidation:

New tax declarations may be issued
Assessment may change depending on classification and SMV zoning

C. Change of Classification or Actual Use

Changing actual use (e.g., agricultural to commercial use) can significantly change:

Classification
Assessment level
Resulting tax

D. Buildings/Improvements Not Declared

Even if land is declared, improvements may not be. Once declared or discovered, the RPT bill can increase because improvements are separately assessed.

XV. Exemptions and Preferential Treatments

Certain properties may be exempt from RPT or enjoy preferential assessment, depending on constitutional and statutory rules and compliance conditions. Common categories include:

Properties of the Republic and its political subdivisions (subject to limitations and beneficial use)
Charitable, religious, and educational institutions under specific conditions
Properties used actually, directly, and exclusively for exempt purposes (a recurring legal standard)

Exemptions are not automatic in practice; documentation and actual use are frequently scrutinized by assessors and treasurers.

XVI. Remedies of Taxpayers: Protesting Assessment vs. Claiming Refund

Tax disputes typically fall into two tracks:

A. Disputing the Assessment (Valuation/Classification/Taxability)

If the issue is the assessed value, classification, or whether the property is taxable, the remedy is generally to challenge the assessment through the administrative process (often starting with the assessor and local boards of assessment appeals), within strict periods.

B. Disputing Collection / Seeking Refund or Credit

If the issue is that the tax was illegally or erroneously collected (e.g., wrong computation, wrong taxpayer, double payment), a taxpayer may pursue refund or tax credit remedies, again within time limits and subject to procedural requirements.

A critical practical rule in many RPT disputes: payment may be required as a condition to pursuing certain protests, depending on the nature of the challenge and governing rules.

XVII. Practical Step-by-Step Guide for Property Owners

Verify your Tax Declaration details at the assessor’s office:
- Correct owner/taxpayer name
- Correct land area and classification
- Correct location and boundary references
Confirm assessed value and year covered at the treasurer’s office.
Ask for breakdown:
- Basic RPT
- SEF
- Any special levies
- Penalties (if any)
Pay within early payment window (if aiming for discount) or follow quarterly deadlines.
Keep official receipts and payment history; these are crucial for:
- Sale transactions
- Loan applications
- Estate settlement
Update records after transfers (sale, inheritance, donation):
- Transfer tax declaration
- Provide required documents (deed, CAR/eCAR, title, etc., as applicable in local practice)
Declare improvements to avoid later back assessments and penalties.

XVIII. Key Takeaways

RPT is computed on assessed value, not directly on market selling price.
Assessed value is derived from FMV under the LGU schedule multiplied by the assessment level.
The basic rate is typically up to 1% (province/municipality) or 2% (city/Metro Manila), plus commonly an SEF component.
Payment is annual but often allowed quarterly; early payment discounts may apply.
Nonpayment triggers penalties and can lead to levy and auction, with a statutory redemption framework.
Disputes require choosing the correct remedy: assessment appeal vs. refund/credit, each with strict deadlines and procedures.