Requirements for Foreigners Buying a Condominium Unit in the Philippines
A comprehensive legal primer (updated as of 19 June 2025)
Caveat: This material is for general information only and does not constitute legal advice. Philippine real-estate law is highly technical; consult a qualified Philippine lawyer or licensed real-estate broker before acting on anything here.
1. Constitutional Framework
| Source | Key Rule | Practical Effect |
|---|---|---|
| 1987 Constitution, Art. XII § 7 | “Save in cases of hereditary succession, no private lands shall be transferred… except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.” | Foreigners cannot own land outright. |
| Art. XII § 11 (corporate ownership) | If land is owned by a corporation, at least 60 % of the capital must be Filipino-owned. | A condominium project may be structured through such a corporation, enabling foreign participation up to 40 %. |
Because a condominium unit is an interest in real property that sits on land, the absolute ban on land ownership is tempered by the Condominium Act (see below). The unit itself is separable from the underlying land, so a measured degree of foreign ownership is possible.
2. The Condominium Act of the Philippines (R.A. 4726, as amended)
40 % Aggregate Foreign Cap Foreigners as a class may own no more than 40 % of the total outstanding capital stock (or “interest”) of the condominium corporation that holds title to the project’s land.
- Stock-based computation is the rule of thumb.
- Voting rights, non-voting preferred shares, and treasury shares all count toward the 40 %.
Condominium Certificate of Title (CCT)
- Each saleable unit is issued its own CCT by the local Registry of Deeds (RD).
- The CCT cites the percentage interest in the common areas/land appurtenant to the unit.
Automatic Disposal Clause If a sale or transfer to a foreigner breaches the 40 % ceiling, the Condominium Act requires divestment within one year or the unit may be sold at public auction.
In-House Restrictions Developers often insert stricter limits (e.g., 30 %) in the Master Deed and Declaration of Restrictions (MDDR) to stay well below the statutory cap.
3. Who Qualifies as a “Foreigner”?
| Category | Status in Philippine Real-Estate Law |
|---|---|
| Natural person holding foreign citizenship | Treated as a foreigner even if permanently residing in PH. |
| Dual-citizen Filipino (RA 9225) | Not a foreigner for land or condo ownership. |
| Former Filipino who lost citizenship | May own up to (a) 5,000 m² of rural or (b) 1,000 m² of urban land in total under RA 8179, in addition to condo units. |
| Foreign-controlled corporation | Foreign equity > 40 % ⇒ corporation is a foreign entity; subject to same land/condo limits as individuals. |
4. Documentary & Procedural Requirements
| Stage | Key Instruments / Requirements | Who Issues / Signs |
|---|---|---|
| Reservation & Contract-to-Sell (CTS) | Reservation Agreement, proof of deposit, photocopy of passport | Developer/Broker; Foreigner |
| Due Diligence | - SEC certificate showing 40/60 compliance - Certified true copy of Master Deed and MDDR - Latest GIS (General Information Sheet) for the condo corporation |
Developer/SEC |
| Deed of Absolute Sale (DOAS) | Notarized DOAS & acknowledgement between seller and buyer | Seller & Buyer before PH Notary Public |
| Tax Clearances & Transfer Taxes | Capital Gains Tax (CGT) @ 6% or VAT if applicable, Documentary Stamp Tax (DST) @ 1.5%, Local Transfer Tax (0.5–0.75 %), BIR Certificate Authorizing Registration (CAR) | Bureau of Internal Revenue (BIR); Local Treasurer |
| Registration & Issuance of CCT | Present CAR, DOAS, Tax Receipts, and original CCT (if resale). RD cancels old CCT and issues new one in buyer’s name. | Registry of Deeds |
| Taxpayer Identification Number (TIN) | Mandatory for title registration even for non-residents. | BIR |
Tip: Foreigners usually appoint a Special Power of Attorney (SPA) so a lawyer or relative can sign and appear before BIR/RD on their behalf.
5. Ownership Via a Philippine Corporation
Capital Structure
- 60 % Filipino : 40 % Foreign equity ratio (at all times).
- At least ₱5,000 paid-in capital (₱25,000 is normal SEC minimum).
SEC Compliance
- File Articles of Incorporation with land-ownership purpose.
- Submit annual GIS to prove continuing 60/40 compliance.
Anti-Dummy Law (Commonwealth Act 108)
- Nominee arrangements or side agreements that give foreigners more than 40 % beneficial interest or control risk criminal liability (5–15 years imprisonment plus fines).
Bank Financing
- Philippine banks may finance up to 80 % of the unit’s appraised value if the borrowing corporation is majority Filipino; for purely foreign borrowers, financing options are scarce.
6. Special Visa & Investment Programs (Optional, Not Mandatory)
| Visa | Key Benefit | Minimum Investment |
|---|---|---|
| SRRV (Special Resident Retiree’s Visa) | Indefinite stay & multiple-entry privileges; permission to work | US$10k–50k time-deposit (age-based) |
| SIRV (Special Investor’s Resident Visa) | Same as SRRV; geared toward investors | Minimum US$75k equity investment |
| PEZA / BOI-registered enterprises | Tax incentives; not directly tied to condo ownership | Depends on project |
These visas do not override the foreign-ownership ceiling but facilitate residency and bank account opening.
7. Marriage, Succession & Estate Planning
Foreigner Married to a Filipino Citizen
- If spouses wish to own a condo jointly, the Filipino’s share counts toward the 60 % Filipino side; the foreign spouse may appear on the CCT for his/her pro-rata interest.
- Under the Family Code, property acquired during the marriage is ordinarily conjugal/community unless a valid prenuptial agreement says otherwise.
Death of the Filipino Spouse
- If the surviving spouse is a foreigner, he/she may inherit the Filipino’s share (hereditary succession exception).
- However, constitutional policy disfavors indefinite land ownership by foreigners, so practice is to dispose of the unit or transfer to qualified heirs within a “reasonable time.”
Estate Taxes
- 6 % estate tax applies to net estate over ₱5 million.
- Filing within one year from death; extensions available for meritorious cases.
8. Leasing as an Alternative
- Long-Term Lease†: Up to 50 years, renewable once for 25 years (P.D. 471).
- Short-Term Lease: Normally 12 months or shorter under the Civil Code.
- Lease conveys use and enjoyment but not ownership; commonly used for beachfront land or when 40 % foreign quota is exhausted.
†Developers sometimes call 50-year leases “condotels” or “perpetual leases,” but the maximum term is fixed by law.
9. Taxes, Fees & Ongoing Obligations
| Item | Frequency | Notes |
|---|---|---|
| Real-property tax (RPT) | Annual | 1–1.5 % of zonal/fair-market value, paid to the city/municipality. |
| Condominium dues | Monthly | Covers maintenance, security, sinking fund. |
| Income Tax on Rentals | Quarterly / Annual | 20 % flat rate on gross for non-residents; option for DWT/witheld tax if leased. |
| Value-Added Tax (VAT) | Once, if sale is from a developer whose annual gross > ₱3 M | 12 % of selling price or market value, whichever is higher. |
| Capital Gains Tax (CGT) | 6 % on gross selling price or zonal value of resale units (seller’s liability). |
10. Anti-Money Laundering & Source-of-Funds Checks
Developers, banks, and licensed brokers are “covered persons” under the Anti-Money Laundering Act (AMLA, RA 9160 as amended). Expect:
- Customer Identification (KYC): Passport, proof of address abroad, work visa if resident.
- Proof of Funds: Bank statements, inward remittance documents.
- Suspicious Transaction Reporting (STR): Single-transaction cash payments ≥ ₱500k or structured remittances trigger mandatory reporting to the Anti-Money Laundering Council (AMLC).
11. Practical Compliance Checklist for Foreign Buyers
Confirm 40 % room with the developer/condo corporation (ask for current stock ledger or GIS).
Obtain a Philippine Taxpayer Identification Number (TIN)—mandatory for title registration.
Reserve the unit and execute a Contract-to-Sell; pay reservation plus earnest money.
Perform independent due diligence:
- SEC certification of 60/40 compliance
- No encumbrances on mother title
- Approved building permits and HLURB/CebuLAB License to Sell
Sign & notarize the Deed of Absolute Sale once payment terms are met.
Settle taxes & fees (CGT/VAT, DST, transfer tax, registration fees).
Register with the Registry of Deeds; secure your new CCT.
Pay ongoing dues and real-property taxes; keep official receipts for future resale.
12. Common Pitfalls & How to Avoid Them
| Pitfall | Why It Hurts | Mitigation |
|---|---|---|
| Exceeding the 40 % foreign quota | RD may deny title; divestment & rescission possible. | Get written certification of quota availability before paying. |
| Relying on “nominee” or side agreements | Violates Anti-Dummy Law; contracts void; criminal liability. | Use lawful 60/40 structures only. |
| Unlicensed brokers | Transactions may be voidable; harder to recover payments. | Deal only with PRC-licensed brokers (REA/REB). |
| Failure to pay CGT/DST promptly | BIR surcharges & interest; RD will not accept transfer. | Include tax-clearance clauses in the DOAS. |
| Buying from a developer without a License-to-Sell | Project may be illegal; no titles issued; refund takes years. | Verify with the Department of Human Settlements & Urban Development (DHSUD). |
13. Exit & Resale Scenarios
Selling to Another Foreigner
- Check that the project’s foreign-ownership percentage will not exceed 40 % after your sale.
Selling to a Filipino or Filipino-controlled corporation
- No quota issues; straightforward.
Donation or Succession
- Donation inter vivos to a foreign donee is not allowed if it breaches 40 %.
- Succession mortis causa is permissible but may trigger compulsory-heir rules.
14. Key Takeaways
- Land ownership is still off-limits to foreigners, but condo ownership up to a 40 % project-level cap is fully legal under RA 4726.
- Compliance is title-driven: you must hold a valid Condominium Certificate of Title in your name.
- Buying through a Philippine corporation is viable but demands strict 60/40 monitoring and adherence to the Anti-Dummy Law.
- Taxes (CGT/VAT/DST) and ongoing dues are significant; budget an extra 6–8 % of the purchase price for closing costs.
- Always perform thorough due diligence—especially on foreign-ownership percentage and developer licensing—to avoid costly post-purchase headaches.
15. Quick Reference Statutes & Regulations
- 1987 Constitution – Art. XII §§ 7, 11
- Republic Act No. 4726 – Condominium Act (as amended by RA 7899 & RA 9856)
- Commonwealth Act 108 – Anti-Dummy Law
- Republic Act No. 8762 – Retail Trade Liberalization (re: foreign retail entities and real property)
- Republic Act No. 9225 – Citizenship Retention and Reacquisition Act
- Department of Human Settlements & Urban Development (DHSUD) Rules – Licenses to Sell, project registration
- Bureau of Internal Revenue (BIR) Regulations – CGT, DST, VAT, estate taxes
- Anti-Money Laundering Act (RA 9160) – KYC & STR obligations
Bottom line: With sound planning, meticulous paperwork, and respect for the 60/40 paradigm, a foreigner can lawfully and securely acquire—and later dispose of—a Philippine condominium unit. Always coordinate with competent counsel and licensed real-estate professionals at every stage.