I. Overview: What the “Seller Side” Covers

In a Philippine real property sale, the “seller taxes and fees” are the statutory taxes and documentary requirements that, by law or by standard market practice, are commonly borne by the seller to enable the transfer of title to the buyer. Legally, many charges may be contractually allocated (the parties may agree who pays what), but several taxes attach to the transaction itself and must be settled to obtain the Bureau of Internal Revenue (BIR) clearances needed for registration. The seller’s compliance is therefore central: without the BIR’s Certificate Authorizing Registration (CAR) or its electronic equivalent (eCAR), the Register of Deeds will not register the deed and issue a new title.

The seller’s principal burdens typically revolve around:

Capital Gains Tax (CGT) or Creditable Withholding Tax (CWT) (depending on the nature of the seller/property),
Documentary Stamp Tax (DST) (often paid by seller in practice, though allocation is contractual),
Clearances, certifications, and document procurement costs needed to secure BIR processing and registration,
Arrearages attributable to the seller (unpaid real property tax, association dues, utilities), and
Costs to cure title issues (estate settlement, annotations, adverse claims, boundary issues), if any.

II. The Governing Framework in Practice

Land title transfer in the Philippines usually proceeds through a sequence:

Execution and notarization of the deed (Deed of Absolute Sale, or other conveyance),
Tax clearance with the BIR and payment of transaction taxes,
Payment of local transfer tax (often shouldered by buyer in practice, but can be agreed otherwise),
Registration with the Register of Deeds and issuance of a new Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT),
Tax declaration update with the Assessor’s Office.

The seller’s taxes and documentary costs appear most heavily at Steps 1–2.

III. Seller’s Core Taxes

A. Capital Gains Tax (CGT): The Typical Seller Tax

1. When CGT applies CGT generally applies to the sale, exchange, or other disposition of real property located in the Philippines classified as a “capital asset” in the hands of the seller. For most individual sellers who are not engaged in the real estate business, and for many ordinary corporate sellers not treated as dealers in real property, the property is treated as a capital asset for tax purposes.

2. Rate and tax base CGT is imposed at a fixed rate on the higher of:

the gross selling price (contract price), or
the fair market value (FMV), typically measured by the higher of (a) the BIR zonal value and (b) the local assessor’s FMV.

This “higher-of” rule is crucial: even if a property is sold below market, CGT is computed using the higher benchmark.

3. Who pays By law, CGT is imposed on the seller. Parties may agree otherwise, but from the BIR’s standpoint, the seller remains the taxpayer responsible for payment and compliance.

4. Timing CGT is paid to the BIR within a prescribed period from the date of sale/transaction (commonly tied to notarization). In practice, delays jeopardize processing and can trigger interest, surcharges, and compromise penalties. A seller should plan to pay promptly after notarization and compilation of requirements.

5. Effect on transfer No CAR/eCAR is issued until CGT (and other applicable taxes) are settled and requirements submitted, so CGT is the principal gatekeeper to title transfer.

B. Creditable Withholding Tax (CWT): When the Seller Is in Business or the Property Is “Ordinary”

1. When CWT applies If the real property is considered an ordinary asset (e.g., held primarily for sale in the ordinary course of business—common for developers, dealers, or when the seller’s tax profile makes the property an ordinary asset), the transaction may not be subject to CGT. Instead, the buyer is typically required to withhold a percentage of the purchase price as CWT and remit it to the BIR, issuing a withholding tax certificate to the seller.

2. Practical impact on the seller Although the buyer remits the withheld amount, the economic burden is borne by the seller because the withheld amount is deducted from the consideration paid to the seller. The seller uses the withholding tax certificate as a credit against income tax due.

3. Market practice Transactions involving corporate sellers in the real estate business often operate under the withholding tax system; the specific rate depends on the seller classification and nature of transaction in practice.

C. Documentary Stamp Tax (DST): Often Treated as a Seller Cost (But Allocation Is Contractual)

DST is a tax on documents and instruments evidencing a taxable transaction, including deeds of sale. It is required for BIR clearance processing. While many deals allocate DST to the seller by convention, it can be shifted by agreement—what matters operationally is that it must be paid for issuance of CAR/eCAR.

Tax base conceptually Like CGT, DST is typically computed using the higher of the stated consideration or relevant FMV benchmarks used for tax purposes.

D. Value-Added Tax (VAT): Seller Exposure in Special Cases

VAT may apply when the seller is VAT-registered and the sale is considered in the course of trade or business, and the property/transaction falls within VAT rules (commonly relevant to developers and certain corporate sellers). For a typical private sale by an individual not engaged in the real estate business, VAT is not usually the operative tax. Where VAT applies, it affects invoicing, price structuring, and documentary requirements.

IV. Seller’s Standard Non-Tax Fees and Costs

A. Notarial Fees (Execution of the Deed)

The deed must be notarized to become a public document acceptable for registration. Notarial fees are often negotiated; many sellers pay or share them. Notarial cost often scales with consideration (market practice varies).

B. Document Procurement and Compliance Costs

Sellers typically shoulder the cost and effort of gathering documents needed for BIR processing and registration, such as:

Owner’s duplicate title (TCT/CCT),
Certified true copy of title (as needed),
Latest tax declaration and property tax clearance,
Valid IDs, Tax Identification Number (TIN) and related BIR forms,
Special powers of attorney if signing through a representative,
Corporate documents if seller is a corporation (board resolutions, secretary’s certificate, etc.),
Proof of authority and identity documentation for heirs or representatives in special cases.

Fees for certified true copies, certifications, and clearances are usually modest individually but can accumulate.

C. Real Property Tax (RPT) Arrearages and Tax Clearance

Unpaid RPT or penalties are customarily settled by the seller up to an agreed cut-off date (often up to the date of sale or possession turnover). Local treasurers may require tax clearance as a prerequisite to other steps.

D. Association Dues, Condominium Dues, and Other Payables

For condominiums or subdivision lots, sellers often must clear:

condominium corporation/HOA dues,
special assessments,
move-out/transfer fees charged by the association or property management,
clearance requirements (some associations require buyer/seller appearance, endorsement, and documentation).

These are not government taxes, but they can impede handover and, in some developments, can delay issuance of clearances needed for administrative processes.

E. Utility Bills and Occupancy-Related Charges

Sellers customarily settle unpaid electricity, water, internet, and similar accounts up to a cut-off date, or adjust them via prorations.

F. Title Issue Resolution Costs (If Applicable)

Seller-side costs can spike when the title is not “clean,” such as:

Estate settlement costs (if the owner is deceased) including legal fees, publication, extra-judicial settlement documentation, and estate tax compliance,
Cancellation of annotations (lis pendens, adverse claims, mortgages, levies) where the seller undertakes to deliver a clean title,
Reconstitution expenses (if title records are missing/damaged),
Corrective deeds (name discrepancies, technical description issues, marital status corrections),
Survey costs (boundary disputes or relocation surveys),
Court or administrative proceedings to correct entries or remove clouds.

V. Allocation by Agreement vs. Legal Incidence

A. What the law “imposes” vs. what parties “agree”

Legal incidence: CGT is imposed on the seller; DST attaches to the instrument; other taxes may be imposed on one party by statute.
Economic incidence: Parties can agree that the buyer will shoulder amounts otherwise imposed on the seller, usually by increasing/decreasing the price or by explicit allocation clauses.
Operational reality: BIR and registries require taxes to be paid and documents complete, regardless of private allocation.

B. Common Philippine market allocations (typical, not mandatory)

Seller: CGT, often DST, notarial fee (sometimes shared), clearance of arrears, document procurement.
Buyer: transfer tax (local), registration fees, title issuance fees, assessor’s transfer and tax declaration update, sometimes DST or notarial fee depending on bargaining.

Because practices vary by locality and bargaining power, the deed should clearly state who pays which item.

VI. The “Higher-of” Valuation Rule and Its Practical Consequences

A recurring feature of Philippine property transfer taxation is valuation based on the higher benchmark of:

contract price, and
FMV (often the higher of BIR zonal value and assessor’s value).

Consequences:

Under-declaration does not necessarily reduce tax, because the base may default to zonal/assessor values.
Price negotiations should account for tax base: if zonal value exceeds the agreed price, the seller may face higher CGT/DST than expected.
Transaction timing and valuation updates matter: zonal values and local schedules can be revised; parties should check current benchmarks during due diligence.

VII. BIR Clearance (CAR/eCAR): The Seller’s Compliance Bottleneck

A. Purpose

The CAR/eCAR is the BIR’s authorization to register the transfer. It indicates that applicable taxes have been paid and that documents are in order.

B. Typical seller responsibilities in the CAR/eCAR process

Ensure the deed is properly executed and notarized,
Provide correct seller identity details (name, TIN, address),
Submit supporting ownership documents,
Pay CGT (or facilitate CWT documentation in ordinary-asset cases) and DST as applicable,
Respond to BIR queries and comply with requirements for valuation or classification issues.

C. Common causes of delay attributable to sellers

TIN issues or inconsistent name spelling across documents,
Missing marital consent/required spousal signatures where applicable,
Incorrect property descriptions (lot number, technical description),
Unsettled estate or unclear chain of title,
Outstanding annotations not addressed,
Discrepancy between deed price and tax benchmarks prompting closer review.

VIII. Special Situations That Change the Seller’s Tax/Cost Profile

A. Sale by Heirs / Estate Property

If the property is inherited and still in the decedent’s name, transfer cannot proceed as an ordinary sale without first addressing succession-related requirements. Seller-side burdens often include estate tax compliance and proper settlement documentation. If heirs sell after transferring title to themselves, the sale becomes a separate transaction with its own CGT/DST implications.

B. Sale of a Portion of Land

Selling a portion of a titled lot typically requires subdivision/segregation, approvals, and updated technical descriptions. Seller costs may include survey and subdivision plan expenses, and the timeline can be longer.

C. Sale of Condominium Units

Condominium transfers commonly involve:

condominium corporation clearances,
association transfer fees and document processing,
additional administrative requirements for new owner registration.

D. Corporate Sellers

Corporate approvals, signatory authority, and tax classification issues (capital vs ordinary asset, VAT exposure) can materially alter the seller’s obligations and documentation.

IX. Penalties and Risk of Non-Compliance

Failure or delay in paying required taxes or filing within prescribed periods can lead to:

Surcharges and interest,
Compromise penalties,
Delays in CAR/eCAR issuance,
Contractual disputes if timelines are missed (especially where the deed requires delivery of CAR/eCAR by a specific date),
Potential exposure if misrepresentations are made in tax declarations or documents.

A seller should treat tax compliance as a closing deliverable, not an afterthought.

X. Drafting and Negotiation Points for Seller-Focused Protection

Well-drafted sale documents allocate burdens clearly and reduce disputes. Key clauses affecting seller taxes/fees include:

Tax and fee allocation clause: specify who pays CGT/CWT, DST, notarial fees, transfer tax, registration fees, and clearance fees.
Cut-off date for prorations: RPT, association dues, utilities, and possession-related expenses.
Seller representations and warranties: clean title, absence of undisclosed liens/annotations, payment of taxes.
Conditions precedent: buyer’s obligation to pay balance upon seller’s delivery of CAR/eCAR or proof of tax filing/payment.
Timelines and remedies: define consequences of delay in document release or tax clearance.

XI. Practical Checklist of Seller Taxes and Fees

Taxes (most common seller exposure):

Capital Gains Tax (CGT) on capital assets (typical private sale),
Documentary Stamp Tax (DST) on the deed/instrument (often seller by practice),
(Alternative) Creditable Withholding Tax (CWT) structure if ordinary asset or seller classification requires it,
(Special) VAT exposure for certain sellers/transactions.

Fees and other seller-side costs:

Notarial fee (often seller or shared),
Certified true copies, clearances, and certifications (title, tax declaration, RPT clearance),
Settlement of RPT arrears and penalties up to cut-off,
HOA/condo dues and special assessments up to cut-off, plus association transfer/clearance fees if allocated to seller,
Utility arrears and agreed prorations,
Costs to cure title defects (annotation cancellation, estate settlement, corrective deeds, surveys).

XII. Conclusion: The Seller’s Obligations Are Primarily Tax-Driven and Document-Driven

In Philippine land title transfers, seller taxes and fees are best understood as a combination of (1) transaction taxes necessary to secure BIR authorization for registration and (2) compliance and clearance costs needed to deliver a registrable deed and a transferable, marketable title. The seller’s decisive role is producing a clean, properly documented transfer supported by timely tax payment, because the entire registration pipeline depends on these prerequisites.