1. Overview: What a Deed of Absolute Sale Does (and Why Taxes Follow)

A Deed of Absolute Sale (DOAS) is the primary written instrument by which ownership of real property (land, a house-and-lot, condominium unit, or other real rights) is transferred from the seller to the buyer for a price, and the seller’s title is conveyed “absolutely” (not conditionally, not by installment contract unless separately structured).

Once signed and notarized, the DOAS becomes a public instrument, which:

triggers tax and fee obligations, and
is used to transfer title at the Registry of Deeds and to update tax declarations at the Assessor’s Office.

In Philippine practice, the financial “cost of transfer” is a combination of:

national taxes (primarily Capital Gains Tax or Creditable Withholding Tax, plus DST),
local taxes (Transfer Tax), and
registration and documentary fees (registration fees, annotation fees, notarial fees, and administrative fees).

2. The Core Rule on “Who Pays”

There is no single mandatory allocation of all transfer costs under one universal statute for private transactions. In most sales:

The law identifies who is primarily liable for a given tax (e.g., seller for CGT), but
The parties may agree contractually that the other party will shoulder the cost, as an economic burden.

However, even when the parties agree that one side “pays,” government offices may still require compliance from the party legally liable (e.g., BIR requirements in the seller’s name). So, “who pays” in practice has two layers:

Legal liability (who the tax is imposed on), and
Contract allocation (who shoulders the expense between the parties).

Typical market convention (varies by locality and negotiation):

Seller: Capital Gains Tax (or CWT where applicable)
Buyer: Documentary Stamp Tax, Transfer Tax, registration fees, and other transfer-related fees But this is not mandatory; it is a matter of agreement—except to the extent offices require compliance steps from the party legally liable.

3. The Main Taxes and Fees on a DOAS (Real Property)

A. Capital Gains Tax (CGT) — 6%

What it is: A final tax imposed on the sale, exchange, or disposition of real property classified as a capital asset in the Philippines.

Rate: 6% of the higher of:

Gross selling price/consideration stated in the DOAS, or
Fair market value (FMV), typically the higher between the zonal value (BIR) and the assessor’s fair market value (per tax declaration), depending on the BIR’s computation basis.

Who is legally liable: Seller (as the transferor of a capital asset).

Common contract allocation: Seller pays (but buyer may agree to shoulder as part of negotiation).

Notes that matter in practice:

Underdeclaration (stating a low price) often does not reduce tax if the FMV/zonal value is higher; the tax base becomes the higher value.
The BIR will require payment and issue the necessary clearance (commonly in the form of documentation enabling issuance of the eCAR) before the Registry of Deeds will transfer title.

When CGT does not apply

CGT is generally for capital assets. If the property is treated as an ordinary asset (commonly for real estate dealers, developers, or property used in business under specific rules), the transaction may be subject instead to Creditable Withholding Tax (CWT) and income tax treatment.

B. Creditable Withholding Tax (CWT) — Commonly 1.5% to 6% (depending on classification)

What it is: A withholding tax system that applies when the sale is considered a sale of an ordinary asset (e.g., property held primarily for sale in the ordinary course of business, or used in business and treated as ordinary asset under tax rules).

Rate: The rate depends on the type of seller and the nature of the transaction; commonly seen brackets in practice range from 1.5% up to 6%.

Who is legally liable: The buyer is usually the withholding agent required to withhold and remit CWT, although the tax is creditable against the seller’s income tax.

Common contract allocation: Buyers commonly handle remittance because it is a withholding obligation.

Practical consequence: Misclassification (CGT vs CWT) leads to delays and potential penalties. Determining whether a property is a capital or ordinary asset can be fact-specific.

C. Documentary Stamp Tax (DST) — 1.5%

What it is: A tax on documents, instruments, and certain transactions. A DOAS falls within taxable documents.

Rate: Commonly computed at 1.5% of the higher of:

selling price/consideration, or
FMV (often tied to zonal or assessed values, depending on BIR computation rules).

Who is legally liable: Often treated as payable by the buyer by convention, but legally it is a tax on the instrument/transaction and can be allocated contractually.

Common contract allocation: Buyer pays.

D. Local Transfer Tax — Up to 0.75%

What it is: A tax imposed by the province or city/municipality on transfer of ownership of real property.

Rate: Generally:

Up to 0.5% (province), and
Up to 0.75% (cities within Metro Manila are commonly at 0.75% in practice), computed on the higher of:
consideration/selling price, or
FMV/assessed value per local basis.

Who is legally liable: Often the buyer in practice because the buyer needs it for transfer, but local ordinances may frame the tax as due upon transfer; parties still allocate by agreement.

Common contract allocation: Buyer pays.

E. Real Property Tax (RPT) Arrears and Tax Clearance — Variable

What it is: Annual local tax on real property.

Who must settle: Not a “tax on the DOAS,” but RPT status affects transfer. LGUs often require:

updated RPT payment, and
sometimes a tax clearance or certification for transfer processing.

Who pays: Typically seller pays arrears up to the date of sale, and buyer pays thereafter—unless otherwise agreed. Contracts often prorate RPT based on the date of transfer of possession or execution.

4. Registration and Documentary Fees (Non-Tax Costs)

A. Notarial Fees

What it is: Payment to the notary public for notarizing the DOAS and related instruments.

Amount: Varies widely; often a percentage of consideration or assessed value, or based on notarial schedule and complexity.

Who pays: Negotiable; commonly buyer pays notarization for transfer documents, but many sellers shoulder it, especially when the seller is delivering “clean papers.”

B. BIR Processing / Documentary Requirements (Administrative Costs)

BIR processing itself is not a “fee” in the same way as taxes, but there are common out-of-pocket items:

certified true copies,
documentary stamps (if separately purchased/required in a particular workflow),
representation/processing service fees if an agent handles it.

Who pays: Negotiable; commonly buyer if buyer is processing transfer.

C. Registry of Deeds Fees (Registration Fees)

What it is: Fees for registration of the DOAS and issuance of a new Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT), plus annotations, entry fees, and other charges.

Amount: Depends on value/consideration and the fee schedule; higher consideration generally means higher fees.

Who pays: Almost always buyer, because the buyer benefits from the new title issuance.

D. Assessor’s Office Fees (Transfer of Tax Declaration)

What it is: Administrative steps and minimal fees (varies by LGU) to issue a new Tax Declaration in the buyer’s name.

Who pays: Typically buyer.

E. Homeowners’/Condominium Dues, Clearance, and Move-in/Transfer Fees (If applicable)

For condos and subdivisions, there may be:

HOA clearance fees,
condo corp transfer fees,
unpaid dues and utility clearances.

Who pays: Commonly seller pays arrears; transfer/membership fees often paid by buyer, depending on rules and negotiation.

5. “Rates” Summary (Most Common Figures Used in Practice)

While specifics can vary by classification and locality, the commonly encountered standard figures for a typical private sale of a capital asset real property are:

Capital Gains Tax (CGT): 6% (Seller; base is higher of price vs FMV)
Documentary Stamp Tax (DST): 1.5% (Commonly Buyer; base is higher of price vs FMV)
Transfer Tax: up to 0.75% (Commonly Buyer; local basis)
Registration fees (Registry of Deeds): variable per schedule (Commonly Buyer)
Notarial fees: variable (Negotiable)
RPT arrears: variable (Usually Seller up to sale date; prorate by agreement)

If the sale is treated as an ordinary asset sale, CGT may be replaced by CWT (often 1.5%–6%) plus ordinary income tax implications for the seller.

6. The Tax Base: Selling Price vs Fair Market Value vs Zonal Value

A critical practical concept is that the government often computes taxes based on the higher value among:

the declared selling price in the DOAS, and
the relevant fair market value benchmark (commonly BIR zonal value and/or assessor’s FMV, depending on the tax).

Because of this, stating an artificially low price may:

not reduce CGT/DST, and
create complications (e.g., disputes, loan issues, future resale tax effects, or questions in audits).

7. Who Pays in Common Contract Clauses (Market Practice)

A typical clause allocation (modifiable by agreement) is:

Seller pays

CGT (or handles obligations needed for BIR compliance as seller)
Any existing mortgages/liens to be cancelled (if sale is “clean title”)
RPT and association dues up to a cut-off date
Seller’s taxes, penalties, and documentary deficiencies attributable to seller’s period of ownership

Buyer pays

DST
Transfer Tax
Registry of Deeds fees (registration, entry, issuance of new title)
Assessor’s transfer and new tax declaration costs
Buyer’s loan-related fees (if financed), including bank charges and mortgage registration, if applicable

Again: this is conventional, not mandatory.

8. Penalties for Late Payment and Why Timing Matters

Taxes related to transfer typically come with:

surcharges,
interest, and
compromise penalties, if paid late or if filings are delayed, depending on the particular tax and circumstances.

Delays can also block:

issuance of the BIR clearance needed to transfer title, and
acceptance of registration at the Registry of Deeds.

For that reason, sale contracts often set:

deadlines for payment and processing,
cooperation duties (e.g., seller must sign BIR forms; buyer must pay and process), and
remedies if one party causes delays.

9. Special Situations That Change the Usual Rules

A. Sale of a Principal Residence (Possible Tax Relief)

There are situations where the sale of a principal residence may qualify for tax relief if proceeds are used to acquire/build a new principal residence within a prescribed period and procedural requirements are met. This is compliance-heavy and commonly requires proper declarations and documentation.

B. Sale by an Estate (Extrajudicial Settlement + Sale)

If the registered owner is deceased, the buyer often cannot directly transfer the title without:

settlement of the estate (extrajudicial settlement or judicial settlement),
payment of estate-related obligations, and
then a sale by the heirs or estate. This introduces additional taxes/fees beyond the standard sale transfer costs.

C. Sale of Condominium Units

Condo sales typically add:

condominium corporation clearance,
possible transfer fees/membership fees,
stricter requirements for updated dues/utilities.

D. Assumption of Mortgage / Bank-Financed Sale

If a buyer obtains a loan:

additional mortgage DST and registration fees apply for the mortgage,
the bank often controls documentary steps and timing,
there may be escrow arrangements for taxes and title transfer.

E. Sale of Property with Improvements Not Reflected in Tax Declaration

If the property’s improvements (house/building) are not properly declared, local assessor records may need updating, which can change assessed values and affect local computations.

10. Practical Checklist of Usual Requirements (High-Level)

While exact document sets vary, transfers generally revolve around:

notarized DOAS,
title owner’s duplicate certificate,
updated tax declarations,
valid IDs, TINs, and authority documents (if representative),
tax clearances and official receipts for CGT/CWT, DST, and transfer tax,
Registry of Deeds requirements for issuance of a new title,
Assessor’s processing for a new tax declaration.

11. Best-Practice Drafting Points in the DOAS (To Avoid Disputes)

A well-drafted DOAS and related sale documents typically specify:

exact purchase price and payment terms,
who pays which taxes/fees (enumerated),
cut-off date for RPT and association dues,
obligation to deliver clean title and cancel liens,
possession and risk transfer date,
allocation of responsibility for document signing and attendance at BIR/LGU/RD,
consequences of non-cooperation or delayed processing,
warranties against hidden encumbrances and adverse claims.

12. Quick Reference: Typical Allocation (Negotiable)

CGT (6%) — seller (typical)
DST (1.5%) — buyer (typical)
Transfer Tax (up to 0.75%) — buyer (typical)
Registry of Deeds fees — buyer (typical)
Notarial fees — either (often buyer, but varies)
RPT arrears — seller up to cut-off; prorate by agreement
If ordinary asset sale: CWT (often 1.5%–6%) — buyer remits as withholding agent; seller claims as credit

13. Bottom Line

In a Philippine Deed of Absolute Sale for real property, the main transfer costs usually include CGT (or CWT depending on classification), DST, local transfer tax, and registration-related fees. The most commonly encountered headline rates in ordinary private sales of capital assets are 6% CGT and 1.5% DST, plus up to 0.75% transfer tax depending on locality. The seller is typically responsible for CGT, and the buyer typically shoulders DST, transfer tax, and registration fees, but the final allocation depends on the parties’ agreement—so long as compliance requirements for the legally liable party are still satisfied during processing.