In the Philippines, real property taxation is governed primarily by Republic Act No. 7160, otherwise known as the Local Government Code (LGC) of 1991. For landowners and aspiring homeowners, navigating the transition from paying taxes on bare land to taxes on a completed residential structure is a critical financial and legal responsibility.

I. The Fundamental Principles of Real Property Taxation

The Philippine tax system operates on the principle that real property shall be appraised at its current and fair market value. Taxes are not uniform; they are based on a "uniform classification" within each local government unit (LGU).

Appraisal vs. Assessment: Appraisal is the process of determining the market value of the property. Assessment is the application of the Assessment Level (a percentage fixed by local ordinance) to the fair market value to arrive at the Taxable Assessed Value.
Actual Use: Real property is classified and assessed based on its actual use, regardless of where it is located or what the title says.

II. Taxation of Land

Land is taxed from the moment of ownership. The tax liability is determined by the Provincial, City, or Municipal Assessor’s Office where the property is located.

1. Factors Influencing Land Assessment

Zonal Value: The Bureau of Internal Revenue (BIR) sets zonal values, but for Real Property Tax (RPT), the LGU uses its own Schedule of Market Values (SMV).
Classification: Land is classified as residential, agricultural, commercial, industrial, mineral, or special. Residential land typically carries a lower assessment level than commercial land.
Assessment Levels: Under the LGC, the assessment level for residential land is capped at 20%.

2. The Formula

III. Taxation of New House Construction

A common misconception is that property tax only applies to the land. However, the law treats "improvements"—such as houses, buildings, and even certain fences—as distinct taxable entities.

1. The Duty to Declare

Under Section 202 of the LGC, any person acquiring real property or making improvements thereon must file a sworn declaration of the true value of the property (a Tax Declaration) with the Assessor within sixty (60) days after the completion or partial completion of the structure.

2. When Does Taxation Begin?

Taxation for a new house does not wait for a "Move-in Date." It begins the year following the completion or occupancy of the structure, whichever comes first. If a house is only 80% finished but is already being lived in, the Assessor may assess it based on its current state of completion.

3. Assessment Levels for Residential Buildings

Buildings have a graduated assessment level based on their market value. For residential buildings, the levels generally range from 0% to 60%, depending on the total value of the structure.

IV. The Special Education Fund (SEF) and Other Levies

Beyond the Basic RPT, owners must be aware of additional impositions:

Special Education Fund (SEF): An annual levy of 1% on the assessed value of real property, collected simultaneously with the basic tax.
Ad Valorem Tax on Idle Lands: LGUs may provincial/city ordinances impose an additional tax (not exceeding 5%) on idle lands to encourage development.
Socialized Housing Tax: In some cities, an additional 0.5% may be charged on properties with an assessed value exceeding PHP 50,000 to fund local housing projects.

V. Payment Cycles and Discounts

Real Property Tax is an annual obligation due on January 1st. However, the law allows for quarterly installments:

First Quarter: On or before March 31
Second Quarter: On or before June 30
Third Quarter: On or before September 30
Fourth Quarter: On or before December 31

Advance Payment Discounts: Most LGUs offer a "Prompt Payment" discount (usually 10%) or an "Advance Payment" discount (up to 20%) if the entire year’s tax is paid before the January deadline.

VI. Penalties and Delinquencies

Failure to pay the RPT results in a penalty of 2% per month on the unpaid amount, up to a maximum of 72% (36 months).

If the delinquency persists, the LGU has the power to:

Distraint of Personal Property: Seize personal items to cover the debt.
Levy on Real Property: Issue a warrant of levy. If the tax remains unpaid, the LGU may sell the property at a public auction to satisfy the tax delinquency.

VII. Administrative and Judicial Remedies

If a homeowner believes the assessment of their new house is too high, they have the right to appeal:

Local Board of Assessment Appeals (LBAA): A petition must be filed within sixty (60) days from the date of receipt of the written notice of assessment.
Payment Under Protest: One cannot appeal without first paying the tax. The taxpayer must pay the amount due, mark the receipt as "Paid Under Protest," and then file the protest in writing to the Provincial/City Treasurer within thirty (30) days.

Summary Table: Land vs. House Assessment

Feature	Land Assessment	House/Improvement Assessment
Tax Basis	Market Value (per SMV)	Market Value (Cost of Construction)
Max Assessment Level	20% (Residential)	60% (Residential - Graduated)
Declaration Trigger	Upon Purchase/Transfer	Within 60 days of Completion/Occupancy
Effective Date	Year following acquisition	Year following completion/occupancy