Who Pays Documentary Stamp Tax (DST) on the Sale of Real Property in the Philippines?

Documentary Stamp Tax (DST) is a tax on documents, instruments, loan agreements, and papers that evidence the acceptance, assignment, sale, or transfer of an obligation, right, or property. For sales and transfers of real property, the DST is imposed on the instrument (e.g., the deed of sale or deed of assignment), not on the underlying property itself.

Below is a practical, lawyerly guide—rooted in the National Internal Revenue Code (NIRC) and long-standing BIR practice—covering who is liable, how liability is allocated between the parties, when it is due, how it’s computed, procedure, penalties, and common edge cases.

1) Statutory Incidence: Who Is Liable Under the Law?

Under the NIRC’s general incidence rule for DST, any person who makes, signs, issues, accepts, or transfers a taxable document is liable for the DST on that instrument. Applied to a sale of land or a condominium unit, that typically captures both seller and buyer because both execute or accept the Deed of Absolute Sale (or equivalent instrument). In other words:

Primary legal liability is on the parties to the instrument—all who make, sign, issue, accept, or transfer it.
The BIR may collect from any party falling within that description.

Practical upshot: even if your contract says “Buyer to shoulder DST,” the BIR can still legally collect from the seller if the tax remains unpaid. Contractual allocation governs between the parties, not against the BIR.

2) Market Practice vs. Legal Liability

While the NIRC spreads legal incidence broadly, market practice in Philippine conveyancing is that the buyer customarily shoulders the DST. Why?

The buyer needs the deed to be stamped to register the transfer and obtain a new title; unstamped instruments generally cannot be registered and may be inadmissible in evidence until properly stamped and penalties are paid.
Registries of Deeds and BIR One-Time Transactions (ONETT) desks require proof that DST has been paid before processing title transfer.

Bottom line:

Customary payer: Buyer (or transferee/assignee).
But: The BIR can assess either party, and parties can stipulate otherwise in their contract.

3) What Transactions Are Covered?

For real property, DST commonly applies to:

Deeds of Sale / Conveyance (land, buildings, condominium units, rights and interests in real property)
Deeds of Assignment of real property or real property rights
Deeds of Exchange / Swaps (including tax-free exchanges for income tax purposes—DST still applies unless specifically exempt)
Foreclosure-related instruments (e.g., certificates of sale; separate DST may also apply to real estate mortgages, which are taxed under a different DST provision)

Note: Even when a transfer is income-tax exempt or zero-rated (e.g., certain corporate reorganizations), DST may still be due because the DST is on the document itself, absent a specific exemption.

4) Tax Base and Rate

Instrument: Deed of sale (or equivalent) of real property. Tax base: Higher of:

Stated consideration in the deed, or
Fair market value (FMV) of the property.

For FMV, authorities typically consider:

The BIR zonal value, if available; and
The assessor’s fair market value from the latest Schedule of Values.

Rate for deeds of sale/conveyance of real property: ₱15.00 for every ₱1,000.00 (or fraction thereof) of the tax base. That is effectively 1.5% of the base (rounded up to the next ₱1,000).

Illustration 1 (simple sale):

Deed consideration: ₱4,800,000
BIR zonal value: ₱5,100,000
Assessor’s FMV: ₱4,400,000
Tax base: ₱5,100,000 (highest)
DST: ₱5,100,000 ÷ 1,000 × ₱15 = ₱76,500

Illustration 2 (fraction rounding):

Tax base: ₱5,100,100 → counts as 5,101 thousands
DST: 5,101 × ₱15 = ₱76,515

5) When Is DST Due? What Form Is Used?

Due date: On or before the 5th day following the close of the month in which the taxable document was made/signed/issued/accepted/transferred (whichever first applies under the NIRC rule of incidence). Real property transfers handled at ONETT are generally filed and paid using BIR Form 2000-OT (One-Time Transactions) within that period.

Key practical checkpoints:

DST must be paid (with proof/validation) before the Registry of Deeds will register the transfer.
If you are processing CGT/CWT, DST, and local transfer tax together at ONETT/City Hall, calendar your filings so the DST deadline is not missed.

6) Allocation Between Parties (Contract Drafting Tips)

Although the buyer typically pays DST in practice, parties are free to allocate the burden contractually:

Standard clause (buyer pays): “Buyer shall shoulder the DST on the deed of sale.”
Alternative (split): “Buyer shall shoulder DST up to ₱X; excess, if any, to Seller.”
Seller-friendly: “Seller pays DST.”

Important: If the designated payer fails, the non-defaulting party should reserve the right to advance payment to meet filing/registration deadlines, with a reimbursement (plus interest/costs) obligation on the defaulting party.

7) Evidence, Registration, and “Unstamped” Consequences

An instrument subject to DST that is not properly stamped may be:

Refused registration at the Registry of Deeds; and
Inadmissible in evidence in court or administrative proceedings until the DST and applicable penalties are paid and the document is properly stamped.

This is a key reason the buyer (who needs a clean transfer of title) often ensures DST is paid even if the contract says otherwise.

8) Penalties for Late or Insufficient Payment

If DST is underpaid or paid late, expect:

Surcharge: generally 25% of the basic tax (or 50% in cases of willful neglect or intent to evade),
Interest: generally 12% per annum (tied to the NIRC’s interest rule referencing the legal interest rate), computed from the date the tax was due until fully paid, and
Compromise penalties: per BIR schedules.

Penalties can be material. Missing the 5th-day after month-end deadline often triggers them, so time your filing carefully.

9) Interaction With Other Taxes and Fees on Real Property Transfers

A complete closing cost picture typically includes:

Capital Gains Tax (CGT) of 6% of the higher of consideration or FMV (if the seller is an individual or a non-dealer corporation disposing of a capital asset).
- OR Creditable Withholding Tax (CWT) for sales by real estate dealers/developers or on ordinary assets (rates vary).
DST (this article) at 1.5% of the higher of consideration or FMV.
Local Transfer Tax (city/municipal), usually around 0.5%–0.75% of the tax base (check local ordinance).
Registration fees and notarial fees.

Tip: Even if a sale is VAT-able or subject to CWT instead of CGT, DST still applies, because it is imposed on the instrument (the deed), not on income.

10) Special Situations & Edge Cases

Installment Sales
- If there is one deed stating the full price, DST is computed on the full amount up front (based on the higher of price or FMV).
- If the transaction uses separate deeds per tranche, DST may attach per instrument.
- If a real estate mortgage secures the installments, another DST (for mortgages) applies based on the amount secured.
Exchanges / Swaps (including tax-free exchanges for income tax)
- Even where the income tax on the transfer is deferred or exempt, DST on the instrument usually still applies, computed on FMV of the property transferred (or stated consideration if higher), absent a specific statutory DST exemption.
Assignments of Rights (e.g., contract to sell, pre-selling units)
- A deed of assignment of real property rights is generally subject to DST similar to a sale, based on the higher of the assignment price or FMV of the underlying rights/interest.
Foreclosure and Dacion en Pago
- Real estate mortgage: subject to mortgage DST at the time the mortgage is constituted, based on the amount secured.
- Certificate/Deed of Sale upon foreclosure or dacion (payment by property): generally DST on the conveyance applies to the instrument transferring ownership.
Government or Special-Law Exemptions
- Certain documents are exempt from DST under the NIRC’s exemption list (e.g., specific government-issued papers, certain transactions explicitly exempted by statute).
- Exemptions are strictly construed; unless the instrument is clearly within an exemption, expect DST to apply.
Related-Party Transfers / Below-Market Pricing
- Because the base is the higher of price or FMV, low consideration does not reduce DST if FMV is higher.
Partial Interests / Easements / Undivided Shares
- DST is computed on the value of the interest conveyed. For undivided shares, base it on the proportionate FMV of the entire property.

11) Step-by-Step: How the Payer Usually Handles DST

Gather valuation data:
- Deed consideration, BIR zonal value, and assessor’s FMV.
Determine the base: the highest of the three.
Compute DST: base ÷ 1,000 × ₱15 (round up any fraction of ₱1,000).
Prepare BIR Form 2000-OT (One-Time Transactions).
File and pay on or before the 5th day after the close of the month of execution/acceptance.
Secure proof of payment/validation and present it with the deed to the Registry of Deeds together with the other transfer tax proofs (CGT/CWT, local transfer tax, etc.).
Register and obtain new title (TCT/CCT) in the buyer’s name.

12) Quick Answers to Common Questions

Q: Who pays DST by default? A: By market practice, the buyer; but the BIR may collect from either party to the instrument.
Q: Can we contract around it? A: Yes. Your contract can make either party or both share the DST. This only governs the parties’ obligations between themselves.
Q: If the buyer fails to pay, can the seller be chased? A: Yes. The BIR can assess any party who made/signed/accepted/transferred the deed.
Q: Is DST still due if the sale is VAT-able or subject to CWT instead of CGT? A: Yes. DST is on the document, not the income.
Q: Is DST based on the zonal value or the deed price? A: On the higher of deed price and FMV (typically comparing zonal value and assessor’s value).
Q: What happens if we forgot to pay DST before registration? A: The deed may be refused registration; you’ll need to pay the DST plus penalties to proceed.

13) Takeaways

Legal incidence: anyone who makes/signs/issues/accepts/transfers the deed is liable; BIR can collect from either party.
Commercial practice: Buyer typically shoulders DST (to ensure registration).
Base: Higher of consideration or FMV (zonal/assessor).
Rate: ₱15 per ₱1,000 (≈ 1.5%), rounded up to the next thousand.
Deadline: On or before the 5th day after month-end of execution/acceptance.
Penalties: 25%/50% surcharge, 12% p.a. interest, plus compromise.
Exemptions: Strictly construed; absent a clear, specific exemption, DST applies.

Final Practical Tip

Even if your contract says the buyer pays DST, include a clause allowing the seller (or vice-versa) to advance payment to meet deadlines—with a clear reimbursement mechanism—so that title transfer or financing doesn’t stall over a missed tax step.