Step-by-Step Guide to Transferring Property of House and Lot for Sale
To transfer a property, both the seller and buyer must provide specific documents, submit them to government offices, and pay corresponding taxes and fees. While there are rare cases where the buyer shoulders all costs, the standard arrangement is that responsibilities and expenses are divided between the seller and the buyer.
SELLER’S ACCOUNT
1. Execution and notarization of the Deed of Sale
What is a deed of sale for property for house for sale Philippines?
The seller executes a Deed of Absolute Sale, which serves as the legal document showing the seller’s agreement to transfer ownership of the property to the buyer.
This is usually prepared or reviewed by a lawyer to ensure that all terms are legally correct and properly protect both parties. If the seller does not have a lawyer, it is common to seek assistance from a real estate agent / broker, who usually has a partner lawyer to handle the documentation.
The Deed of Sale must then be notarized by a properly commissioned notary public (lawyer). Choosing an improperly commissioned or “shortcut” notary may result in invalid notarization, which can cause delays or lead to the document losing its status as a public document.
2. Payment of BIR taxes (CGT and Documentary Stamp Tax)
What is Capital Gains tax, how much is capital gains tax and how to compute it for house and lot for sale?
The seller is responsible for paying the required taxes to the Bureau of Internal Revenue, usually within 30 days from the date of sale. This is because the Capital Gains Tax (CGT) is imposed on the presumed gain from the sale of real property.
The applicable taxes are:
- Capital Gains Tax (CGT) – 6% (BIR Form 1706)
- Documentary Stamp Tax (DST) – 1.5% (BIR Form 2000-OT)
Both taxes are generally computed based on the highest value among:
- Selling price
- Zonal value
- Fair market value
If a real estate broker is involved, they usually assist in determining the correct zonal and market values for proper computation.
3. Application for eCAR (Electronic Certificate Authorizing Registration)
How to get an eCAR for a house for sale near me?
After payment of taxes, the seller applies for an eCAR from the appropriate office of the Bureau of Internal Revenue where the property is located.
The eCAR certifies that all required taxes have been fully paid and authorizes the transfer of the property to be registered with the Registry of Deeds.
Common requirements include:
- Notarized Deed of Sale
- Owner’s duplicate TCT or OCT
- Certified true copy of Tax Declaration
- Proof of full payment (if applicable)
- TIN of buyer and seller
- Valid government IDs of both parties (with specimen signatures)
- Special Power of Attorney (if processed by a representative)
Processing usually takes around 7 to 14 days, depending on the BIR office.
BUYER’S ACCOUNT
1. Payment of Transfer Tax
After the seller completes BIR requirements, the buyer pays the transfer tax to the local government unit (LGU) where the property is located. This applies to transfers through sale, donation, or exchange and is typically shouldered by the buyer.
Rates are generally:
- 0.50% for provinces
- 0.75% for cities and municipalities in Metro Manila
The tax base is computed using the highest value among:
- Selling price
- Zonal value
- Fair market value
2. Tax Clearance from the LGU
After payment of the transfer tax, the buyer secures a tax clearance from the city or municipal treasurer’s office.
This certifies that real property taxes are fully updated and paid, and it is required before registration with the Registry of Deeds.
3. Registration at the Registry of Deeds
The buyer then proceeds to the Land Registration Authority / Registry of Deeds to request issuance of a new Transfer Certificate of Title (TCT) under their name.
Requirements typically include:
- Notarized Deed of Sale
- Owner’s duplicate TCT or OCT
- eCAR from BIR
- Tax clearance
- Transfer tax receipt
- Valid IDs of buyer and seller (with specimen signatures)
- Registration fee
The registration fee is generally around 0.25% of the higher value among selling price, zonal value, or fair market value, plus additional Registry of Deeds fees. These usually total around ₱8,000 and up, depending on the property value and transaction type, and may be lower for low-value properties.
Additional requirements may include:
- Homeowners Association clearance (for subdivision lots)
- Affidavit of non-tenancy (for condominium units)
If a broker is involved, they typically assist in compiling and verifying these requirements.
FINAL STEP
Once the Registry of Deeds issues the new TCT under the buyer’s name, the property transfer is legally complete and officially registered.
The buyer then becomes the recognized owner and is responsible for complying with future government requirements related to property ownership, including real property tax updates and tax declaration transfer.
Did you know? Availing the services of a real estate broker usually does not require any upfront payment.
Brokers typically earn through a commission-based arrangement, where the rate is agreed upon by both the client and the broker and is only paid once the sale is successfully completed. If the sale does not push through, no commission is charged.
Considering the amount of work involved—not only in finding a qualified buyer but also in assisting with documentation, coordination, and the overall transfer process—the broker’s commission is often well worth it for the convenience and reduced risk they provide.
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