If you are buying or selling a property, did you know that transferring the title comes with several fees and taxes? These costs are not insignificant and can amount to a substantial sum depending on the property’s value. Knowing these expenses in advance helps ensure that you have enough funds to complete the transfer and avoid delays in the process.
If this is your first time buying or selling a property, it is also important to know which expenses are typically shouldered by the buyer and which are shouldered by the seller. This will help you understand your responsibilities and avoid being misled during the transaction. While the allocation of expenses below follows common practice, the buyer and seller may agree on a different arrangement as long as it is clearly stated in the Deed of Absolute Sale or other written agreement.
SELLER’S ACCOUNT
Capital Gains Tax (CGT) – 6%
This is a tax imposed by the government on the presumed gain from the sale of a property.
Computation: 6% of the highest value among the selling price, BIR zonal value, or fair market value
Paid To: BIR using BIR Form 1706
Due: Within 30 days from the date of notarization of the Deed of Absolute Sale
Processing Time: N/A
Electronic Certificate Authorizing Registration (eCAR)
The eCAR is issued by the BIR as proof that the required taxes related to the property transfer have been paid. Without the eCAR, the Registry of Deeds generally cannot transfer the title to the buyer.
Cost: PHP 100.00 certification fee plus PHP 30.00 documentary stamp per certificate
Paid To: BIR
Due: After payment of applicable BIR taxes and submission of complete requirements
Processing Time: Approximately 5 to 15 working days
Real Property Tax Clearance
This document serves as proof that all real property taxes due on the property have been paid and that there are no outstanding tax liabilities.
Cost: PHP 50.00 to PHP 150.00 per Tax Declaration, depending on the city or municipality
Paid To: City or Municipal Treasurer’s Office
Due: Before title transfer processing
Processing Time: Usually same day to 3 working days
BUYER’S ACCOUNT
Documentary Stamp Tax (DST) – 1.5%
This is a tax imposed on the Deed of Absolute Sale and other documents involved in the transfer of ownership.
Computation: 1.5% of the highest value among the selling price, BIR zonal value, or fair market value
Paid To: BIR using BIR Form 2000-OT
Due: On or before the 5th day of the month following notarization of the Deed of Sale
Processing Time: N/A
Notarial Fee
This is the fee charged by the lawyer or notary public for notarizing the Deed of Absolute Sale, making it a public document that can be legally enforced and presented as evidence in court should disputes arise.
Computation: Approximately 0.1% to 1% of the selling price or a fixed professional fee, depending on the lawyer
Paid To: Lawyer or Notary Public
Due: Upon notarization of the Deed of Absolute Sale
Processing Time: Usually same day
Transfer Tax – 0.50% (Provinces) to 0.75% (Metro Manila)
This is a local government tax imposed whenever ownership of real property is transferred.
Computation: 0.50% of the property value in most provinces or up to 0.75% within Metro Manila
Paid To: Provincial Treasurer’s Office or City Treasurer’s Office
Due: Usually within 60 days from the execution of the Deed of Absolute Sale
Processing Time: Usually same day to 3 working days
Registration Fee
This fee is paid to the Registry of Deeds for the registration of the transfer and issuance of a new title in the buyer’s name.
Computation:
- PHP 300,000 – PHP 500,000: PHP 13.00 for every PHP 1,000.00
- PHP 500,000 – PHP 1,000,000: PHP 11.00 for every PHP 1,000.00
- PHP 1,000,000 – PHP 1,700,000: PHP 32.00 for every PHP 5,000.00
- Above PHP 1,700,000: PHP 8,796.00 base fee plus PHP 90.00 for every additional PHP 20,000.00 or fraction thereof
Additional Fees:
- Legal Research Fund (LRF): 1% of Registration Fee
- Service Fee: PHP 344.93
Paid To: Registry of Deeds
Due: No specific deadline, but required before issuance of a new title
Processing Time: Approximately 2 to 4 weeks
Tax Declaration Transfer Fee
After the title is transferred, the Tax Declaration must also be transferred into the buyer’s name.
Cost: Approximately PHP 100.00 to PHP 1,000.00 depending on the local government unit
Paid To: City or Municipal Assessor’s Office
Due: After issuance of the new title
Processing Time: Approximately 1 to 10 working days
Sample Computation for a PHP 3,000,000 Property
For illustration purposes, let us assume that the property’s selling price, BIR zonal value, and fair market value are all PHP 3,000,000.
Seller’s Expenses
| Expense | Amount |
|---|---|
| Capital Gains Tax (6%) | PHP 180,000 |
| eCAR Fee | PHP 130 |
| Real Property Tax Clearance | PHP 100 |
| Estimated Seller Total | PHP 180,230 |
Buyer’s Expenses
| Expense | Amount |
| Documentary Stamp Tax (1.5%) | PHP 45,000 |
| Notarial Fee (estimated at 0.5%) | PHP 15,000 |
| Transfer Tax (0.75%) | PHP 22,500 |
| Registration Fee | PHP 14,556 |
| Legal Research Fund (1%) | PHP 145.56 |
| Registry of Deeds Service Fee | PHP 344.93 |
| Tax Declaration Transfer Fee | PHP 500 |
| Estimated Buyer Total | PHP 98,046.49 |
Estimated Total Transfer Cost
| Party | Amount |
| Seller | PHP 180,230 |
| Buyer | PHP 98,046.49 |
| Combined Total | PHP 278,276.49 |
Based on this example, a PHP 3,000,000 property may incur approximately PHP 278,000 in transfer-related taxes and fees, excluding broker’s commission, unpaid real property taxes, penalties, legal fees beyond notarization, and other special circumstances.
Final Thoughts
There may be other minor fees associated with the transfer of a property depending on the city, municipality, or government office involved. The expenses listed above are the most common costs that buyers and sellers should expect during a standard property transfer.
Because the process can be complex and involves multiple government agencies, it is often advisable to seek the assistance of a licensed real estate broker. A broker can not only handle the title transfer process on your behalf but also verify that the property has a clean title, identify potential issues, and ensure that you are dealing with the rightful owner. Considering the amount of money involved in a real estate transaction, professional guidance can help save you time, money, and costly mistakes.
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