Key Considerations When Buying Property in the Philippines
By P. Monte Law · March 10, 2024
Who Can Own What
Philippine law restricts land ownership largely to Filipino citizens and corporations at least 60% Filipino-owned. Foreign nationals generally cannot own land directly, but may own condominium units — subject to a foreign ownership cap of 40% within a given condominium corporation — or acquire long-term leasehold rights. Understanding which category a transaction falls into is the first step before anything else.
Doing Your Due Diligence
Before any money changes hands, the title should be verified directly with the Registry of Deeds to confirm it is genuine, current, and free of adverse claims, liens, or encumbrances. It's also worth checking the property's tax declaration and real property tax payment history with the local assessor's office, confirming the seller's identity and authority to sell (including a valid Special Power of Attorney if they are acting for someone else), and verifying the property's zoning or land use classification matches your intended use.
Taxes and Fees to Expect
A typical sale involves several taxes and fees: capital gains tax of 6% of the selling price or zonal value, whichever is higher (customarily the seller's obligation, though this is often negotiated); documentary stamp tax of 1.5%; a local transfer tax that varies by city or municipality; and registration fees with the Registry of Deeds. Budgeting for these up front avoids surprises at closing.
Completing the Transfer
Once terms are agreed, the parties execute and notarize a Deed of Absolute Sale, pay the applicable taxes to the Bureau of Internal Revenue to obtain a Certificate Authorizing Registration (eCAR), and present that certificate to the Registry of Deeds to have a new title issued in the buyer's name. The final step is updating the tax declaration with the local assessor's office.
Why Counsel Matters Here
Title issues — overlapping claims, unresolved estates, forged documents — are a real risk in the Philippine market, and they are far cheaper to catch before closing than to untangle after. This is especially true for foreign buyers navigating ownership restrictions, or for properties still under an unsettled estate.
A Note on This Article
This article is provided for general informational purposes only and does not constitute legal advice. Property transactions carry real financial risk, so please consult directly with a lawyer before signing anything.