Complete Guide to Taxes and Fees When Buying Property in the Philippines

So you've found the property. You've negotiated the price. You're ready to sign.

But before you celebrate, there's one more number you need to get right: the total cost of acquisition — which is almost always higher than the sticker price on the listing.

In the Philippines, buying real estate comes with a set of government-mandated taxes and transfer fees that can add anywhere from 8% to 10% on top of the agreed selling price. If you haven't budgeted for these, you could find yourself scrambling for funds at exactly the wrong moment.

This guide breaks down every cost you need to know — who pays what, how much, and when — so you can walk into your property purchase fully informed.

WHY THIS MATTERS MORE THAN YOU THINK

Many first-time buyers in the Philippines focus entirely on the selling price when doing their math. They forget that the closing process involves payments to the Bureau of Internal Revenue (BIR), the local government unit (LGU), the Register of Deeds, and a notary public — and some of those payments have strict deadlines.

Missing those deadlines can result in penalties and surcharges. Underestimating the total cost can delay or even derail a transfer of title.

Let's go through each cost carefully.

TAXES AND FEES TYPICALLY PAID BY THE SELLER

1. Capital Gains Tax (CGT) – 6%

The Capital Gains Tax is the biggest single tax in a Philippine property transaction. It is 6% of the gross selling price or the current fair market value (or BIR zonal value), whichever is higher.

Despite the name, CGT applies to all sales of residential real property classified as a capital asset — even if the seller didn't technically "gain" anything. It's a final tax, not based on profit.

Who pays it: The seller, as a rule. However, in some negotiations, the buyer agrees to shoulder this cost. Always clarify this in the Deed of Absolute Sale.

Deadline: CGT must be paid to the BIR within 30 days from the date the Deed of Sale is notarized. Late payment incurs a 25% surcharge plus interest.

Note: If the property is classified as an ordinary asset (such as real estate held by a developer or dealer), a different tax — the Creditable Withholding Tax (CWT) — applies instead of CGT. The rate varies based on the selling price.

TAXES AND FEES TYPICALLY PAID BY THE BUYER

2. Documentary Stamp Tax (DST) – 1.5%

The Documentary Stamp Tax is imposed on the deed of sale and is computed at 1.5% of the selling price or fair market value, whichever is higher.

Who pays it: Typically the buyer.

Deadline: DST must be filed and paid to the BIR on or before the 5th day of the month following notarization. This is a shorter window than most buyers expect — don't sleep on it.

3. Local Transfer Tax – 0.5% to 0.75%

This is a tax paid to the City or Municipal Treasurer's Office of the LGU where the property is located.

• Outside Metro Manila (provinces): 0.50% of the selling price or fair market value, whichever is higher

• Within Metro Manila: 0.75% of the selling price or fair market value, whichever is higher

Who pays it: The buyer.

Deadline: Must be paid before the Register of Deeds will process the title transfer, so it's effectively due during the closing process.

4. Registration Fee (Register of Deeds)

Once taxes are settled, the transfer of title is registered with the Register of Deeds under the Land Registration Authority (LRA). Registration fees follow a tiered schedule based on the property's value and are generally modest relative to the other costs — often ranging from a few thousand pesos to around ₱20,000–₱30,000 for mid-range properties.

Who pays it: The buyer.

5. Notarial Fee – ~1% to 2%

The Deed of Absolute Sale must be notarized to be legally valid. Notarial fees are not strictly regulated for private transactions, but the standard practice is to charge 1% to 2% of the selling price, or a flat fee negotiated with the notary.

Who pays it: Typically the buyer, though this is negotiable.

WHO PAYS WHAT: AT-A-GLANCE SUMMARY

SAMPLE COST COMPUTATION

Let's say you're buying a condo unit in Quezon City for ₱5,000,000, and the BIR zonal value is also ₱5,000,000.

In this example, the buyer needs to set aside an additional ~₱182,500 (about 3.65% of the purchase price) on top of the selling price. The seller should account for ₱300,000 in CGT.

IMPORTANT TIPS TO AVOID COSTLY MISTAKES

1. Always check the BIR zonal value before negotiating. If the property's declared selling price is lower than the BIR zonal value, taxes will still be computed based on the zonal value. You can look up current zonal values at the BIR website's BIR Zonal Value Lookup tool.

2. Clarify who pays CGT in writing. This is one of the most common points of confusion in Philippine real estate transactions. If the seller is asking you to shoulder CGT, factor that 6% into your total budget before agreeing.

3. Don't miss the BIR payment deadlines. CGT is due within 30 days of notarization; DST within 5 days after the end of the month of notarization. Penalties and surcharges can significantly inflate your total cost.

4. Work with a licensed broker or attorney. A licensed real estate broker (PRC-registered) can guide you through the closing process and help you avoid errors in tax computation or documentation. The professional fee is well worth it.

5. Budget for miscellaneous costs. Expect to spend on bank processing fees (if getting a housing loan), appraisal fees (typically ₱5,000–₱8,000), and documentary requirements like PSA-authenticated IDs and tax declarations.

A NOTE ON FINANCING: BANK LOANS AND IN-HOUSE FINANCING

If you're taking out a bank loan or Pag-IBIG housing loan to finance the purchase, the bank will also require an appraisal of the property and may charge processing and insurance fees. These are separate from the transfer taxes and fees above. Factor them into your budget as well.

Some developers offering in-house financing may include a portion of the transfer costs in the package — always ask for a full breakdown before signing.

FINAL THOUGHTS

The real cost of buying property in the Philippines is always more than the listed price. But once you understand the full picture — CGT, DST, transfer tax, registration, and notarial fees — you can budget accurately, negotiate smarter, and close your transaction without any unpleasant surprises.

Ready to start your property search? Browse thousands of verified listings across Metro Manila, Cebu, Davao, and beyond on Listd.ph. Whether you're buying your first home or expanding your investment portfolio, Listd.ph connects you with the right properties — and the right professionals to guide you through the process.

Sources: Bureau of Internal Revenue (BIR), Land Registration Authority (LRA), Respicio & Co., FileDocsPhil, Bamboo Routes