Long Term Lease Of House And Lot To Foreigner

[AlvinPH]

Hello all,

I am a U.S. Citizen living the Philippines but my father is a dual citizen of US/PH. Because he was naturalized before my birth I am not a citizen of the Philippines and thus cannot own property but may be able to inherit it in the future.

He has purchased with my money a house and lot in Pampanga in his name that I currently live in. I wish to lease it from him for 25 years with an auto renew for another 25 years which is the only option available to foreigners. The reason I wish to do this is so that I can then use the investment in the long term lease to qualify for the SRRV visa.

The problem is that I really cannot seem to find anyone who can actually help me process this transaction. I've emailed all over and the best I've found is some firm that will draw up the contract to lease for 20K. This seems excesive and they won't even help with the rest of the process. I think I will just attempt to go through the process myself but I'm having trouble figuring out all the exact steps and feels.

Can any one tell me the exact steps? So far I have:

1. Notarized Contract to Lease (I really think I could find an example online or create my own, the details of this lease are not important, my father is not going to try to use it against me or anything. I just need to show that I am leasing the property for more than $50,000 USD).

2. Annotate TCT with Contract to Lease agreement - how is this even done? My father or his SPA just needs to register this at city hall?

What else would be required? What other fees and registrations would be needed ?

It looks like at the least the Documentary Stamp Will be nessesary:

“Section 194. Stamp tax on Leases and Other Hiring Agreements. – On each lease, agreement, memorandum, or contract for hire, use or rent of any lands or tenements, or portions thereof, there shall be collected a documentary stamp tax of Three pesos (P3.00) for the first Two thousand pesos (P2,000), or fractional part thereof, and an additional One peso (P1.00) for every One Thousand pesos (P1,000) or fractional part thereof, in excess of the first Two thousand pesos (P2,000) for each year of the term of said contract or agreement.”

That will be around P75K, ouch. Just wondering if there are any more fees. Should be no CGT as it's not being sold or transferred.

Please any help would be really great. I don't mind doing the legwork. Thanks!

[Dave Hounddriver]

It sounds like you have done most of the research work and you have a good grasp on what you want to do.  Congrats and good luck

Edited December 13, 2015 by Dave Hounddriver

[lets_take_a_look]

The annotation of the TCT is done at the office of the Register of Deeds where the land is located. Yes, the local RD is often located at or very near the city or provincial hall.

 

Is there a particular reason why you are setting the initial lease term at 25 years instead of the maximum allowable period of 50 years?

[Dave Hounddriver]

Is there a particular reason why you are setting the initial lease term at 25 years instead of the maximum allowable period of 50 years?

 

Without looking up the regulations, memory tells me that the max is 25 years with one renewal to a max of 50 years.  Can you quote a different law?

[Billy]

Is there a particular reason why you are setting the initial lease term at 25 years instead of the maximum allowable period of 50 years?

 

Without looking up the regulations, memory tells me that the max is 25 years with one renewal to a max of 50 years.  Can you quote a different law?

Maximum lease 25 years with 25 years renewable...

[RBM]

Seems every attorney has a different view or opinion.

I also looked at this how ever decided against after two attorneys advised me to strictly comply with the law the lessor must register with the BIR and this also entails more requirements and once again on the train with things.

Proberly worth checking this out, exactly how to find 100% accurate info reminds me of the proverbial needle in.....

[Steve & Myrlita]

Seems every attorney has a different view or opinion.

I also looked at this how ever decided against after two attorneys advised me to strictly comply with the law the lessor must register with the BIR and this also entails more requirements and once again on the train with things.

Proberly worth checking this out, exactly how to find 100% accurate info reminds me of the proverbial needle in.....

I'd say go directly to the BIR themselves and ask them.

[Dave Hounddriver]

I'd say go directly to the BIR themselves and ask them.

 

Prediction:  (based on simply an educated guess)  If one goes to the BIR and says:  Do I need to pay tax?  The answer will be yes.  Somewhat similar to going up to an alligator, putting your hand in its mouth and seeing if it bites.  Much better to learn these things from the experience of other people and keep a distance if possible.   But this is just an opinion and perhaps I am paranoid about 'tax people'.  Still, just because I am paranoid does not mean they are NOT out to get me  :bash:  Mwah ha ha.   :cheersty:

[Thomas]

I also looked at this how ever decided against after two attorneys advised me to strictly comply with the law the lessor must register with the BIR and this also entails more requirements and once again on the train with things.

I don't know if it need registration at BIR.

but I know BIR demand TENNANTS to handle paying of the LANDLORD'S Tax to BIR for renting !!!    :1 (103):

I GUESS it's the same for leases.

[earthdome]

but I know BIR demand TENNANTS to handle paying of the LANDLORD'S Tax to BIR for renting !!!  

 

Has anyone on this forum who has rented a place to live in the Philippines ever had to pay the LANDORD'S Tax to BIR???

 

I for one have not and I highly doubt anyone else had to either.