Tax Declaration land

[mogo51]

I am just surfing around at properties in Nth. Luzon, looking for a decent sized block, don't want to look out the window at the neighbour having a shower or worse!

Snowy was very informative in this area, does anyone know what 'tax declaration' block only - seems it means dodgy to me?

[Mike J]

Tax declared means the land is not titled.  Basically there are some documents that say one or more people are "presumed" to own the land and they are responsible for paying taxes on the property.  Not necessarily dodgy but their are a multitude of people both Filipino and expat who have been cheated when attempting to buy tax declared property.  There are a lot of ways to be screwed over when buying property here even when titled.  The odds against you increase quite a bit when buying tax declared land.  The most common problem is distant relatives that pop out the woodwork after you buy.  Suddenly it turns out the original owner died two generations back and the land actually belongs to a large number of heirs even if only one is on the tax declaration.  I expect other members here can share their experience, either good or bad, when buying tax declared land.     

Edited June 27, 2017 by Mike J

[Snowy79]

Basically every piece of land in the Philippines has a zonal value. A price per sqm. It can be found on the BIR website for the area you are looking at. In my instance I'm buying a condo where the zonal value is 200 php per sqm. You work out how large the area is and from that you make a calculation of how much property tax you will pay per year. 1% or 2% of the total depending on whether you live inside Metro Manila or not.

Every one that in theory owns land will pay this tax prior to selling the land. Some families don't pay it for years so when you go to buy it, back taxes must be paid. The problem is you can pay tax on any land you want and with these receipts try to prove you own the land. 

You then find a mug and show him the land is tax declared but not titled and that you must own it as you've been paying the tax. The mug then buys the tax declared land and then 50 locals come out of the woodwork to say they own it and a whole load of trouble opens up.

Basically don't touch tax declared but not titled land and even then do due diligence.

Edited June 27, 2017 by Snowy79
Spelling

[sonjack2847]

I was told by a brit whos wife deals in land that if there are more than two names on a title don`t touch it.We now have our land title and mine and my wife`s names are on it.

[mogo51]

18 hours ago, Mike J said:

Tax declared means the land is not titled.  Basically there are some documents that say one or more people are "presumed" to own the land and they are responsible for paying taxes on the property.  Not necessarily dodgy but their are a multitude of people both Filipino and expat who have been cheated when attempting to buy tax declared property.  There are a lot of ways to be screwed over when buying property here even when titled.  The odds against you increase quite a bit when buying tax declared land.  The most common problem is distant relatives that pop out the woodwork after you buy.  Suddenly it turns out the original owner died two generations back and the land actually belongs to a large number of heirs even if only one is on the tax declaration.  I expect other members here can share their experience, either good or bad, when buying tax declared land.     

Thanks Mike, a lot more complicated than I first thought.

[mogo51]

18 hours ago, Snowy79 said:

Basically every piece of land in the Philippines has a zonal value. A price per sqm. It can be found on the BIR website for the area you are looking at. In my instance I'm buying a condo where the zonal value is 200 php per sqm. You work out how large the area is and from that you make a calculation of how much property tax you will pay per year. 1% or 2% of the total depending on whether you live inside Metro Manila or not.

Every one that in theory owns land will pay this tax prior to selling the land. Some families don't pay it for years so when you go to buy it, back taxes must be paid. The problem is you can pay tax on any land you want and with these receipts try to prove you own the land. 

You then find a mug and show him the land is tax declared but not titled and that you must own it as you've been paying the tax. The mug then buys the tax declared land and then 50 locals come out of the woodwork to say they own it and a whole load of trouble opens up.

Basically don't touch tax declared but not titled land and even then do due diligence.

Thanks Snowy, that makes it very clear and I suspected there was a likely problem.  This would account in part for why the block I looked at, was rather cheap.

As we say, we learn something everyday.  I am not in a hurry and will surely have the proper checks and balances made (as much as possible if and when the time comes).

[Mike J]

A friend of mine, married to a Filipina, who bought property told me what he did when they purchased a house and lot.  They used a down payment and the balance was financed via a reputable Philippine bank.  When someone defaults on a loan the bank does not want to be stuck with property that has a disputed title or any other questions of ownership.  They need to be able to foreclose and then resell the property.  For this reason the bank will "probably" do a thorough job of making sure the sale is legitimate to protect themselves.  So he and his wife bought using a bank loan, made a few payments, then went in and payed off the loan which carry a HIGH  percentage rate here.  You would need to read any loan contract carefully to make sure you are allowed to pay off the contract early without penalty, or at worst a small penalty.  Worked for them and he says he would do it that way again if they decide to move.

[Snowy79]

3 hours ago, Mike J said:

A friend of mine, married to a Filipina, who bought property told me what he did when they purchased a house and lot.  They used a down payment and the balance was financed via a reputable Philippine bank.  When someone defaults on a loan the bank does not want to be stuck with property that has a disputed title or any other questions of ownership.  They need to be able to foreclose and then resell the property.  For this reason the bank will "probably" do a thorough job of making sure the sale is legitimate to protect themselves.  So he and his wife bought using a bank loan, made a few payments, then went in and payed off the loan which carry a HIGH  percentage rate here.  You would need to read any loan contract carefully to make sure you are allowed to pay off the contract early without penalty, or at worst a small penalty.  Worked for them and he says he would do it that way again if they decide to move.

Realistically as long as you get a certified copy of the title yourself you are as protected as you can be in this lovely country. One thing that amazed me when I bought my condo is that there is no third party holding the money until the sale goes through. You're expected to pay all the taxes etc right up until exchange of title.

[Gary D]

3 hours ago, Snowy79 said:

Realistically as long as you get a certified copy of the title yourself you are as protected as you can be in this lovely country. One thing that amazed me when I bought my condo is that there is no third party holding the money until the sale goes through. You're expected to pay all the taxes etc right up until exchange of title.

If there was a certified copy of the title the land wouldn't be sold as Tax Declaration as it would be worth far more.

[bigpearl]

Hhmmmm, this will be long winded and will probably incur some negative or speculative comments, while very open to input and feed back I am only relating where we went and what we see/did. We purchased a property recently, 1,700M2 titled lot and an 860M2 tax declared lot. The 1700M2 lot has 3bed 2 bath house, a seperate studio and a large nippa hut workshop, about 6M x 6M, The 860M2 lot is sand, from the front of the titled lot to the high tide mark facing the South China Sea. The developer (also a real estate agent and the reseller 7 years later) purchased some 5 hectares 9 to 10 years ago and subdivided, in his wisdom (a thinker) he also subdivided and paid the fees to create tax declared lots in front of the water front lots so no one could squat on that land. So previously simply sand now holds a tax dec in front of about 10 odd titled properties.

Not up on Filipino property law but we now hold 4 tax decs on this purchase, tax decs as follows,  though a clear unencumbered title the 1,700M2 lot still has a tax dec, the 860M2 lot has a tax dec, the house has a tax dec and the studio has a tax dec. 

I am sure when we do our extensions there will be another tax dec, as others here and other sites have said and I totally agree, if it's only tax declared land do your home work and then do it again. BTW I am only the lessee, hopefully until I'm pushing up the daisies.

Cheers, Steve.