Title transfer for undeveloped land and paperwork

[bang4dabuck]

My girl bought 150k php of land, it is just cleared, nothing developed. I'm wondering about the paperwork processing and if there are people that can handle it for a reasonable fee. What is reasonable fee ?  She paid 150k so all the taxes and fees and I think 10,000 for the service would be fair. Also the Capital Gains tax is 6% and as one site stated it is the responsibility of the seller but the buyer usually pays this. It is not mentioned anywhere in the agreement who is to pay it but the seller verbally infers that my gf is to pay. Why do they call it a Capital Gains tax which means that you pay tax on the gain over the previous value of the land ? Instead it looks like a sales tax. The seller has given her 2 receipts, one with the actual sale price of 150k and one, I guess if my gf wants to try and pay a far less tax at 30k. To me if it were really a Cap Gain tax,  the higher/actual value should be used especially if the seller is required to pay it.  It would seem that 30k would be ridiculously low but maybe the tax guys would take the easy way and just look at the deed of sale ???  Any tips from youse guys ?

Edited August 23, 2017 by bang4dabuck

[sonjack2847]

I would get tax paid on the real amount because if you don`t it may cause you problems later.She could register the land herself it is not difficult.

[Dave Hounddriver]

21 minutes ago, bang4dabuck said:

Why do they call it a Capital Gains tax

I would guess its the same reason the call a "blackout" a "brownout".  Just a Philippine euphemism.  You got it right though, its a sales tax that the seller is supposed to pay but the buyer cannot register the land until the tax is paid OR the seller files for an exemption as in this link

http://www.philstar.com/business/420050/capital-gains-tax-exemption-sale-family-home

Since the seller is not really motivated to be arsed to do this it is generally the buyer who pays the 6% so he can register the sale.

[virginprune]

We bought agricultural land to build on in October 2015. We have all the paperwork in my partners name so now we just need to go to the register of deeds to get the title. The reason this takes a long time is because of changing the land usage to residential, this has to be changed in Manila, you don't have to go there. The gain tax was paid by us and all other requirements were done by us, you don't need a fixer just follow the process. There is a lot of running around but it is not difficult, although can be a bit frustrating at times, like everything else! Regarding the sale price, if it is too low the BIR will question it, they do know the value of land in any given area.

I will advise that you pay the gain tax before any improvement is done to the plot, such as building a wall or building a property with any concrete, hollow block work. Otherwise the tax to pay will be higher! Putting a bamboo house there first and a wire fence would be OK and then it will also be easier and cheaper to get the electric supply. This is because if you build the house first the electrical fees will go by number of rooms and sockets etc when you file your occupancy papers. 

I will also stress that if you build a house proper and/or a wall, get your building permit first. If not you can be liable to a financial penalty. 

Good luck!

 

Edited August 23, 2017 by virginprune

[bang4dabuck]

Thank you all for the very sound advice.

[Snowy79]

The BIR website has the set value for land in each area. This tends to be the price people put on the dead of sale so they pay less tax. If there's a house on the land when you buy it they'll know and the tax adjusted to take that into consideration. 

If the land is only tax declared and not titled just use the value that was on the previous payments. 

[Jack Peterson]

 When we bought our lot it was Agricultural so we had to get a DAR (Department of Agricultural Reform) Clearance, this we took to the BIR for assessment and rezoning as you pay less tax on AG land than you do Residential. If you don't get the Clearance and it was Agricultural before you may hit problems with Building permits, they won't pass plans without the Clearance and to build without a permit can have a backlash (as stated before) Worth a visit to your local DAR to ensure you have covered another base when you want to build.

Just a thought here 

[bigpearl]

8 hours ago, virginprune said:

We bought agricultural land to build on in October 2015. We have all the paperwork in my partners name so now we just need to go to the register of deeds to get the title. The reason this takes a long time is because of changing the land usage to residential, this has to be changed in Manila, you don't have to go there. The gain tax was paid by us and all other requirements were done by us, you don't need a fixer just follow the process. There is a lot of running around but it is not difficult, although can be a bit frustrating at times, like everything else! Regarding the sale price, if it is too low the BIR will question it, they do know the value of land in any given area.

I will advise that you pay the gain tax before any improvement is done to the plot, such as building a wall or building a property with any concrete, hollow block work. Otherwise the tax to pay will be higher! Putting a bamboo house there first and a wire fence would be OK and then it will also be easier and cheaper to get the electric supply. This is because if you build the house first the electrical fees will go by number of rooms and sockets etc when you file your occupancy papers. 

I will also stress that if you build a house proper and/or a wall, get your building permit first. If not you can be liable to a financial penalty. 

Good luck!

 

A little off topic but related to CGT, we purchased a house and 2 lots on the beach in La Union some 5 months ago, sale price 5.75M, the agent drew up 2 contracts one for the correct amount and one for CGT and other duties, both the seller and ourselves queried the valuation of 1.2M, perfectly fine and acceptable we were assured, now whether bias to the vendor as he paid the tax based on that amount or just a guess we believe the former as this is a big company that has been around for 20 odd years and should have the expertise in knowing what is and what will not be acceptable with BIR.

We were asked 2 months ago for another PHP 140K to settle with BIR, queried this as they advised us all will be good, next response was we can fix this for 50K but no receipts, our response was that is corruption and your government is clamping down on issues like this and we should report your company,,,,,,,, next response was we will contribute 25k in this to settle. Our response was "your wildly inaccurate figures led to this situation and the transaction needs to be transparent and legal". Response: Well sir it could have been 431K based on selling price but now it's legally 230K and the vendor contributed 72k for CGT and you contributed 18K for other tax and while we agree this is a difficult situation and one that needs to be resolved, one would hope we can come to an amicable agreement given the circumstances. 

Our response roughly, You Sir ill advised both us and the vendor and both the vendor and I have the chain of emails indicating what would appear to be "fixing" to you or your representatives gain, as stated this transaction needs to be legal and while we appreciate your offer of 25k from your commission, the contribution in an illegal transaction we feel that the full amount needs to be remitted so there are no comebacks, more fixers, we have the BIR's official valuation and such should be paid. Please advise and we will transfer the required funds to your account. 

No response in 3 days.

Cheers, Steve.

[Jack Peterson]

16 minutes ago, bigpearl said:

we have the BIR's official valuation and such should be paid.

As we always say "Buyer Beware" Good on yer mate for going that one step beyond to help rub out this corruption issue.

When it comes to the BIR and Land there can only be 1 (one) winner and in my 69+ years alive I have not met many that can beat them, they have sharp teeth that no one, wants to get bit on the Arse by, Way down the line in years to come when the Inheritance issue comes up Little things like what you mention come to light believe me & we really don't want our kids and family to start losing things because we did things wrong.

 I say this because my MIL's Lot  has brought up some pretty bad issues since her death (Bless her)  This Crazy Place and it's Crazy Laws is enough without creating any more problems but then, are they really crazy or are we just seeing people making ( or Trying to) a buck  at our expense in the Future. Like the man that will build your house, we say "Do it right first time and no (or little) Comebacks

JMHO Folks. All good Fun 

[sonjack2847]

If you are not honest and fiddle with the paperwork then IMHO you may as well not bother,all you are doing is leaving a complete mess for somebody else to clear up and they could have bills that will swallow any  or all of the value in the land.It might be a pain in the butt to do it correctly but it is safer for your loved ones.