Question on Property tax in the Philippines

[Gator]

1 hour ago, Crazyhorse said:

My Wife's niece, who is in real estate.  Said that we would have to pay property tax in the PH and in the US.  I don't think that is correct.  Case in point, If I had property in Yuma county and in Pima County, I would pay tax to the county in which the property was in, and not to both counties. 

You’re right. You don’t pay property tax to the USA on property you own in the Philippines.  If you ever sell it you and make a profit, then you’re supposed to report it as a capital gain. 
 

If you decide to do the deal, put into you and your wife’s name only! (Or just hers). And check with the BIR personally to ensure the taxes are paid up. My wife and I are currently in the process of buying 2 hectares of property in south central Cebu. The old owners showed a forged tax certificate. Turns out they never paid the estate tax (children of original owner who’s deceased). Wound up paying an extra 130k pesos for that plus the “capital gains” (sales) tax and doc stamps.  Was still worth it as the land is valued at over 2m pesos (actual); much much more then what we are paying. As I guide the property tax on it  (vacant land) is about 1k pesos per annum, so not very much. 

[Gator]

5 minutes ago, Freebie said:

Many folk make two sale and purchase agreements , one the "real one" and one, which shows a much lower price in an effort to reduce the 6% owed. Sometimes it works.

Not always.  Wife and I tried that. The BIR had the property we’re buying at a much higher valuation then what it’s actually worth. It hadn’t been assessed since 2015 and it was indicating a few buildings on it, all of which were wiped out during the 2021 typhoon. Photos and Pasalobong to the manager reduced it though. 😁

[hk blues]

15 minutes ago, Gator said:

And check with the BIR personally to ensure the taxes are paid up. 

In our area at least, property tax is paid to the local municipality and I'd recommend checking with them rather than BIR directly.  I believe it's under the jurisdiction of the BIR though.  

[Crazyhorse]

32 minutes ago, Gator said:

You’re right. You don’t pay property tax to the USA on property you own in the Philippines.  If you ever sell it you and make a profit, then you’re supposed to report it as a capital gain. 
 

If you decide to do the deal, put into you and your wife’s name only! (Or just hers). And check with the BIR personally to ensure the taxes are paid up. My wife and I are currently in the process of buying 2 hectares of property in south central Cebu. The old owners showed a forged tax certificate. Turns out they never paid the estate tax (children of original owner who’s deceased). Wound up paying an extra 130k pesos for that plus the “capital gains” (sales) tax and doc stamps.  Was still worth it as the land is valued at over 2m pesos (actual); much much more then what we are paying. As I guide the property tax on it  (vacant land) is about 1k pesos per annum, so not very much. 

Thanks for the great info!    Ours is just 2500 sm.. but good enough for our plans.   Wife says everything is good, lot has finished with the survey, etc.  We are still a year or so away from making the move.  A lot of ducks to get in a row!

[Gator]

45 minutes ago, hk blues said:

In our area at least, property tax is paid to the local municipality and I'd recommend checking with them rather than BIR directly.  I believe it's under the jurisdiction of the BIR though.  

You’re correct. In our case they couldn’t provide an amount due, only that it was in arrears. Therefore the wife had to go to the BIR in Talisay to get an assessment of the tax due (they call it computations). Once we had that number (originally it was just over 300k) it was back to attorney to draw up a new deed of sale and to the municipal office to get them to update their files as well. Then back to the BIR with the new deed of sale (lower price and newer date) for an updated assessment. Wound up with a tax liability of less than half the what the BIR first computed. For payment we had do it via an accredited Bank (list on the wall of the BIR office). 

Edited March 23, 2023 by Gator

[hk blues]

31 minutes ago, Gator said:

You’re correct. In our case they couldn’t provide an amount due, only that it was in arrears. Therefore the wife had to go to the BIR in Talisay to get an assessment of the tax due (they call it computations). Once we had that number (originally it was just over 300k) it was back to attorney to draw up a new deed of sale and to the municipal office to get them to update their files as well. Then back to the BIR with the new deed of sale (lower price and newer date) for an updated assessment. Wound up with a tax liability of less than half the what the BIR first computed. For payment we had do it via an accredited Bank (list on the wall of the BIR office). 

Yep...property tax is the jurisdiction of BIR but payment is to local municipality.  I was mainly responding to the point made about checking if taxes were up to date - this can be done at City Hall rather than BIR.  

[Mike J]

Welcome to the forum @Crazyhorse

With all due respect, I would recommend you disregard any and all advice given to you by the niece.  At best she is ignorant of the law regarding taxes, at worst she is trying to take advantage of you.  If she is the one saying "every is okay" I would be suspicious of her motives and find another method to verify that everything is the correct and legitimate.  Assuming the lot is clear for purchase the deed of sale and/or title should read; "Your Wife's name a Philippine Citizen, married to Your Name a United States Citizen".  This will put make the property a conjugal asset under Philippine law.  As mentioned by other posters above DO NOT, under any circumstance, put the property into someone else's name.

[baronapart]

2 hours ago, Mike J said:

Welcome to the forum @Crazyhorse

With all due respect, I would recommend you disregard any and all advice given to you by the niece.  At best she is ignorant of the law regarding taxes, at worst she is trying to take advantage of you.  If she is the one saying "every is okay" I would be suspicious of her motives and find another method to verify that everything is the correct and legitimate.  Assuming the lot is clear for purchase the deed of sale and/or title should read; "Your Wife's name a Philippine Citizen, married to Your Name a United States Citizen".  .

We bought land last year and this is how our deed of sale was done. Do not put that land in anyone's name except you and your wife's. We paid property tax to some local entity. Very cheap. Less than $50.

Edited March 23, 2023 by baronapart

[fillipino_wannabe]

Property tax is local, 1% for the province based on the zonal value which is normally a lot lower than the real value.

Better talk with the seller about who's paying the other types of taxes first. Capital gains tax is 6% and supposedly paid by the seller but often they just assume the buyer should pay it. It's better to just knock a bit of the price and pay it yourself as you can't transfer the title if they don't pay the CGT.

[gbmmbg]

13 hours ago, Mike J said:

Assuming the lot is clear for purchase the deed of sale and/or title should read; "Your Wife's name a Philippine Citizen, married to Your Name a United States Citizen".  This will put make the property a conjugal asset under Philippine law

I think you might be mistaken as to why it is that way on the title. If both party's are Filipino then yes it becomes a conjugal asset under Philippine law. You might want to read this. Its a bit long but worth the read. Most husbands don't think the house or land can be sold with out them but it can.              https://www.guampdn.com/news/local/owning-land-in-philippines-when-married-to-a-foreigner/article_93904827-aaa6-5930-9b29-885adf632e17.html