Buying a home isn’t as simple as choosing a property and making a downpayment. It involves careful planning and doing thorough research before taking the big leap. Aside from enlisting the help of a broker or consulting with a real estate professional to learn more about the current market condition, it’s important that you familiarize yourself with the taxes and fees that need to be paid when purchasing a property. The payment of taxes must be dealt with once you’ve settled on a unit, the price, and the terms. Here are the fees that you might encounter:
Capital Gains Tax (CGT)
The seller usually shoulders this, and it’s six percent of the selling price or the fair market price, whichever is higher. (The fair market price is also known as the zonal value, which varies from location to location, and is set by the Bureau of Internal Revenue.) For instance, if your condo’s selling price is Php2 million, but the BIR set the zonal value at Php3 million, then the CGT will be computed based on the Php3 million.
Documentary Stamps Tax
This is usually shouldered by the buyer—you. It’s 1.5 percent of the selling price or the fair market price, whichever is higher.
Again, something you pay for. This is paid to the City Treasurer, and the rate is dictated by the Local Government Unit to which your property belongs. It’s usually .05 percent of the selling price.
The hits keep coming: You usually pay for this. The rate is generally almost half the Transfer Tax, depending on which price bracket your condo belongs to. You’ll find this tax bracketing at the city’s Registry of Deeds.
When the taxes and other matters have been resolved, a contract will be drafted by your broker. Remember that before you sign, you need to double- and triple-check the terms you’ve agreed on with the seller. Don’t hesitate to ask questions and clarify some points, if needed.
Read the original article (You condo it!) in the January-February 2004 issue of Real Living Magazine. Download your digital copy of Real Living on the Real Living App. Log on to summitnewsstand.com.ph/real-living for more details.
This story originally appeared on Realliving.com.ph.
* Minor edits have been made by the Entrepreneur.com.ph editors.