Four charges, and none of them is the price
A Philippine property purchase carries a national tax on the sale itself, a national stamp tax on the document, a local transfer tax collected by the province or city, and registration fees at the Register of Deeds. Together they routinely add a meaningful single-digit percentage on top of what you agreed to pay for the land. Buyers coming from abroad are usually surprised twice: first by the total, and then by discovering that the party who agreed to pay a tax and the party the tax authority looks to are not always the same person. Everything below is described as it is commonly assessed in practice; the exact figures on your deal come from the deed, the zonal schedule and the local ordinance that apply to that specific property.
Capital gains tax — commonly six percent
On a sale of real property held as a capital asset, capital gains tax is commonly assessed at six percent of the higher of the gross selling price or the fair market value, with the Bureau of Internal Revenue's zonal valuation for the location doing most of the work in deciding what that value is. Two practical consequences follow. First, it is a tax on value rather than on profit — a seller who breaks even still pays. Second, agreeing on a low figure in the deed does not lower it, because the higher of the stated price and the zonal or assessed value governs. In our experience the biggest surprises here belong to sellers who priced the property net of tax without checking the current zonal schedule for that barangay.
Documentary stamp tax — the provision worth reading
The stamp tax on conveyances of real property is fixed by Section 196 of the National Internal Revenue Code, which is worth quoting because it is the item most often mis-stated in sales talk. It collects the tax on
all conveyances, deeds, instruments, or writings, other than grants, patents, or original certificates of adjudication issued by the Government, whereby any lands, tenements or other realty sold shall be granted, assigned, transferred, or otherwise conveyed to the purchaser, or purchasers, or to any other person or persons designated by such purchaser or purchasers, there shall be collected a documentary stamp tax at the following rates:
(a) When the consideration, or value received or contracted to be paid for such realty, after making proper allowance of any encumbrance, does not exceed one thousand pesos, Fifteen pesos (P15.00).
(b) For each additional one thousand pesos, or fractional part thereof in excess of one thousand pesos of such consideration or value, Fifteen pesos (P15.00).
Note what the section does with an understated price. Where the tax has been reduced by an incorrect statement of the consideration, the same provision authorises the Commissioner, the provincial or city treasurer or another revenue officer to assess the property at its true market value from the assessment rolls or other reliable sources and collect the proper tax. Under-declaring the deed is therefore not a saving; it is a deferred assessment with your name on it, and it hands the seller a document that contradicts what you actually paid.
Transfer tax and registration fees
The local transfer tax is collected by the provincial or city treasurer under the local government's own ordinance, computed against the consideration or the fair market value, and it commonly must be paid within a short window after the deed is notarised — late payment attracts surcharges and interest set by the same ordinance. Registration fees are then charged by the Register of Deeds on a published schedule that rises with the value of the property, alongside smaller entry, annotation and certified-copy charges. Around these sit the incidentals nobody budgets: notarial fees, certified true copies, updated tax declarations at the assessor's office, and the cost of getting documents from wherever the seller happens to live.
Who customarily pays what — and why that sentence matters
The market custom is straightforward: the seller carries capital gains tax and the broker's commission; the buyer carries documentary stamp tax, transfer tax and registration fees. That custom is not law, and contracts reallocate it constantly — developers commonly push everything to the buyer, motivated sellers sometimes absorb the lot. What we insist on is that the deed or the contract to sell say so in words, name amounts or formulas, and set deadlines, because taxes here run on clocks that start at notarisation. Where the other side is to pay a tax you depend on, the safer structure is to hold back that amount from the price and remit it yourself against receipts, rather than to trust that it will be settled after closing.
The eCAR is the gate everything passes through
None of this is bookkeeping. Until the Bureau of Internal Revenue issues the electronic Certificate Authorizing Registration for the transaction, the Register of Deeds will not issue a new title in your name — you can be paid up, notarised and in possession, and still not be the registered owner. When the seller acquired through a death anywhere in the chain, the estate side has to clear first, and that is a longer road with its own tax and its own deadlines; our estate tax and eCAR page covers it. This is also why we sequence payments against tax milestones rather than calendar dates, and why the tax review is part of the title examination rather than an afterthought.
Getting the real number before you sign
Ask for the computation in writing before the deed is signed: the zonal value used, the assessed value, each tax with its base and rate, each fee, and who pays it. A serious seller or developer will produce it; the reluctance to produce it is itself information. We do this arithmetic as part of every engagement — see how the engagement runs and what it costs — and we would rather you spend an hour on it now than discover the shortfall at the registry counter.
Frequently asked questions
How much tax is paid when buying property in the Philippines?
Budget for four charges on top of the price: capital gains tax, commonly assessed at six percent of the higher of the selling price or the zonal value; documentary stamp tax; a local transfer tax collected by the province or city; and registration fees at the Register of Deeds. Together they routinely add a meaningful single-digit percentage to a purchase.
Who pays the capital gains tax, the buyer or the seller?
By custom the seller carries the capital gains tax and the broker's commission, and the buyer carries documentary stamp tax, transfer tax and registration fees. That is only a custom. The contract can reallocate every item, and in practice it often does, so the deed should say who pays what and by when in words rather than leaving it to assumption.
What is documentary stamp tax on a sale of land?
Section 196 of the National Internal Revenue Code collects a stamp tax on conveyances of realty at fifteen pesos for the first one thousand pesos of consideration or value, after proper allowance for any encumbrance, and fifteen pesos for each additional one thousand pesos or fractional part of it.
Can we lower the taxes by writing a smaller price in the deed?
No, and it is a bad trade. Section 196 itself lets the revenue officer assess the property at its true market value and collect the proper tax where the stated consideration has been understated, and taxes are computed against zonal and assessed values in any case. An understated deed also becomes the seller's evidence against you if the price is ever disputed.