Owning a property in the Philippines is a huge responsibility. There will be taxes like property tax that are needed to be considered. Here are the information you need about property taxes:
First of all, What is a Property Tax?
Property Tax is imposed by the Local Government to any property built inside the city or the province. The properties that can be taxed are real estate properties, buildings, machineries, and other improvements.
Who is required to pay for property tax?
Any person who owns residential or commercial properties are obligated to pay a property tax. The property is required by law as stated in the Republic Act 7160, where Local Governments are permitted to tax a property within their zone to fund public expenditures such as roadways, bridges, government buildings, and other public expenditures.
How much is the Property Tax in the Philippines?
The land or a business will pay a property tax depending on where the house or a commercial building stands. According to the Section 233 of the Republic Act 7160 the city may levy 2% on a property tax while in the province it should not exceed 1%.
How to know how much your property tax is?
The Real Property Tax (RPT) is required to be paid annually and before we go to the paying scenario, we should just first need to know how much you need to pay. There is a formula to help you determine your property tax, it is RPT = RPT rate multiplied by the assessment value.
Assessment value varies from the property classification and assessed value of the building that you own. For instance, if you bought a house for sale in Makati, you should first compute the total assessed value of the property. If you can look at the table:
| Classification of Land | Residential Property Rate | Multiplied by Assessment level | Assessed Value of Land |
| Residential | Residential Property (₱8,000,000) | 20% | ₱1,600,000 |
| Building (₱5,000,000) | 50% | ₱2,500,000 |
After we already know the assessed value of the residential and the building, we just simply add the two: ₱2,500,000 + ₱1,600,000 and we can get ₱4,100,000 as the total assessed value of the property.
Now we can proceed with the computation of the Real Property Tax itself. RPT = Total Assessed Value (4,100,000) x City Tax Rate (2%) = ₱82,000.
The Real Property Tax is ₱82,000 but based on Republic Act No. 5447 or the Special Education Fund (SEF), the SEF will get an additional Real Property Tax for the benefit of both public and municipal schools. In summation:
Total Assessed Value (4,100,000) x 1% for the Special Education Fund = ₱41,000.
The tax that is needed to be cleared is ₱82,000 + ₱41,000 = ₱123,000.
Same goes with office buildings. Let us say that Juan Agias bought a commercial property for sale in Taguig. The computation for his Real Property Tax are as follows:
| Classification of Property | Commercial Property Rate | Multiplied by Assessment level | Assessed Value of Land |
| Commercial | Office Property (₱750,000) | 50% | ₱375,000 |
| Building (₱1,000,000) | 60% | ₱600,000 |
The total assessed value of land is ₱975,000.
Real Property Tax is ₱975,000 x City Tax Rate (2%) = ₱19,500.
Including the SEF that will result in ₱9750. Juan Agias will be required to pay an annual Real Property Tax of ₱29,250.
How do you pay your Property Tax?
There are requirements that you need to prepare before paying your property tax. First thing that you need is the latest tax declaration and a valid ID. Property owners can pay their taxes at the Real Property Tax Section usually located in the City Hall. Local Governments also have their own guides on paying a Real Property Tax including Quezon City, Makati, and Mandaluyong has its online service portal where its residents and business owners can pay their taxes.
When is the deadline for paying property taxes?
Property taxes are mostly paid annually on or before January 31, but if you want to pay in quarterly basis you need to take note the following deadlines:
1st installment: On or before March 31
2nd Installment: On or before June 30
3rd Installment: On or before September 30
4th Quarter: On or before December 31
Can I get a discount on my property tax?
Yes you can, the person who pays his/her tax before the due date can receive a discount not exceeding 20%.
What are the penalties if I fail to pay in time?
There are penalties imposed for someone who is delayed to pay their property taxes. The fine is 2% to 72% interest rate depending on how many months have passed since your last payment.
Owning a property also means that there are financial responsibilities you need to shoulder. Property Tax is one of them and paying early or in time will offer a sense of convenience for every resident or even business owners. Taxes are one of our contributions in the development of our country, it should not hold you back to live a happy life with family and friends.
