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All you need to know about property taxes in the Philippines

Naia Carlos Naia Carlos
Modern home by MC Arquitectos Modern
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In the Philippines, there is a price for planting roots and it’s paid annually: the Real Property Tax (RPT). Few people like shelling out for taxes and unfortunately, few also understand it. However, this is an important facet of owning property and it’s important that homeowners understand these dues in order to keep their money safe and secure.

What is the RPT?

Real Property Tax is an annual tax on real property paid to the local government units to provide them more funds for basic public services. It’s legally based on the Local Government Code, Republic Act no. 7160.

Computing the RPT

Figuring out how much taxes to pay is surprisingly simple, even for those who have little experience in assessing property. One can compute for it by multiplying the RPT rate by the assessed value of the property. For cities and municipalities in Metro Manila, the RPT rate is two percent (2%). On the other hand, the rate for provinces is one percent (1%).

The other half of the RPT is the property’s assessed value, which is known as the fair market value (as written in the tax declaration) multiplied by the assessment level that can be discovered in each city or municipality’s tax ordinances.

Who needs to pay the RPT?

The real property tax is imposed on all kinds of properties. This includes lands, buildings, condominiums and even machinery. Owners and administrators of these properties are responsible for coughing up the payment for the tax.

Where to pay the RPT

Property owners and administrators who need to pay their real property taxes can simply head over to the city or municipal treasurer’s office to settle their finances.

When to pay the RPT

by Arkin Classic

It’s the payer’s choice whether they want to pay the taxes in one fell swoop for one year or in quarterly installments. Those who want to opt for a single payment need to submit it on or before January 31 every year.

However, if you eventually decide to pay in installments, it’s imperative that they take note of four specific due dates for the four separate quarters. Make sure you hand in the installments on or before these dates: March 31, June 30, September 30 and December 31.

Possible RPT discounts

Whether you own a small rural cottage or a modern residence with a luxurious porch like the one above, there's some relief provided to property owners who make it a point to settle their taxes early. Many local government units offer discounts to those who pay in advance. Each city or municipality has a different set of regulations for discounts, so it’s best to check at the office to be certain when exactly you need to pay to avail of the benefits and how big of a discount you can get.

Consequences of not paying the RPT

It’s best to pay the RPT as soon as its due, because failure to do so would result in penalties that will continue to balloon the longer the taxes remain unpaid. The interest rate is two percent (2%) every month on the unpaid amount until the property owners fully pay their debt. The maximum is 36 months, which is equivalent to a maximum interest rate of 72%.

Eventually, if the RPT gets neglected for a long stretch of time – years of it, usually – it can be included in a tax delinquent property auction.

RPT exemptions

The following are not required to pay taxes on real property: charitable institutions, churches, cooperatives, local water districts, government-owned or government-controlled corporations, machinery and equipment used for environmental protection, and properties used exclusively for religious, charitable or educational purposes.

Payment is an obligation

Just remember, this part of owning property is an important part of the ownership. Pay diligently and there won't be problems keeping the home safe and happy. 

For tips and tricks on using the home design to attract financial luck, read Feng Shui tricks to attract money to your home.

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