Who Shoulders the Expenses In Land Title Transfers?

With respect to sale of real properties, the standard practice is that the Seller is the one who should pay for the following:

a.) Capital Gains Tax - 6% of the selling price on the Deed of Sale or the zonal value, whichever is higher. If the seller is a corporation, Withholding Tax would apply

b.) Real property taxes ("amelyar") up to the time of the transaction.

c.) For condominium or subdivision, all unpaid association dues etc

d.) The seller also pays for his broker's or agent's fees or commission

While the Buyer on the other hand ideally pays for:

a.) Documentary Stamp Tax - 1.5% of the selling price indicated in the deed of sale or zonal value or fair market value, which ever is higher.

b.) Transfer Tax  - 0.5% of the purchase price, or zonal value or fair market value, which ever is higher. A maximum rate of 0.75% in the case of cities and municipalities within Metro Manila.

c.) Registration Fee - 0.25% of the selling price, or zonal value or fair market value, which ever is higher.

d.) Notarial fees - not more than 1% of the purchase price

e.) Real estate broker's or attorney's professional fees for their services in transferring the title under your name, if you choose to engage them.

f.) Other minimal incidental expenses to be paid such as certification fee of P100 per title, annotation fees, etc.

While this is the common practice, the parties have the full freedom to deviate from this and may mutually agree on other arrangements provide it is done during the negotiation period.

Note, however, that if the payment of the capital gains tax is passed on to the buyer and it was indicated in the deed of sale, it may alter the purchase price since the BIR may consider it as part of the selling price which might increase the actual taxes to be paid by the buyer.

Taxes, Fees and Related Expenses on Sale of Real Property

a.) Capital Gains Tax to be paid to the Bureau of Internal Revenue (BIR) - 6% of the selling price on the Deed of Sale or the zonal value, whichever is higher. If the seller is a corporation, Withholding Tax would apply

b.) Documentary Stamp Tax to be paid to the Bureau of Internal Revenue (BIR) - 1.5% of the selling price indicated in the deed of sale or zonal value or fair market value, which ever is higher.

c.) Transfer Tax to be paid to the local government unit (Treasurer's Office) - 0.5% of the purchase price, or zonal value or fair market value, which ever is higher. A maximum rate of 0.75% in the case of cities and municipalities within Metro Manila.

d.) Broker's or agent's fees or commission - industry practice is 5% of selling price

e.) Registration Fee at the Registry of Deeds - 0.25% of the selling price, or zonal value or fair market value, which ever is higher.

f.) Notarial fees - not more than 1% of the selling price

g.) unpaid Real property taxes ("amelyar") up to the time of the transaction

h.) For condominium or subdivision, all association dues etc up to the

i.) Unless you yourself would be the one to process the title transfer, you would also spend for your own real estate broker's or attorney's professional fees for their services.

j.) There are also other minimal incidental expenses to be paid such as certification fee of P100 per title, annotation fees, etc.