What Are the Taxes and Fees Required When Buying a Property in the Philippines?
Buying your dream home in Davao is exciting—but before you close the deal, it’s important to understand the taxes and fees involved. These extra costs can add up fast, especially for first-time buyers. Here’s a quick and simple breakdown to guide you:
1. Capital Gains Tax (CGT) – 6%
The Capital Gains Tax is usually paid by the seller, but it’s important for buyers to know in case of special arrangements. This tax is 6% of the property’s selling price or fair market value, whichever is higher. It applies when ownership of the property is transferred.
In many cases, especially with private listings, the seller may bundle this tax into the total package price. That means while it’s technically their responsibility, the cost could still be indirectly passed on to the buyer—so always clarify if CGT is already included in the sale price.
💡 Tip: Even if the selling price is lower, the BIR may base the tax on the zonal value if it’s higher.
2. Documentary Stamp Tax (DST) – 1.5%
The Documentary Stamp Tax is 1.5% of the selling price or fair market value, again whichever is higher. This tax is imposed on the documentation of the sale, such as the Deed of Sale.
3. Transfer Tax – 0.5% to 0.75%
The Transfer Tax is collected by the local government (city or municipal treasurer’s office). The rate varies per locality, but it generally falls between 0.5% to 0.75% of the property’s value. This tax must be paid before you can proceed to registration.
📍 In Davao City, the transfer tax is usually around 0.5%.
4. Registration Fees – 0.25%
Once all taxes are settled, you must register the property under your name. The Registration Fee is 0.25% of the selling price, and it’s paid at the Registry of Deeds.
Quick Note:
These taxes and fees are standard in private property transactions, where you buy directly from an individual seller. However, if you’re buying from a developer, things are different.
With developers, these fees are usually bundled into the total price under miscellaneous or closing fees. This makes it more convenient for buyers since the developer handles the paperwork and includes most taxes and charges in their computation.
Also, developers do not pay Capital Gains Tax. Since their properties are categorized as ordinary assets, they are subject to Value Added Tax (VAT) or percentage tax, depending on the property price and their registration with the BIR.
✅ Always ask your developer or broker for a detailed breakdown of fees to know what’s included and what’s not.
