Feb 09, 2022

Real Property Tax in the Philippines: Questions and Answers

Frequently Asked Questions on Philippine Real Property Tax

The great Albert Einstein once said: “The hardest thing to understand in the world is the income tax.” The painful truth is that, not only do you have to understand taxes, but regularly pay them as well. And yes, it’s not just income tax you have to settle on a regular basis. If you own real property in the Philippines, you would have to pay your real property tax as well, on top of taking care of a variety of other responsibilities.  

While we may not be able to help you actually fulfill your tax obligations as a property owner, we can help make it as hassle-free as possible by shedding light on things about real property tax that may still be confusing. This guide will help you with all of your concerns, from getting to know what real property taxes in the Philippines are and how to pay for them, to other frequently asked questions.  

What is real property tax?

To begin, real property tax is a tax you have to pay if you own any real property. A real property tax in the Philippines is imposed by local government units (LGUs) as a way to increase the funds that are used to provide basic public services to constituents.

What are considered real properties in the Philippines? 

The Philippine Civil Code classifies property into two: immovable or real property, and movable or personal property. Immovable property basically refers to structures that adhere to the soil, such as buildings, roads, and constructions.  

According to Article 415 of the Civil Code, the following are considered real property: 

  1. Land, buildings, roads, and constructions of all kinds adhered to the soil;  
  2. Trees, plants, and growing fruits, while they are attached to the land or form an integral part of an immovable; 
  3. Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object;  
  4. Statues, reliefs, paintings, or other objects for use or ornamentation, placed in buildings or on lands by the owner of the immovable in such a manner that it reveals the intention to attach them permanently to the tenements;  
  5. Machinery, receptacles, instruments, or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works;  
  6. Animal houses, pigeon-houses, beehives, fish ponds, or breeding places of similar nature, in case their owner has placed them or preserves them with the intention to have them permanently attached to the land, and forming a permanent part of it (the animals in these places are included);
  7. Fertilizer actually used on a piece of land;  
  8. Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters either running or stagnant;  
  9. Docks and structures which, though, floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast;  
  10. Contracts for public works, and servitudes and other real rights over immovable property.  

Who should pay real property tax? 

Basically, those who own real property and whose names are found on titles and certificates of ownership are required to pay the land and property taxes in the Philippines.  

How much is real property tax in the Philippines? 

The cost of real property tax depends on the location of the property in the Philippines. If the property is located in Metro Manila, the real property tax rate is 2% of the assessed value of the property, while it is 1% for the provincial rate. 

How is Philippine real property tax calculated?   

Again, keep in mind that the real property tax (RPT) rates are 2% of the assessed value of a property within Metro Manila and 1% outside Metro Manila.   

From this we can come up with the formula:  

RPT = RPT rate x assessed value  

Assessed values are the property’s taxable value, which is acquired by multiplying the market value by the assessment level. Assessment levels differ per property, as these are based on a property’s location and use.

Tables of Assessment Levels  

Different assessment levels are prescribed by Section 218 of the Local Government Code of the Philippines. Here are the different assessment levels from the Official Gazette.

Class  Assessment Levels 
Residential 20% 
Agricultural 40% 
Commercial 50% 
Industrial 50% 
Mineral   50% 
Timberland 20% 
Assessment Levels for Lands
Fair Market Value Over Not Over  Assessment Levels  
 Php 175, 000 0% 
Php 175,000 Php 300,000 10% 
Php 300,000  Php 500,000 20% 
Php 500,00  Php 750,000 25% 
Php 750,000 Php 1,000,000 30% 
Php 1,000,000 Php 2,000,000 35% 
Php 2,000,000 Php 5,000,000 40% 
Php 5,000,000 Php 10,000,000 50% 
Php 10,000,000  60% 
Assessment Levels for Residential Buildings
Fair Market Value Over Not Over  Assessment Levels  
 Php 300,000 25% 
Php 300,000  Php 500,000 30% 
Php 500,00  Php 750,000 35% 
Php 750,000 Php 1,000,000 40% 
Php 1,000,000 Php 2,000,000 45% 
Php 2,000,000  50% 
Assessment Levels for Agricultural Buildings & Structures
Fair Market Value Over Not Over  Assessment Levels  
 Php 300,000 30% 
Php 300,000  Php 500,000 35% 
Php 500,00  Php 750,000 40% 
Php 750,000 Php 1,000,000 50% 
Php 1,000,000 Php 2,000,000 60% 
Php 2,000,000 Php 5,000,000 70% 
Php 5,000,000 Php 10,000,000 75% 
Php 10,000,000  80% 
Assessment Levels for Commercial/Industrial Buildings & Structures
Fair Market Value Over Not Over  Assessment Levels  
 Php 300,000 45% 
Php 300,000  Php 500,000 50% 
Php 500,00  Php 750,000 55% 
Php 750,000 Php 1,000,000 60% 
Php 1,000,000 Php 2,000,000 65% 
Php 2,000,000  70% 
Assessment Levels for Timberland Buildings & Structures
Class  Assessment Levels 
Agricultural 40% 
Residential 50% 
Commercial 80% 
Industrial 80% 
Assessment Levels for Machineries
Actual Use Assessment Level
Cultural 15% 
Scientific 15% 
Hospital 15% 
Local water districts 10% 
Government-owned or government-controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power 10% 
Assessment Levels for Special Classes

How do you calculate Philippine real property tax?

Use the following example as a guide for calculating your real property tax:  

A residential property in Metro Manila is said to have a market price of Php5,000,0000. This includes a parcel of land valued at Php3,000,000 and the house (building and/or improvement) that sits upon this land is valued at Php2,000,000.   

  1. Assessed Value of Land: Residential Land (Php3,000,000) x Assessment Level (20%)  = Php600,000  
  2. Assessed Value of House: Residential Property (Php2,000,000) x Assessment Level (40%) = Php800,000  
  3. Total Assessed Value of the Property: (1) + (2) = Php1,400,000   
    Now that we have the total assessed value of the property, we can get the real property tax amount to be paid by the property owner.  
  4. Real Property Tax: Php1,400,000 x Metro Manila Real Property Tax Rate (2%)  = Php28,000  

The real property tax to be paid by the property owner is Php28,000. Getting to this result may seem like a heavy task at first, but when you do it regularly, you would be able to calculate real property taxes with ease in no time. 

How do you pay real property tax in the Philippines? 

There are two ways to pay real property tax in the Philippines: online and in person.  

Online Payment

You can either use the Moneygment app or check out your local government unit if they have an online payment system in place. This makes it possible for property owners to settle their real property taxes without having to do it in person and risk getting infected with COVID-19.  

For owners of properties in Metro Manila, Calabarzon, Central Luzon, and Cebu, you can use a mobile application called Moneygment

How To Pay Philippine Real Property Tax with Moneygment

  1. Log in to the Moneygment app and click “Calculate, pay and file your taxes” then tap on Real Property Tax.
  1. The app takes you through the process of property assessment. You will need to enter information such as the Title Number and the Full Name indicated in the title, the LGU where the property is located, and the Tax Declaration Number or the Official Receipt (OR) Number of the property.  
  1. After submitting the information, you will be shown a Transaction Summary for your review. Click Confirm if all the details are correct. If not, edit the information, proceed with the summary review, and confirm. 
  1. Choose your payment option, then tap on Proceed. You will receive a One-Time Password (OTP) on your registered number. Enter this OTP into the app when prompted. You will receive a confirmation email about your assessment transaction. 
  1. Proceed with assessment by replying to the confirmation email, with the following documents attached: the Previous Property Tax Official Receipt, the Tax Declaration, and the Original Certificate of Title/Transfer Certificate of Title/Condominium of Title. 
  1. Wait for the assessment to be completed. You can monitor the progress of the assessment through the app’s History tab. Once the property assessment is done, you will receive an email, and the app will display “Assessment Completed” as the status in the History tab. (Note: Processing of the Property Assessment can take up to three working days after confirmation of payment.) 
  1. Proceed with payment by tapping “Pay My Tax.” Review the tax amount and confirm.  
  1. Select your payment method and tap Proceed, then enter the OTP sent to you. You will receive an email to confirm your real property tax payment. 
  1. The app processes the payment. You can check its progress at the History tab. Once the payment is posted, you will receive another email notifying you that your payment has been successfully posted. (Note: Posting of the real property tax payment can takes about three to five working days after payment confirmation.) 

You can also visit your local government’s website to see if it has an online portal for paying taxes. Pasig City and Quezon City are two examples of LGUs where you can pay your annual real property tax online through their official websites. 

In-Person Payment

If, unfortunately, your local government does not offer any online means of paying your RPT, here are the general steps you need to take: 

  1. Visit the Real Property Tax Section at the Treasurer’s Office located usually inside City Hall or within the city hall compound.  
  1. Secure an order of payment (OP) from the assessors’ office, proceed to the realty tax section, and present the OP with the latest official receipt (OR) and new tax declaration for new transferred properties.  
  1. The collection officer then computes the tax and how much you have to pay.  
  1. Make your payment at the casher upon validation of the OR for new transferred properties. 
  1. Receive your official receipt for the payment. Check to make sure that the payment is posted on the property tax card. 

How often should Philippine real property taxes be paid? 

The Philippine real property tax is paid annually. Real property taxes can be paid in full before January 31 of each year or through quarterly installments with deadlines as follows:  

  • Q1: On or before January 31  
  • Q2: On or before June 30  
  • Q3: On or before September 30  
  • Q4: On or before December 31 

What happens if you fail to pay real property taxes on time?

There will be consequences for not being able to pay your real property taxes on time. First, the penalty is imposed at 2% interest per month based on the unpaid amount and can reach up to a maximum of 72% if the taxes are unpaid for 36 months or three years.  

Second, if the taxes are still unpaid beyond 36 months or three years, the local government may take some legal actions such as auctioning off your property as a whole or in portions to satisfy the delinquency.  

Can you pay your real property tax in advance? 

Yes, it’s highly encouraged to do so. Some local government units eve offer tax discounts as incentives to those who pay their RPT before the deadline. Always aim to be a responsible property owner to not only possibly save on taxes with discounts but also to avoid costly penalties.

What are exempted from payment of real property tax in the Philippines?

These are some real properties that are exempt from tax, according to Section 234 of the Local Government Code:  

  1. Government-owned real property, except when beneficial use of the property is granted to a taxable person. 
  1. Lands, buildings, and improvements exclusively used for religious, charitable, or educational purposes.  
  1. Machineries and equipment actually, directly, and exclusively used by local water districts and government-owned or controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power.  
  1. All real property of registered cooperatives under Republic Act. No. 6938.  
  1. Machinery and equipment used for pollution control and environment protection.  

If you are unsure of your property’s exemption status, you can consult an official and secure a confirmation of exemption from the local government unit.

What is the tax declaration of real property in the Philippines?  

Declaration of Real Property (Tax Declaration) is a record and assessment document used as a basis for market and assessed values of property for the collection of real property tax. Other uses of the Declaration of Real Property include: 

  1. The zonal value of the property is based on the barangay where the property is located.  
  1. The tax declaration keeps track of prior ownership and is useful for “tracebacks” (when research is being done on a history of a property).  
  1. Assessment for the value of the improvement is also used by the Bureau of Internal Revenue when figuring out the zonal value of the property.  
  1. The Declaration of Real Property and Transfer Certificate of Title are important documents that show proof of ownership.  

What is the difference between estate tax and real property tax?

Estate taxes and real property taxes are two terms that sound about the same but are very different things and should not be confused with one another. The estate tax is a tax on the privilege to transfer one’s estate or property at the time of death to their heirs. This is done through a will or intestate succession (if a person dies without a will). A person’s estate includes both real estate and personal properties. 

On the other hand, real property tax is a tax on the value of the real property a person owns.  

What is the difference between real property and personal property?

As previously discussed, the differentiation between real property and personal property can be made simple: One is immovable and the other is not. Real property, or immovable property, is referred to as such because it adheres to the soil. Movable property, on the other hand, refers to personal property, which is either consumable or nonconsumable.  

We’ve laid out what are considered real property, so now it’s time to take a look at personal property. According to Articles 416 and 417 of the Civil Code, the following are considered to be personal property:  

  • Those movables susceptible of appropriation that are not considered real property under Article 415 
  • Real property that is considered as personal property by any special provision of law  
  • Forces of nature that are brought under control by science 
  • In general, all things that can be transported from place to place without impairment of the real property to which they are fixed 
  • Obligations and actions that have for their object movables or demandable sums  
  • Shares of stock of agricultural, commercial, and industrial entities (though these may have real estate)

Is real property tax the same as ‘amilyar?’

Yes! “Amilyar” is the colloquial term for real property tax. It’s taken from the Spanish word “amillaramiento,” which translates to the action and effect of tax assessment. So when you say you’re going to pay your amilyar, you’re addressing the effect of the tax assessment—the tax imposed. Remember this so that you won’t get confused when a local government official or a tax accountant approaches you about your amilyar.  

Final Word

Being a first-time homeowner or property owner can be overwhelming with a lot of responsibilities and obligations, foremost of which is paying your Philippine real property tax. The sooner you are able to calculate your taxes and pay them to avoid penalties, the sooner you will be able to settle into your new role and the better you will become as a property owner. That’s why at Enta.ph, we try our best to make your real estate and property ownership worry-free.  

Check out our blog to get more tips and detailed information on properties in the Philippines. Do you have other questions or comments about real property tax in the Philippines? Leave us a note! 

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