Disclaimer: The following information is provided for general informational purposes only and does not constitute legal advice. While every effort has been made to ensure accuracy, laws and procedures in the Philippines may change over time. You should consult a qualified attorney or contact the Bureau of Internal Revenue (BIR) and the relevant government offices for the most up-to-date information and advice tailored to your specific situation.

Overview

When buying real property in the Philippines, the purchaser (and in certain cases, the seller) must comply with the Bureau of Internal Revenue (BIR) requirements to successfully transfer and register the property under the new owner’s name. Compliance generally involves paying applicable taxes, obtaining the BIR’s Certificate Authorizing Registration (CAR) or electronic Certificate Authorizing Registration (eCAR), and proceeding with the local government and Registry of Deeds processes.

This article provides a comprehensive discussion of all the crucial steps, taxes, deadlines, and documentary requirements for registering purchased property in the Philippines, focusing on the BIR’s rules and procedures.

Key Taxes and Their Applicability

Capital Gains Tax (CGT)
- When it applies: CGT applies to sales, exchanges, or other dispositions of real property classified as capital assets (generally, real property not used in business or trade) located in the Philippines.
- Rate: Typically 6% of the gross selling price or the fair market value (whichever is higher).
- Who pays: By default, the seller is liable for CGT, but it’s not unusual for parties to agree otherwise. Check your Deed of Sale for clarity.
Creditable Withholding Tax (CWT)
- When it applies: If the real property is held as an ordinary asset (e.g., property used in trade/business, real estate dealers, developers, or lessors), a different tax regime applies. Instead of CGT, a Creditable Withholding Tax is withheld by the buyer.
- Rate: The rate varies depending on the classification of the seller and the property (1.5%, 3%, 5%, or higher), based on the selling price or the fair market value, whichever is higher.
Documentary Stamp Tax (DST)
- When it applies: All transfers of real property are subject to Documentary Stamp Tax.
- Rate: ₱15.00 for every ₱1,000.00, or a fraction thereof, of the consideration or fair market value of the property (whichever is higher).
- Who pays: Under Philippine law, the buyer typically shoulders the DST unless the parties agree otherwise.
Transfer Tax (Local Government)
- This is not a BIR tax but a local government unit (LGU) tax. Once you have paid the national taxes and secured the BIR clearance (CAR/eCAR), you will pay transfer tax to the provincial or city treasurer’s office. Rates generally range around 0.50%–0.75% of the property value, depending on local ordinances.

BIR Registration Process: Step-by-Step

1. Preparation of Documents

Before heading to the BIR, gather all necessary documents. It is crucial to have complete documentation to avoid delays. Commonly required documents include:

Notarized Deed of Absolute Sale (or other similar instrument, e.g., Deed of Sale with Assumption of Mortgage, Deed of Exchange)
Certified True Copy of the Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT)
Tax Declaration of the real property (land and improvements), usually obtained from the Assessor’s Office
Seller’s and Buyer’s Tax Identification Number (TIN) and government-issued IDs
Payment documents (proof of payment of taxes, if you are paying or have paid in advance)
Duly accomplished BIR Forms relevant for CGT/CWT (e.g., Form 1706 for CGT or Form 1606 for Withholding Tax) and DST (Form 2000–OT or applicable DST form)

Depending on the specific transaction, additional documents may be required (e.g., Secretary’s Certificate for corporate sellers, special power of attorney if transacted through an attorney-in-fact, or extra notarization requirements).

2. Determining Applicable Taxes

Capital Asset vs. Ordinary Asset: Confirm whether the property is a capital asset or an ordinary asset. This distinction dictates whether you use BIR Form 1706 (for CGT) or BIR Form 1606 (for CWT).
Correct Valuation: Determine which is higher—(a) the sales price stated in the Deed of Sale or (b) the zonal value or (c) the fair market value as determined by the local assessor. The tax computation must always be based on the higher value.

3. Filing and Payment

File the appropriate BIR Form with the Authorized Agent Bank (AAB) or the BIR Revenue District Office (RDO) where the property is located or the taxpayer is registered.
Pay the corresponding CGT/CWT on or before the specified deadlines:
- CGT: Must be filed and paid within 30 days after the sale or disposition.
- CWT: Must be remitted and filed on or before the 10th day of the month following the transaction, or as specified under the withholding tax regulations.
Pay the Documentary Stamp Tax (DST) using BIR Form 2000–OT (or other designated DST forms). The deadline is also within 5 days after the close of the month the Deed of Sale was executed.

4. Submission of Documents and Application for CAR/eCAR

Once you have paid the taxes, proceed to the BIR’s Revenue District Office (RDO) that has jurisdiction over the property. Submit:

Proof of Tax Payments (CGT/CWT and DST), such as the validated BIR forms and payment slips.
Original and photocopies of the notarized Deed of Sale.
Original and photocopies of the Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT).
Tax Declaration(s) (for land and improvements).
Any additional documents the RDO may require.

The BIR will evaluate your documents to ensure proper payment and compliance. Once satisfied, the BIR will issue the Certificate Authorizing Registration (CAR) or the electronic Certificate Authorizing Registration (eCAR). This certificate is your clearance from the BIR to register the property with the Registry of Deeds.

5. Processing at the Registry of Deeds

With the CAR/eCAR in hand, you will proceed to the Registry of Deeds (RD) that has jurisdiction over the property’s location. Requirements generally include:

Original Owner’s Duplicate Copy of the Title
Notarized Deed of Sale
BIR CAR/eCAR
Proof of Payment of Transfer Tax (official receipt)
Real Property Tax Clearance (to show that there are no outstanding taxes due on the property)

The Registry of Deeds will process the transfer of title. Once approved, a new Transfer Certificate of Title (for land) or a new Condominium Certificate of Title (for condo units) will be issued under the buyer’s name.

6. Updating the Tax Declaration at the Local Assessor’s Office

After obtaining the new title, the final step is to update the Tax Declaration at the municipal or city Assessor’s Office. This ensures the property tax records reflect the new owner’s name. Required documents usually include:

Newly issued Transfer Certificate of Title (certified true copy)
Deed of Sale
BIR CAR/eCAR
Official Receipt for Transfer Tax Payment
Previous Tax Declaration

The assessor’s office will then issue a new Tax Declaration in the buyer’s name.

Deadlines and Penalties

Capital Gains Tax / Withholding Tax Filing Deadline: Within 30 days from the date of sale or disposition.
Documentary Stamp Tax Filing Deadline: Within 5 days after the close of the month when the Deed of Sale was executed.
Penalties: Late filing or payment results in surcharges, interest, and compromise penalties, which can be significant.

Practical Tips

Verify Title Authenticity Early: Before paying, confirm that the title is clean (i.e., no adverse encumbrances) and that the seller is the rightful owner.
Check Zonal Values: Zonal values are published by the BIR and may differ from assessed values or market prices. Always inquire at the BIR or check their website for updated zonal values.
Use the Correct BIR Form: CGT (BIR Form 1706) for capital assets, or CWT (BIR Form 1606) for ordinary assets. Mistakes in filing can cause delays and possible penalties.
Pay the Correct Amount: Always pay based on the highest value among the sales price, zonal value, or assessed value. Underpayment can lead to deficiency assessments later on.
Keep Detailed Records: Retain notarized copies, official receipts, validated tax forms, and other pertinent documents in a safe file.
Consult a Professional: If you are unsure about tax computations or legal requirements, consider engaging a lawyer or a tax consultant who specializes in real estate transactions.

Common Questions

Can the buyer pay the Capital Gains Tax on behalf of the seller?
Yes, although traditionally the seller is liable for CGT, the parties may mutually agree otherwise. The important part is that the tax is paid on time.
What if the seller is a corporation or real estate dealer?
If the property is classified as an ordinary asset, the applicable tax would be a creditable withholding tax (CWT) rather than CGT. Always confirm the nature of the property to determine the correct tax regime.
How long does it take to get the eCAR from the BIR?
Processing times vary by RDO and the completeness of your documentation. Under normal circumstances, it may take anywhere from a few days to a few weeks.
What is the difference between the CAR and eCAR?
The eCAR is simply the electronic version of the Certificate Authorizing Registration. It streamlines verification and helps prevent fraud. Some RDOs still use physical CAR documents, but most are transitioning to eCAR.
Are there special tax rules for foreclosed or auctioned properties?
Yes, special rules and additional documentation might apply for properties sold in foreclosures or public auctions, often involving the financial institution that foreclosed on the property. It is best to consult the BIR or a legal professional.

Conclusion

Registering purchased property in the Philippines requires strict compliance with BIR requirements, particularly in the payment of Capital Gains Tax (or Creditable Withholding Tax) and Documentary Stamp Tax, alongside other local taxes. Securing the BIR Certificate Authorizing Registration (CAR/eCAR) is critical before title transfer at the Registry of Deeds and updating the Tax Declaration at the local assessor’s office.

By following the step-by-step procedure—ensuring timely filing, correct tax payments, and submission of complete documentation—you can efficiently navigate the property registration process and secure full legal ownership of your newly purchased property in the Philippines.

Note: For personalized guidance and the most accurate, current regulations, you should always consult with the relevant BIR Revenue District Office, a licensed attorney, or a certified public accountant specializing in real property transactions.