Who Should Pay for the Transfer of Tax Declaration When Buying Land?

Simplified Question: Is the buyer responsible for paying the costs to transfer the tax declaration after purchasing land?

In the Philippines, when transferring ownership of real property, several steps and fees are involved, including the transfer of the Tax Declaration. The payment responsibility for the transfer of the Tax Declaration, while not explicitly outlined by law, is typically negotiated between the buyer and the seller. However, it is common practice for the buyer to shoulder the cost of the transfer. Here's an overview of the key points involved:

1. What is a Tax Declaration? A Tax Declaration is a document issued by the local government that records the value of the real property (land and any improvements on it) for taxation purposes. It serves as the basis for determining property taxes payable by the property owner.

2. Process of Transferring the Tax Declaration: After purchasing land, the transfer of the property title needs to be completed first, followed by the transfer of the Tax Declaration to the new owner’s name. The process generally involves the following steps:

   • Step 1: Payment of Capital Gains Tax and Documentary Stamp Tax: The seller usually pays the Capital Gains Tax (6% of the selling price or zonal value, whichever is higher), while the buyer pays the Documentary Stamp Tax (1.5% of the selling price or zonal value).

   • Step 2: Transfer of Title: The buyer must submit the required documents (Deed of Sale, proof of tax payments, and other necessary documents) to the Registry of Deeds to transfer the title into their name.

   • Step 3: Transfer of Tax Declaration: Once the title is transferred, the new owner must apply for the transfer of the Tax Declaration at the local assessor’s office. The buyer typically shoulders the fees for this process.

3. Who Pays for the Transfer of the Tax Declaration? While it is common for the buyer to pay for the costs associated with the transfer of the Tax Declaration, it is important to note that this responsibility is subject to agreement between the buyer and the seller. The parties can negotiate who will shoulder the expenses, which may include fees for notarization, processing, and other administrative costs.

4. Associated Costs: The fees involved in transferring the Tax Declaration may vary depending on the location of the property, its value, and the local government’s regulations. It usually includes administrative fees and may also require the settlement of any outstanding real property taxes before the transfer can be completed.

5. Importance of the Transfer: Transferring the Tax Declaration is essential for the new owner to reflect their ownership of the property with the local government. Failure to do so can lead to complications in the future, such as issues with property taxes or potential disputes regarding ownership.

In conclusion, while the law does not strictly require the buyer to pay for the transfer of the Tax Declaration, it is often a customary practice in the Philippines. The terms of who bears the cost can be discussed and agreed upon during the sale negotiation.