Rental Income: Non-resident foreigners who are engaged
in trade or business are taxed at progressive rates (5% to 32%) on their net
income. Rents above PHP10,000 (US$223) per month are also liable to VAT at 12%
of gross rent.
Capital Gains: Capital gains realized by non-resident
foreigners considered to be engaged in trade or business for tax purposes are
taxed at the standard progressive income tax rates (5% to 32%). Taxable gains
are the difference between selling price and acquisition cost of the property.
Inheritance: Non-resident foreigners pay estate tax only on property
located in the Philippines at rates from 5% to 20%.
Residents: Resident foreigners and non-resident citizens are taxed on
Philippine-sourced income. Resident citizens are taxed on their worldwide
income.
Transaction costs are very high in the Philippines
The total roundtrip cost of property purchase is around 16.23% to 23.75% of the property value, inclusive of Capital Gains Tax (6%) and Real Estate Agent's Fee (3% to 5%).
It takes about 33 days to go through the eight procedures needed to register a property in the Philippines.
Pre-selling, or the selling of units during construction, is the fashion nowadays.
The buyer should be careful when buying unfinished buildings or condominiums.
