The transfer of real estate ownership in the Philippines involves a meticulous process that ensures the proper and legitimate conveyance of property rights. One crucial aspect of this procedure is the settlement of the required taxes and obtaining clearance from the Bureau of Internal Revenue (BIR). This article aims to provide a concise and comprehensive guide to the BIR requirements for the transfer of title in the Philippines.
1. Capital Gains Tax (CGT) or Creditable Withholding Tax (CWT)
Depending on the nature of the transaction (whether it's a sale of a capital asset or an ordinary asset), either the CGT or CWT must be settled.
Capital Gains Tax (CGT): This is a tax imposed on the presumed gains from the sale of a capital asset. For real estate properties, the CGT is 6% of the selling price, the BIR zonal value, or the assessed value of the property, whichever is highest. This is applicable for sellers who are not habitually engaged in the real estate business.
Creditable Withholding Tax (CWT): This tax is imposed on sales of ordinary assets. It's applicable for sellers who are considered habitually engaged in the real estate business. The rates vary depending on the selling price and the seller's tax status.
2. Documentary Stamp Tax (DST)
This tax is payable by the buyer and amounts to 1.5% of the selling price, the BIR zonal value, or the assessed value of the property, whichever is higher.
3. Certificate Authorizing Registration (CAR) or Tax Clearance (TCL)
Once the taxes are settled, the BIR will issue a Certificate Authorizing Registration (CAR) or a Tax Clearance (TCL), indicating that the required taxes for the transfer have been paid. This certificate is necessary for the final transfer of the property title in the Registry of Deeds.
4. Tax Identification Number (TIN)
Both the buyer and the seller must have a TIN. If either party doesn't have one, they must apply at the nearest BIR office.
5. Notarized Deed of Sale
The transfer starts with the execution of a Deed of Sale. This document should be notarized, which serves as authentic evidence of the transaction.
6. Official Receipts of Payment
You should keep official receipts of all payments related to the transaction, including the payment of the CGT or CWT, DST, and other related fees.
7. Clearance from the Homeowner’s Association
If the property is part of a subdivision or condominium, a clearance or certificate from the homeowner's or condominium association is usually required. This ensures that there are no outstanding dues or issues with the property being transferred.
8. Other documents
The BIR might also require other supporting documents, depending on the specific nature of the transaction, such as:
Copy of the Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT)
Latest tax declaration
Sworn declaration of "no improvement" if the sale only involves a vacant lot
Special Power of Attorney, if the person processing is not the owner
Conclusion
The process of transferring a title in the Philippines, while systematic, can be quite intricate. By understanding and preparing the necessary BIR requirements, you ensure that the process is executed seamlessly and that all obligations are met, guaranteeing the legitimacy of the transfer and securing the rights of all parties involved.
