When buying property, you don’t just consider the actual price. There are other expenses involved, mostly related to documentation and taxes.
It’s always best to seek professional advice from a real estate agent who knows and understands the market. An experienced RE/MAX agent can help answer your questions about purchasing property and the additional expenses you will incur. These additional expenses can be quite substantial and complicated. Thus, you will need expert advice and even representation for this.
Once you’ve zeroed in on the property, you can contact a broker or agent to represent you. Having a broker or agent represent you in a property purchase means a professional will take care of important details and aspects of the sale. Brokers and agents from RE/MAX will also use all their resources and knowledge to help you find the property you’re looking for at the price you want.
The broker or agent will also help you in other aspects of the sale, such as scheduling a site visit so you can inspect the property and talk to the seller if you choose to do so. The broker or agent will also give you a checklist of questions to ask and accompany you on the site visit. They are basically your teammate in this purchase, and it is their job to help you make informed decisions every step of the way.
After you’ve decided to purchase the property, the broker or agent will give you a quotation and inform you of the payment terms. You will need to put down a reservation fee if you are serious about your intent. After that, a down payment of 20% is usually expected from the buyer. The reservation fee is incorporated into this down payment.
Here are the other fees you will need to pay on top of those already mentioned:
This represents 1-2% of the property value. This amount will go to notarizing the Absolute Deed of Sale and other documents related to your purchase.
Local Transfer Tax
The Local Transfer Tax is usually around 0.50% of the property value for provincial properties and 0.75% for properties within Metro Manila. This is paid to the local government unit for transferring the ownership of the property from the seller to you.
This varies, but it usually starts at around 1% of the selling price. This is paid to the Register of Deeds in the LGU where the property is located.
This tax is imposed by the local government unit on the sale, donation, barter, or any other means of transferring ownership of a real property. The rate depends on the city where the property is located. In Metro Manila but it usually starts at 50% of 1% of the selling price of the property. This tax is paid to the treasurer’s office of the LGU.
Capital Gains Tax
This is one of the biggest amounts you will shell out, aside from that of the property price. The Capital Gains Tax represents 6% of the total selling price, zonal value, or fair market value of the property, whichever is higher. This payment is made to the Bureau of Internal Revenue office where the property is located;
These include certification fees to be paid to the BIR or to the LGU and the expenses you will incur in copying documents.