Becoming a property owner is a privilege that not everyone has and it is a huge achievement in one’s life. Although there are certainly perks and advantages of becoming a property owner, you also have some obligations to answer to once you become a property owner.
One of those obligations would be your obligation to the country to pay tax, and, in this specific case, your real estate tax also known as real property taxes or RPT.
If you’re about to be a property owner, are a property owner, or are planning to become one, then it’s a good idea to know how to pay your real estate taxes. Before we start covering that, let’s first define what real property tax is.
What is Real Property Tax?
Real property tax, a.k.a. real estate tax, is a tax due to property owners that they pay their local government units or LGUs based on where their property is. According to the Local Government Code of the Philippines, LGUs can impose this tax annually on the real properties of those within their population so that they can have more funds for their public works or projects.
Is Real Property Tax and Amilyar the same?
You might be familiar with the term amilyar and not have known that it refers to real property tax. Yes, these two are the same.
The history of this term comes from when the Philippines was under Spanish rule. The datu of a specific area would charge its jurisdiction of taxes (or amillaramiento originally) for the protection of those within their jurisdiction.
Is Estate Tax the same as Real Property Tax?
Although “real estate tax” is another term for real property tax, estate tax itself is completely different from real property tax.
Estate Tax is the tax imposed on a person (specifically the descendent) who will be inheriting an estate from someone else after the latter’s death. It is a tax imposed on the act of being able to transfer the estate to the descendant based on the value of the estate that they get which you pay to the Bureau of Internal Revenue (BIR).
On the other hand, as mentioned above, RPT or real property tax is one you pay for the property you own within a specific locality. You pay that to your LGU.
Who is exempted from paying Real Property Tax?
There are some people who are exempted from having to pay RPT. These are the following:
- Charitable Institutions: This includes churches, educational institutions, mosques, convents, and other institutions that are for religious, charity, or educational use.
- Machineries and Equipment: These are institutions that engage in local water or electrical distribution, generation, or transmission. Machineries and equipment from persons that use it for pollution control and environmental protection also apply.
- Real property that the duly registered cooperatives own or the government owns
If you think you apply to any of these, you have to make sure that you register for exemption from the tax.
How Much Does Real Property Tax Cost in the Philippines?
Now that you know more about the fundamentals of real property tax, it’s time to know how much it would cost you.
The tax rate of real property tax depends on the assessed value of the property in mind. It also depends on the location of the property.
If your property is in the provinces, then the RPT rate is 1%. However, if the property is in Metro Manila, then the RPT rate is 2%.
The overall RPT that you have to pay would then be your RPT rate multiplied by the assessed value of your property based on the fair market value of your property. So, it will be:
Real Property Tax Rate Assessed Property Value = Real Property Tax
The assessed value of your property is based on specific levels and it pertains to the taxable value of your property. It depends on the assessment level of your property based on specific ordinances that depend on the property’s location and usage. The assessment level of your property is ordained by the Local Government Code of the Philippines as well.
Real Property Tax Payment Deadlines
After finding out how much you have to pay, the next step is to identify when exactly you have to pay the taxes since you want to pay on time to avoid penalties.
As mentioned earlier, you pay this once a year. However, you can have different ways of paying this off: in full or quarterly.
If you’re paying it in full, then you pay the taxes before January 31st of the year. If you’re paying it quarterly, then the deadline for each quarter would be the following:
- First Quarter or Q1 Deadline: March 31st
- Second Quarter or Q2 Deadline: June 30th
- Third Quarter or Q3 Deadline: September 30th
- Fourth Quarter or Q4 Deadline: December 31st
You will need a valid ID, a copy of the most recent tax declaration, and copies of the official receipt are needed for you to complete your payment. If it’s your first time paying, then you can get the tax declaration and official receipts from the previous owner or the developer of the property.
How to Pay Real Property Tax in the Philippines
It’s time for you to start the step of paying off your real property taxes. Let’s first begin by identifying the channels of payment for your RPT.
What are the requirements when paying your Real Estate Tax?
Here are some of the requirements that you might need to bring with you, especially if you plan on paying your RPT physically:
- Valid ID
- Most recent official receipt of real estate tax payment
- Property title
- Number of your tax declaration
You will especially need to bring these documents with you if you are paying for the first time.
Where can you pay Real Property Tax in the Philippines?
Luckily, nowadays, there are multiple ways to pay off your real property tax and one doesn’t even involve you stepping foot in your locality’s city hall. You can pay it off online nowadays, but you can still go to the city hall to do it if you want.
Paying Real Property Tax Online
Paying your RPT online is the most convenient way of doing it. There are quite a few LGUs that have opted to create online portals to make it more convenient to pay RPTs online for their property owners, so make sure that you check the official websites of your local municipality to see if they have these online payment portals for RPT payments.
After you find one, you can then either register or simply follow the instructions and then pay off your taxes using officially accepted payment channels.
Paying Amilyar Through Your City Hall
If you have to pay your amilyar through the city hall, you can either do so at the LGU’s Treasurer’s Office or the designated payment centers of your LGU. Here are some step-by-step instructions on how to pay your real property taxes through the city hall:
- Prepare the documentary requirements we’ve listed above and bring them to the city hall.
- Proceed to the specific window designated for assessing the property tax payment that you need to make. You can ask the staff there if there are no specific windows that you can identify that can assess your real property tax dues. This step should tell you how much you owe.
- Go to the billing window or cashier to pay your real estate tax.
- Wait for the official receipt of payment as proof because you need to bring that with you for next year.
After that, you should be done with it until next year, unless you’re paying it quarterly, then you will have to do this every quarter.
How to Get Your Real Property Tax Declaration
When you have to pay your RPT for the first time, they will ask you for the Real Property Tax Declaration. Before you learn how to get it, let’s first briefly cover what it is.
What is a Real Property Tax Declaration?
The real property tax declaration shows specific details about your property, such as the market and assessed value of your property. You will need this information for when you have to pay your RPT because this is a part of the computation of your dues. This record of your property is something that your municipality is keeping.
What You’ll Need to Get Your Real Property Tax Declaration
To claim your real property tax declaration, you will need to bring the following with you:
- BIR Tax Clearance Certificate
- Certified True Copy of Title
- Certificate Authorizing Registration
- Valid ID (and photocopies of Valid ID)
- Updated Real Property Tax Payment
- Sworn Statement of True and Fair Market Value of the Property
There are going to be more documentary requirements that you’ll need to bring with you, but it differs between municipalities. Therefore, it’s better to ask directly rather than waste time going back and forth only to find that you don’t have all the documents with you.
Aside from these documents, you might need to pay the following fees:
- Filing fee
- Annotation fee
- Registration fee
- Miscellaneous fees
The fees also differ depending on various factors so keep that in mind when claiming your tax declaration.
Steps for Getting Your Tax Declaration of Real Property
Once you’re ready to get your real property tax declaration, here are the steps you will take:
- Get your documents and submit them. It will take a few days because your property will need assessment and verification. The Municipal Clerk will let you know when you should come back to their office.
- If the assessments and verifications are successful, they will then proceed with the process. You will then have to pay processing fees and more.
- The documents will then be signed for approval after the Appraiser Inspection Report is complete. They will then encode that into the LGU’s system.
- They should hand you your real property tax declaration there.
Other FAQs About Real Property Tax in the Philippines
Here are some of the other frequently asked questions regarding real property taxes in the Philippines and the answers to them.
What happens if you don’t pay real property tax?
If you don’t pay real property taxes and the local government unit finds out, they will have to get administrative action against you. They could impose a levy on you or get judicial action against you. They can even auction off your property in the very worst possible scenario.
Instead of going through all of that and risking losing a lot more than just money, it’s better to do your duty and pay your real property taxes.
How much is the penalty for late payment of real property taxes?
You can pay your real estate taxes still even if the deadline has passed, but there are penalties imposed for late payments. You will have to pay an additional 2% interest charge for the unpaid amount of your real estate taxes for each month that you missed payment. The maximum penalty is 72% for up to three years or 36 months.
If you haven’t been able to pay your real estate taxes for the past few months or are late, then you might want to check if there are any tax amnesty programs available in your area. That way, you might be able to avoid having to pay interest or fines for late payments.
If there are penalties for late payments, LGUs also usually provide incentives for people to pay their real property taxes early. If you opt to pay yours off early way before the deadline, then you might get a 10% to 20% tax reduction depending on your LGU. Therefore, it might be worth your time to pay your taxes off early.
How long can you go without paying real estate taxes?
As mentioned earlier, the maximum late penalty charge that you can get for unpaid real property taxes would be 36 months or three years. Once you go over that, then your property could now be under the rule of your LGU. They can take it from you by auctioning it off or pursue civil action against you.
What is the purpose of the real estate tax?
Your LGUs use the money that they get from your real estate tax for the betterment of your area. A part of it goes to smaller parts of your municipality, such as within the barangay or even the village where your property is.
Since you use the public roads that the municipality manages, as well as other facilities, such as local hospitals and schools, paying real estate tax is your way of continuing support for the operation of these key institutions and infrastructure within your locality. That’s the main purpose of paying off real estate taxes.
Can you use a Real Property Tax Declaration as conclusive proof of ownership of a property?
A common misconception of people is that if you have tax declarations of the real property then that’s proof of ownership over a certain property. However, that is not considered conclusive proof that you are the owner of the property.
What your real property tax declaration can show, though, is that you have a claim of title over the property. More conclusive proof of ownership would be the True Copy of the Transfer Certificate Title of the property.
Taxes can be quite a headache and expensive, but they are our duty to fulfill as citizens of the Philippines. Learning more about real property taxes helps empower you so that paying your taxes doesn’t feel as intimidating, and you can exert your rights freely as a citizen of the country and a property owner.
Whether you’re a current property owner or a future one, this article will surely help you get a better grasp of real property tax. Good luck and make sure to pay on time.