A Real property tax is a tax imposed on real properties such as lands, buildings and other improvements and machineries. The real property tax rates would depend on the location of the real property. The imposition of tax rates is subject to the following ceiling:
- Provinces- Not exceeding 1% of the assessed value of the real property; and
- Cities or Municipalities within the Metro Manila Area- Not exceeding 2% of the assessed value of the real property.
Real property tax is based on the assessed value of the real property. The assessed value is computed by multiplying the fair market value of the property by the assessment level. The assessment level is fixed by ordinance of the local Sanggunian depending on the actual use of the property, at rates not exceeding the following:
- LAND
CLASS | Assessment Levels |
1. Residential | 20% |
2. Agricultural | 40% |
3. Commercial, Industrial and Mineral | 50% |
4. Timberland | 20% |
- BUILDINGS AND OTHER STRUCTURES
Rate progresses directly with the Fair Market Value as follows:
CLASS | Assessment Levels |
1. Residential | 0% for those with FMV of P175, 000.00 or less to 60% for those with FMV of more than P10 million |
2. Agricultural | 25% for those with FMV of P300, 000.00 or less to 80% for those with FMV of more than P10 million. |
3. Commercial/ Industrial | 30% for those with FMV of P300, 000.00 or less to 80% for those with FMV of more than P10 million. |
4. Timberland | 45% for those with FMV of P300, 000.00 or less to 70% for those with FMV of more than P2 million. |
- MACHINERIES
CLASS | Assessment Levels |
1. Agricultural | 40% |
2. Residential | 50% |
3. Commercial and Industrial | 80% |
- SPECIAL CLASSES
ACTUAL USE | Assessment Levels |
1. Cultural | 15% |
2. Scientific | 15% |
3. Hospital | 15% |
4. Local Water Districts | 10% |
5. GOCCs engaged in the supply and distribution of water and/or generation and transmission of electric power | 10% |
Provinces, city or municipality within the Metro Manila Area may levy and collect the following taxes in addition to real property tax:
- Special Education Fund Tax of 1% based on the assessed value;
- Idle Lands Tax of up to 5% based on the assessed value;
- Special Levy of up to 60% of the actual cost of such projects and improvements;
- Other Impositions:
- Socialized Housing Tax of ½ of 1% based on the assessed value of all lands in urban areas in excess of P50, 000.00
- Tax on Transfer of Real Property Ownership
The following properties are exempted from paying Real Property Tax:
- Real property owned by the Republic of the Philippines or any of its political subdivisions, except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person;
- Charitable institutions, churches, parsonages, or convents appurtenant thereto, mosques, non-profit or religious cemeteries, and all lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable or educational purposes;
- All machineries and equipment that are actually, directly and exclusively used by local water districts and government-owned or–controlled corporations (GOCCs) engaged in the supply and distribution of water and/or generation and transmission of electric power;
- All real property owned by duly registered cooperatives as provided for under RA 6938; and
- Machinery and equipment used for pollution control and environment protection.
Real property tax can be paid once for the whole year or four (4) times in equal installments. For taxpayers who opt to pay for one whole year, payment is due on or before January 31 of each year. For those paying in installment, the following is the deadline per installment:
1st Installment on or before March 31
2nd Installment on or before June 30
3rd Installment on or before September 30
4th Installment on or before December 31.
Normally, taxpayers who pay real property tax in full within January are given real property tax discounts depending on the allowed rate in the LGU of the taxpayer. Real property tax can be paid at the Treasurer’s Office of the LGU. Failure to pay real property and other taxes due will make the taxpayer pay for penalties. He shall pay for an interest of 2% per month based on the unpaid amount. The maximum number of months is 36 months thus, a taxpayer may be subjected to an interest up to 72%.
Reference:
www.ntrc.gov.ph Guide to Philippine Taxes: Chapter XI