Getting a new property can be very exciting. If you are buying your first condo, you could be so excited that you are already looking for home decor and what color motif to decorate your new home.
While all that is fine and dandy, remember that the financial aspect of acquiring a new property should be the top priority before putting all your hard-earned money in your lovely home.
After carefully reviewing the monthly amortization and when you have determined that it is well within your financial capacity, it is important to consider how much fees goes on even after you have fully paid your condo unit. The sad news is, as the monthly dues are a communal fee shared by the residents, the pot, or the ‘reserved funds’ sometimes fall short because repairs or maintenance becomes too much to be covered by the budget. Sometimes the population of occupants are not enough to split these fees.
These are monthly payments paid by the unit owner or tenant for the entire operational expenses of the entire building. This covers security, janitorial services, administration and management, etc. Some developers make unit owners become automatic residential members once the title is fully transferred and the Deed of Sale is signed. Note that Association Dues are subject to Value Added Tax (VAT).
While some providers make unit owners automatic members, others may charge membership fees separately, in order to have full use of amenities such as the pool, spa, gym or sports complex. Be wise and ask to be informed of the specific scope and limitations of the fees in your contract.
In Sec. 5 of Resolution No. 770 series of 2004 Framework for Governance of Homeowners Association, it is prescribed that membership should always remain voluntary, unless otherwise stated in the contract, Deed of Sale or property title.
You will be surprised that at prime locations such as Makati, a 9,000 sq. m. Parking lot may cost from Php 400,000 – Php 500,000. At the Fort, parking lots sell from Php 600,000 – Php 1M.
Seeing that a parking space may cost one-third of your purchased condo unit, perhaps renting a parking space would be a lot wiser. Rental rates may range from Php3,000 – Php10,000. Ask the property office for some condo owners renting out their parking slots.
Yes, this may sound odd, after all the commissions that the broker is already enjoying. The broker’s fee could be anywhere from 3% - 5% of the gross selling price of the property, so you may want to crack up on your negotiation skills when doing business with a real estate broker.
Simply put, taxes are government-mandated fees charged to businesses and individuals to help fund the sustainability of a nation.
Depending on the transaction, taxes may be minimal to highly significant. In real estate, taxes are one of the major considerations before making a purchase to ensure that your financial capacity will be sustained for as long as monthly payments and taxes are concerned. Here’s a look at some of the basic taxes that you need to consider in the equation.
Documentation Stamp Tax
These are taxes on documents, instruments, loan agreements and papers as evidence that the sales or transfer is completed and accepted by both seller and buyer.
In real estate, the rate is 1.5% based on the highest selling price among the selling price, Bureau of Internal Revenue (BIR) Zonal Value and assessed value by the provincial city assessor.
Property tax is a tax applied on real estate. This is not to be confused with Real Property Tax or RPT. Real Property tax is just one of the kinds of taxes under Property Tax. RPT rate for Manila and its municiplalities is 2% while in provinces, its 1%. Assessment value is determined by
For residential properties, property tax is rated at 20% of the assessment level (base value) of the property. It is assessed by local and municipal governments.
Real property tax is paid by the owner annually and is paid to the Local Government Unit (LGU) covering the jurisdiction of the property. This is usually at the municipal hall. Paying your property tax in advance usually earns you discounts, while late payments will incur penalties.
For example 1, your condo unit's Fair Market Value is Php 1M located in Manila. The Assessment Level is 35% and RPT is 2%.
To compute for Real Property Tax, first get the Assessment Value:
Php 1,000,000 X 35% = Php 350,000 (Assessment Value)
Php 350,000 X 2% (RPT for Manila) = Php 7,000 (RPT)
For example 2, your house Fair Market Value is Php 600000 located in provice. The Assessment Level is 25% and RPT is 1%.
Php 600,000 X 25% = Php 150,000 (Assessment Value)
Php 210,000 X 1% = Php 1,500 (RPT rate)
RPT = RPT rate X Assessment Value
For more details on computation please visit http://www.foreclosurephilippines.com/real-property-tax-rpt-philippines/#What_is_Real_Property_Tax. Please note that the municipality covering the jurisdiction of the proper has a designated assessor who specializes in conducting assessments and computations for such transactions. When all else fails, feel free to consult a financial lawyer specializing in taxation and real estate to make sure that you are making a fully informed decision when making a big investment.