2/20/2017 WhatIsRealPropertyTax?

Lamudi

PHILIPPINES

WhatIsRealPropertyTax?
BYLamudi 26November2014 TipsandAdvice

InthispostforLamudiPhilippinesQ&A,wewilldiscussthelegalbasesforrealpropertytaxandhowtocomputeit.

Q:WhatIsRealPropertyTax?
A:WhentheLocalGovernmentCodewasenactedin1991,thegovernmentvestedpowertolocalgovernmentunits(provincesandthecitieswithinMetroManila)to

createtheirownrevenuesources.OneoftheserevenuesourcesistheRealPropertyTax(RPT)thetaximposedonallformsofrealproperty(land,building,

improvements,andmachinery).

Suchpower,however,isexercisedwithinthelimitationssetbytheCode,suchassettingaceilingandlimitsontaxrates,andthetaxbaseandvaluation.

Inaddition,exemptionisgiventorealpropertiesownedbythegovernment,charitableinstitutions,churches,cooperatives,thosethatareusedinthesupplyofwater

andelectricpower,andequipmentforpollutioncontrolandenvironmentalprotection.

Thebaseofthetaxortheassessmentlevel(thevaluefromwhichthetaxratewillbecomputed)isonlyafractionoftheactualmarketvalueofthelandhence,

thereisanundertaxationbuiltintothetaxstructure.However,thisiscompoundedbythedifferentassessmentlevelsdependingonlanduse.Forexample,a

residentialpropertyhasanassessmentlevelof20percent,whilethatforacommercialpropertyis50percent.

TocomputeforRPT,theRPTrateforthepropertyismultipliedbythepropertysassessedvalue.TheRPTrateis2percentforthecitiesandmunicipalityinMetro

Manilaand1percentforprovinces.

InadditiontothebasicRPTrate,theLGUmaylevyandcollectanannualtaxof1percent,whichshallbeaccruedtotheSpecialEducationFundoftheLGU.

Furthermore,theLGUmayimposea5percentadvaloremtaxonidlelands,whichisbasedontheassessedvalueoftheproperty.

Togettheassessedvalue,ontheotherhand,thepropertysfairmarketvalueismultipliedbytheassessmentlevel,whichisfixedthroughordinancesimposedby

theprovincialgovernmentorthecity/municipalgovernmentifthepropertyisinMetroManila.Theassessmentlevelcanbeashighas20percentresidentiallandtoa

highof50percentforcommercialproperties(showindetailinthefollowingslideshow).

TheRPTforanyyearshallaccrueonthefirstdayofJanuaryandfromthatdateitshallconstitutealienonthepropertywhichshallbesuperiortoanyotherlien,

mortgage,orencumbranceofanykindwhatever,andshallbeextinguishedonlyuponpaymentofthedelinquenttax.

http://www.lamudi.com.ph/journal/realpropertytax/ 1/4
2/20/2017 WhatIsRealPropertyTax?Lamudi

Ifyouhaveprioryearsdelinquencies,interests,andpenalties,yourRPTpaymentshallfirstbeappliedtothem.Oncetheyaresettled,yourtaxpaymentmaybe

creditedforthecurrentperiod.

Doyouhavequestionaboutpropertytobuyortorent?SendusanemailortweetLamudiPhilippinesusingthehashtag#AskLamudi

1of10

RealpropertytaxslideshowfromRodelAmbas

Typeandhitentertosearch

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