Tax and Payment Verification
Learn how to verify real property tax payments, check for delinquencies, and confirm tax declaration details. Understand the importance of tax clearance in property transactions.
Checking Real Property Tax Payment Status
“There is hereby created a lien on the real property which shall be superior to any other lien, mortgage, or encumbrance of any kind whatsoever, and shall be extinguished only upon the payment of the delinquent tax, including any interest, surcharges, and penalties. Such lien shall be enforceable against the property whether in the hands of the delinquent owner or of any subsequent owner or possessor.”
What This Means
Real property tax (RPT or "amilyar") creates a SUPERIOR lien on the property. meaning it takes priority over ALL other claims, including bank mortgages. Unpaid RPT can lead to tax sale (government auction) of the property. Buyers must verify: (1) the tax declaration is current, (2) all RPT is paid up to date, and (3) the property is not subject to a pending tax sale. Request the latest Official Receipt of RPT payment and a Tax Clearance Certificate from the City/Municipal Treasurer.
- RPT lien is SUPERIOR to all other liens. even bank mortgages
- Unpaid RPT for 2+ years: property can be sold at public auction
- Request latest Official Receipt of RPT payment from seller
- Get Tax Clearance Certificate from City/Municipal Treasurer
- Check for pending tax sale notices at the Treasurer's Office
Real-World Scenario
Buyer Aquino is purchasing a lot in Cavite. The seller provides a 2022 RPT receipt as proof of payment. The current year is 2025. The property has a bank mortgage annotation.
What are the potential issues with this transaction?
Verifying the Tax Declaration
“It shall be the duty of all persons, natural or juridical, owning or administering real property, including the improvements therein, within a city or municipality to make, file and/or update their tax declaration. The owner or administrator of the real property or his duly authorized representative shall declare the true value of the property in the prescribed form.”
What This Means
The tax declaration is a document from the Assessor's Office that describes the property for taxation purposes. It contains: owner's name, location, lot/plan number, area, classification (residential, commercial, agricultural), assessed value, and market value for tax purposes. Compare the tax declaration against the title. the technical descriptions, area, and owner should match. Discrepancies could indicate: the property was subdivided, a portion was sold, improvements were added/removed, or the tax declaration belongs to a different property.
- Tax declaration is from the Assessor's Office (different from BIR)
- Must match the title: owner, area, lot number, technical description
- Check classification: residential, commercial, agricultural, industrial
- Compare assessed value vs. actual market value. affects RPT amount
- Undeclared improvements (buildings) may mean unpaid taxes
Real-World Scenario
A TCT shows a lot area of 500 sqm registered to "Spouses Santos." The tax declaration shows the same lot number but an area of 350 sqm and the owner as "Maria Santos" (single). There is a 2-story house on the property but the tax declaration only shows the lot. no improvement.
What discrepancies need to be resolved?
Understanding Property Assessment and Valuation
“All lands, buildings, and other improvements thereon shall be appraised at their current and fair market value, as provided for in the schedule of values prescribed by the provincial, city, or municipal assessor and approved by the local sanggunian. The assessed value of each class of real property shall be determined by applying the pertinent assessment level to its fair market value.”
What This Means
The tax declaration shows two values: (1) Fair Market Value (FMV). the Assessor's estimate of the property's worth based on the Schedule of Market Values, and (2) Assessed Value. a percentage of FMV based on the property classification. For residential: 20% assessment level; commercial: 50%; agricultural: 40%; industrial: 50%. The RPT rate (maximum 2% for cities, 1% for provinces) is applied to the assessed value. Understanding these values helps verify if the property is correctly classified and fairly assessed.
- FMV: Assessor's estimated market value per Schedule of Market Values
- Assessed Value = FMV × Assessment Level (varies by classification)
- Residential: 20% assessment level; Commercial: 50%
- RPT = Assessed Value × Tax Rate (max 2% for cities, 1% for provinces)
- An under-assessed property may face reassessment and back taxes
Real-World Scenario
A commercial lot in a city has a tax declaration showing FMV of P5,000,000 and assessed value of P1,000,000. The RPT being paid is P20,000 per year. The actual market value of the lot based on comparable sales is P25,000,000.
Is the current assessment correct and what risks does the buyer face?
Frequently Asked Questions
What is the penalty for late payment of real property tax?
Under Section 255 of the Local Government Code, delinquent RPT accrues interest of 2% per month on the unpaid amount, up to a maximum of 72% (36 months). After delinquency, the LGU can issue a warrant of levy and sell the property at public auction to satisfy the tax debt. The owner has a 1-year redemption period after the tax sale.
Can a buyer be held liable for the seller's unpaid real property taxes?
Yes. Under Section 257 of the LGC, the RPT lien follows the property regardless of ownership changes. If you buy a property with unpaid RPT, the lien attaches to you as the new owner. This is why tax clearance verification is essential before closing. the buyer should require a Tax Clearance Certificate or proof of full RPT payment before paying the seller.
What is the difference between the BIR zonal value and the Assessor's FMV?
The BIR zonal value is set by the Bureau of Internal Revenue for computing national taxes (CGT, DST). The Assessor's FMV is set by the local Assessor's Office for computing local real property tax. They are determined by different agencies using different methodologies and schedules. Often the BIR zonal value is higher than the Assessor's FMV, though both may be lower than actual market prices.