Transfer Tax and Registration Fees
Understand the local transfer tax under the Local Government Code, Registry of Deeds registration fees, and other costs required to complete property title transfer.
Local Transfer Tax Rates
“The province may impose a tax on the transfer of real property ownership at a rate of not more than fifty percent (50%) of one percent (1%) of the total consideration involved in the acquisition of the property or of the fair market value in case the monetary consideration involved in the transfer is not substantial, whichever is higher. The sale, donation, barter, or on any other mode of transferring ownership or title of real property is taxable.”
What This Means
The local transfer tax is imposed by the LGU (city or municipality) on every transfer of real property ownership. For provinces, the maximum rate is 50% of 1% (0.50%). For cities and municipalities within Metro Manila, the rate can be up to 75% of 1% (0.75%) under Section 151. This tax is separate from and in addition to national taxes (CGT, DST). The tax base is the total consideration (selling price) or fair market value, whichever is higher. the same principle used for national taxes.
- Provincial rate: up to 50% of 1% (0.50%) of higher value
- Metro Manila cities: up to 75% of 1% (0.75%) under Section 151
- Tax base: selling price or FMV, whichever is higher
- Paid to the City/Municipal Treasurer's Office
- Required before Registry of Deeds will process the title transfer
Real-World Scenario
A house and lot in Quezon City is sold for P10,000,000. The assessed value is P8,000,000 and the zonal value is P9,500,000. Quezon City imposes the maximum transfer tax rate allowed.
How much is the local transfer tax?
Registry of Deeds Registration Fees
“For registration of any deed, conveyance, mortgage, lease, or other instrument affecting land registered under the Land Registration Act or under the Spanish Mortgage Law, or any interest therein, the Register of Deeds shall collect fees in accordance with a schedule to be prepared by the Administrator of the Land Registration Authority with the approval of the Secretary of Justice.”
What This Means
The Registry of Deeds charges registration fees based on a schedule that varies by the value of the property or consideration. These fees cover the issuance of a new Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) in the buyer's name. The fees are computed on a sliding scale. higher-value properties pay proportionally more. Additional fees include annotation fees, entry fees, and certification fees. These costs are typically borne by the buyer.
- Registration fee is based on a sliding scale set by the LRA
- Covers issuance of new TCT/CCT in buyer's name
- Additional fees: annotation, entry, certification, and IT fees
- Typically paid by the buyer (unless contract says otherwise)
- Processing time: usually 1-4 weeks after complete documents are submitted
Real-World Scenario
Buyer Lopez just paid the CGT, DST, and transfer tax for her newly purchased condominium unit worth P6,000,000. She goes to the Registry of Deeds to have the title transferred but is told she needs to pay additional registration fees.
What fees should Buyer Lopez expect at the Registry of Deeds?
Tax Clearances Required for Title Transfer
“No registration of any deed or instrument transferring real property shall be effected by the Register of Deeds unless the Commissioner or his duly authorized representative has certified that the transfer has been reported, and the tax due thereon, if any, has been paid.”
What This Means
Before the Registry of Deeds will register the transfer, three tax clearances must be obtained: (1) CAR (Certificate Authorizing Registration) from the BIR. proving CGT/CWT, DST, and any VAT have been paid, (2) Transfer Tax Clearance from the local Treasurer's Office, and (3) Real Property Tax Clearance from the Assessor's Office (proving no unpaid real property taxes). Missing any one of these stops the transfer process. The CAR alone typically requires 5-15 working days to release.
- CAR from BIR: proof that CGT/CWT, DST, and VAT are paid
- Transfer tax clearance: from City/Municipal Treasurer
- Real property tax clearance: no unpaid annual real property taxes
- All three must be presented to the Registry of Deeds
- CAR processing: typically 5-15 working days after filing
Real-World Scenario
Attorney Cruz is processing a title transfer for his client. He has paid the CGT and DST and obtained the CAR from BIR. He also paid the local transfer tax. When he submits to the Registry of Deeds, the registrar refuses to process the transfer.
What is likely missing from Attorney Cruz's submission?
Frequently Asked Questions
Who pays the local transfer tax. buyer or seller?
The Local Government Code imposes the transfer tax on the "person who acquired the property". meaning the buyer is the statutory taxpayer. However, in practice this is negotiable and the contract of sale may allocate it differently. Many transactions split it or assign all transfer costs to one party by agreement.
What is the total tax cost of a real estate sale in the Philippines?
For a capital asset sale, the seller pays: CGT (6%) + DST (1.5%) = 7.5% of the higher of selling price or FMV. The buyer pays: Transfer tax (0.50-0.75%) + Registration fees (sliding scale). For ordinary asset sales, replace CGT with CWT (1.5-5%) + income tax on the gain + possible 12% VAT. Total cost typically ranges from 8-12% of the property value.
Can I transfer a title without paying all the taxes first?
No. The BIR will not issue a CAR until all national taxes (CGT/CWT, DST, VAT) are paid. The Registry of Deeds will not register the transfer without the CAR, transfer tax receipt, and real property tax clearance. There is no legal way to transfer a registered title without full tax compliance. Attempting to circumvent this (e.g., through unregistered deeds) creates legal risks for both parties.