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REAL PROPERTY TAXATION
by Atty. Rey Cartojano, REC, REA, REB
Maya Bandolon-Cartojano, REC, REA, REB
www.cartojanorealty.com
11/27/2015
Real Property Tax
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What is Real Property Tax?
Tax on real property
Imposed by the Local Government Unit (LGU)
Based on Local Government Code (R.A No. 7160)
The RPT for any year shall accrue on the first day of
January and from that date it shall constitute a lien on
the property which shall be superior to any other lien,
mortgage, or encumbrance of any kind whatever, and
shall be extinguished only upon payment of the
delinquent tax.
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11/27/2015
Real Property Tax
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What is Real Property Tax?
If you have prior years delinquencies, interests, and
penalties, your RPT payment shall first be applied to
them. Once they are settled, your tax payment may be
credited for the current period.
If you choose to pay for one whole year, the payment is
due on or before January 31. If the basic RPT and the
additional tax accruing to the Special Education Fund
(SEF) are paid in advance, the sanggunian concerned
may grant a discount not exceeding twenty percent
(20%) of the annual tax due.
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11/27/2015
Real Property Tax
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What is Real Property Tax?
If you choose to pay in installments, the four quarterly
installments shall be due on or before the last day of
each quarter, namely: March 31, June 30, September
30, and December 31.
In case of failure to pay the basic RPT and other taxes
when due, the interest at the rate of two percent (2%)
per month shall be imposed on the unpaid amount,
until fully paid. The maximum number of months is
thirty-six (36) months, so effectively, the maximum
interest rate is seventy-two percent (72%).
www.cartojanorealty.com
11/27/2015
Real Property Tax
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What is Real Property Tax?
Tax on real property
Imposed by the Local Government Unit (LGU)
Based on Local Government Code (R.A No. 7160)
The RPT for any year shall accrue on the first day of
January and from that date it shall constitute a lien on
the property which shall be superior to any other lien,
mortgage, or encumbrance of any kind whatever, and
shall be extinguished only upon payment of the
delinquent tax.
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11/27/2015
PAYMENT OF REAL PROPERTY TAX
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Who should pay the RPT?
The Owner or Administrator of the property
Where to pay?
At the City or Municipal Treasurers Office
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11/27/2015
PAYMENT OF REAL PROPERTY TAX
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When to pay?
Payment in advance is entitled to 20% discount if paid on or before
January 31 of the year
May be paid in 4 equal quarterly installments
March 31
June 30
September 30
December 31
Delinquent payment is subject to 2% interest per month but not more than
36 months or 72%
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11/27/2015
Real Property Tax
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Assessment
The act of determining the value of a property
Fair Market Value FMV
The highest price in terms of money
Based on Land Classification per Tax Declaration
Assessment Level
Percentage applied to FMV
Used to determine taxable value property
Based on Actual Use of property
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11/27/2015
Real Property Tax
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How do you compute real property tax (RPT)?
RPT = RPT Rate x Assessed Value
How do you compute the Assessed Value?
Assessed Value = Fair Market Value x Assessment
Level
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11/27/2015
Real Property Tax
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Maximum RPT rates: 1-2%
Cities and Municipalities within Metro Manila 2%
Provinces
- 1%
Special Education Fund (SEF) 1%
In addition to the basic RPT, the LGUs may levy and
collect an annual tax of one percent (1%) which shall
accrued exclusively to the Special Education Fund
(SEF).
Ad Valorem Tax on Idle Lands 5%
In addition to the basic RPT, the LGUs may collect a
maximum idle land tax is 5% assessed value of the
property.
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11/27/2015
ASSESSMENT LEVEL - Land
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CLASSIFICATION
Assessment Level
Residential
20% of FMV
Commercial/Industrial/Mineral
50% of FMV
Agricultural
40% of FMV
Timberland
20% of FMV
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11/27/2015
ASSESSMENT LEVEL Buildings and Other
Structures (Residential)
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FMV Over
But not Over
Assessment Level
0.00
175,00.00
0%
175,00.00
300,000.00
10%
300,000.00
500,000.00
20%
500,000.00
750,000.00
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750,000.00
1,000,000.00
30%
1,000,000.00
2,000,000.00
40%
5,000,000.00
10,000,000.00
50%
10,000,000.00
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60%
11/27/2015
ASSESSMENT LEVEL Buildings and Other
Structures (Commercial or Industrial)
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FMV Over
But not Over
Assessment Level
0.00
300,000.00
30%
300,000.00
500,000.00
35%
500,000.00
750,000.00
40%
750,000.00
1,000,000.00
50%
1,000,000.00
2,000,000.00
60%
2,000,000.00
5,000,000.00
70%
5,000,000.00
10,000,000.00
75%
10,000,000.00
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80%
11/27/2015
MACHINERIES
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CLASSIFICATION
Assessment Level
Residential
50% of FMV
Commercial
80% of FMV
Industrial
80% of FMV
Agricultural
40%
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11/27/2015
SAMPLE COMPUTATIONS
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Actual use of property: Residential
Location: City within Gensan
FMV per assessors officer (based on Tax Declaration):
Land P350,000
Improvement P350,000
Assessment Level for Land: 20%
Assessment Level for Improvement: 20%
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11/27/2015
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REALTY TAX REAL REAL ESTATE TAX or REAL
PROEPRTY TAX
ASSESSED VALUE = MV x AL (based on actual use)
(Basic) = Assessed Value x Realty Tax Return use (2%)
(Special Education Fund Tax/SEFT = AV x 1% fixed)
Ad Valorem Tax on idle Lands 5%
In addition to the basic RPT, the LGUs collect a maximum
idle land tax of 5% of assessed value of property
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11/27/2015
SAMPLE COMPUTATIONS
Computation:
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Assessed Value of Land
= P350,000 x 20% = P70,000
Assessed Value of Improvement
= P350,000 x 20% = P70,000
Basic Real Property Tax for Land and Improvement
= (P70,000 + P70,000) x 2% = P2,800
Special Education Fund (SEF) for Land
and Improvement
= (P70,000 + P70,000) x 1% = P1,400
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11/27/2015
What are Special Classes of Real Property?
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All lands, buildings, and other improvements
thereon actually, directly and exclusively used for
hospitals, cultural, or scientific purposes, and those
owned and used by local water districts, and
government-owned or controlled corporations
rendering essential public services in the supply and
distribution of water and/or generation and
transmission of electric power
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11/27/2015
SPECIAL CLASSES OF REAL PROPERTY
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CLASSIFICATION
Assessment Level
Cultural
15% of FMV
Scientific
15% of FMV
Hospital
15% of FMV
Local water districts
10% of FMV
GOCC engaged in the supply and
distribution of water or
generation and transmission of
electric power
10% of FMV
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11/27/2015
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What are Idle Lands?
Agricultural lands more than 1 hectare in area for
cultivation, dairying inland fishery, and other
agricultural uses, of which remain uncultivated or
unimproved
Exceptions
i. Lands planted to permanent or perennial crops with at least
50 trees to a hectare; and
ii. Lands used for grazing purposes (Note: put goats or cows on
your property).
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11/27/2015
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What are Idle Lands?
Lands other than agricultural, located in a city or
municipality, more than 1,000 sqm. In area, of
which remain unutilized unimproved
Residential lots in subdivisions, regardless of land
area
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11/27/2015
MORE SAMPLE COMPUTATIONS
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Illustrative Example:
FMV OF LAND IN DAVAO
ZONAL VALUE OF LAND
CONTRACT PRICE
ACTUAL USE
P 2,000,000.00
P 2,500,000.00
P 3,000,000.00
RESIDENTIAL
1. How much is the ASSESSED VALUE?
2. How much is the REAL OR TAXABLE TAX?
A. BASIC
B. SEFT
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11/27/2015
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How much is ASSESSED VALUE?
ASSESSED VALUE OR TAXABLE VALUE
FMV x ASSESSMENT LEVEL
P2,000,000.00 x 20% = P400,000.00 ASSESSED VALUE
OR TAXABLE VALUE
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11/27/2015
ASSESSMENT LEVEL - Land
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CLASSIFICATION
Assessment Level
Residential
20% of FMV
Commercial/Industrial/Mineral
50% of FMV
Agricultural
40% of FMV
Timberland
20% of FMV
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11/27/2015
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How much is the REAL PROPERTY TAX?
A. BASIC
ASSESSED VALUE x 2%
P400,000.00 x 2%
=P8,000,000.00
B. SEFT
ASSESSED VALUE x 2%
P400,000.00 x 1%
=P4,000,000.00
TOTAL REAL PROPERTY TAX
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=P12,000,000.00
11/27/2015
Exemptions from Real Property Tax (Sec. 284 RA 7160)
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Real property owned by the government or any of its political
subdivisions
Charitable institutions, churches, parsonages or convents,
mosques, non-profit or religious cemeteries and all lands,
buildings, and improvements used for religious, charitable or
education purposes
All machineries and equipment used by local water district
and GOCC engaged in the supply and distribution of water or
generation and transmission of electric power
All property owned by cooperative under RA 6938
(Cooperative Code of the Phil.)
Machinery and equipment used of pollution control and
environment protection
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11/27/2015
TRANSFER TAX
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Tax for the sale disposition of real estate
Rate is not more than 1% in cities and not more than
% in provinces
Basis is the contract price of FMV whichever is higher
Local government may also use contract price or zonal
value whichever is higher
Due in within 60 days from date of execution of deed
or date of death of decedent
Surcharge of 25% for late payment
Interest of 2% per month or maximum of 275
To be paid at the Treasurers Office of the City or
Municipality
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11/27/2015
