Every Philippine property sale triggers a series of tax obligations that must be fulfilled before the title can be legally transferred from seller to buyer. These are not optional steps — the Bureau of Internal Revenue must issue a Certificate Authorizing Registration (CAR) before the Registry of Deeds will process the title transfer, and the CAR is only issued after the relevant taxes have been paid and accepted. Understanding what each tax is, how it is determined, and when it is due prevents the delays and penalties that arise from misunderstanding these obligations.

Capital Gains Tax applies to the sale of real property classified as a capital asset — which includes most residential property, investment property, and land held for appreciation rather than active business use. It is computed on the higher of two values: the gross selling price stated in the Deed of Sale, or the BIR zonal value (also called the BIR fair market value) of the property at the time of the transaction. The tax does not apply to the gain — it applies to the higher of selling price or zonal value regardless of what the seller originally paid for the property.

CGT is generally the seller’s obligation, though parties frequently negotiate which side bears this cost. The agreed allocation must be documented in writing in the contract — verbal agreements on tax allocation are not enforceable. CGT must be filed with the Bureau of Internal Revenue within 30 days of the date of the notarized Deed of Sale. Late filing incurs surcharges and penalties that increase the tax cost significantly. The 30-day deadline starts from the Deed date — not from payment, not from title transfer initiation, and not from any other point in the transaction.

The BIR zonal value is published by the BIR and periodically updated. Sellers and buyers should verify the current applicable zonal value with the relevant BIR Revenue District Office before finalizing any price negotiation, as the zonal value determines the tax floor regardless of the agreed selling price.

Documentary Stamp Tax applies to the Deed of Sale and related instruments in a property transaction. Like CGT, it is computed on the higher of the gross selling price or the BIR zonal value. DST is generally associated with the buyer’s obligations, but — like CGT — the specific allocation between buyer and seller is subject to negotiation and must be documented in the contract. DST must also be filed with the BIR before the 5th day of the month from the of the Deed of Sale date, and the same late filing penalties that apply to CGT apply equally to DST.

After CGT and DST are filed, paid, and accepted by the BIR, the bureau issues a Certificate Authorizing Registration. This document is the BIR’s confirmation that the required taxes on the transaction have been settled and that the Registry of Deeds is authorized to process the title transfer. The CAR is a required document for the title transfer process — it cannot be obtained without first settling CGT and DST.

Transfer Tax is assessed by the local government unit where the property is located. It is paid after the CAR has been obtained from the BIR, and before the title transfer documents are submitted to the Registry of Deeds. Transfer Tax is based on the selling price or the fair market value as determined by the local assessor — whichever is higher. The rate varies by LGU. Payment is made to the local treasurer’s office, which issues a Transfer Tax receipt required for the Registry of Deeds submission.

Registry of Deeds registration fees are assessed based on the property’s value at the time the title transfer documents are submitted. These fees cover the cost of processing and registering the new title in the buyer’s name. They are computed according to a fee schedule set by the Land Registration Authority and are paid directly to the Registry of Deeds at the time of submission.

Specific tax rates, zonal values, and fee schedules are subject to change through legislation and administrative orders. This guide explains how each tax works and what it covers — not specific rates, which must be verified with the BIR Revenue District Office or relevant LGU before any transaction is finalized. Never rely on rates from a previous transaction or from third-party estimates without independent verification.