Property Taxes in the Philippines for Foreign Owners: 2026 Guide

A foreign owner of a Philippine condominium unit pays the same suite of property-related taxes as a Filipino owner, with two important wrinkles: capital gains tax treatment differs for foreign corporations, and rental income is subject to higher withholding rates for non-resident aliens.

The Philippine tax system around real property is administered by two separate authorities. The Bureau of Internal Revenue (BIR) handles transaction taxes (capital gains, documentary stamp, donor's, estate, income). The Local Government Unit (city or municipality) handles annual ownership tax (Real Property Tax) and transfer tax at the local level. Both must be settled before a Condominium Certificate of Title can be transferred.

This guide walks through every tax event a foreign condominium owner will face: at purchase, during ownership, on sale, and on inheritance.

Taxes at the moment of purchase

Five charges hit at closing, split by custom between buyer and seller. The actual allocation is negotiated and varies by region and developer, but the default custom is:

Capital Gains Tax (CGT) — 6%. Paid by the seller. Six percent of the higher of the gross selling price, the zonal value (BIR's published valuation), or the assessed market value. For a foreign buyer this is technically not your tax, but in practice developers selling pre-construction units roll the CGT (which becomes Creditable Withholding Tax for ordinary asset sales) into the price.

Documentary Stamp Tax (DST) — 1.5%. Paid by the buyer in most contracts. Calculated as PHP 15 per PHP 1,000 of the higher of the selling price or fair market value. Filed within 5 days after the close of the month in which the deed was notarized.

Transfer Tax (local) — 0.50% to 0.75%. Paid by the buyer. Rate depends on the local government unit. Metro Manila cities typically charge 0.75%. Provincial municipalities charge 0.50%.

Registration Fee — graduated. Paid by the buyer to the Register of Deeds. For a PHP 10 million transaction, expect roughly PHP 50,000 to 60,000.

Notarial fee — 1% to 2%. Paid by the buyer. The Deed of Absolute Sale must be notarized by a Philippine notary public, and notarial fees are loosely regulated, typically 1 to 2% of the selling price.

Total buyer-side closing costs for a foreign buyer purchasing a PHP 10 million condominium typically run 3.5% to 5% of the transaction value, before any developer-side fees passed through.

Annual ownership taxes

Real Property Tax (RPT). Paid annually to the local government unit. The rate is set by the local government but capped by the Local Government Code (Republic Act 7160) at 1% of assessed value for provinces and 2% for cities and Metro Manila municipalities.

The assessed value is not the market value. It is computed as the market value (set by the local assessor) multiplied by an assessment level, which varies by property type — typically 20% for residential property under PHP 175,000 and rising to 35% for residential property above PHP 1 million.

For a PHP 10 million Metro Manila condominium with an assessed value at 35% of fair market value, RPT runs roughly PHP 35,000 to 70,000 per year depending on the city.

In addition to basic RPT, an Additional Special Education Fund (SEF) Tax of 1% on assessed value applies on top. So the all-in annual RPT for a city property is closer to 2.5% to 3.0% of assessed value, or approximately PHP 50,000 to 100,000 per year for a typical foreign-owned Manila condo.

Many condominium owners delegate RPT payment to their condominium corporation, which collects it as part of monthly dues and remits it. This is convenient but verify each year that the payment was actually made — RPT delinquency can result in the local government attaching the property and selling it at tax auction.

Rental income tax during ownership

A non-resident alien owning Philippine property and earning rental income is taxed as follows:

Non-Resident Alien Engaged in Trade or Business (NRAETB). Defined as a non-resident alien who stays in the Philippines for more than 180 days in a calendar year, or whose Philippine activities constitute "trade or business." Rental income is taxed at progressive rates from 0% to 35%, the same as Philippine citizens, with standard deductions available.

Non-Resident Alien Not Engaged in Trade or Business (NRANETB). Default category for most foreign condominium owners who do not spend significant time in the Philippines. Rental income (and all other Philippine-source income) is taxed at a flat 25% withholding rate on gross income. No deductions are available.

Both categories must obtain a Philippine Tax Identification Number (TIN) before the property begins generating rental income. The tenant or property manager is required to withhold the tax and remit it to the BIR monthly. Failure to register and remit triggers penalties of 25% surcharge plus 12% annual interest plus a compromise penalty.

Tax treaties may reduce the 25% rate for certain countries. The United States-Philippines tax treaty (1976) generally allows rental income to be taxed in the Philippines (the source country) without reduction, but credits Philippine tax paid against U.S. tax owed.

Capital gains tax on sale

When a foreign owner sells the unit, the 6% capital gains tax applies. Important: this is calculated on the higher of selling price or zonal value or assessed market value, not on the gain. There is no cost-basis adjustment. The tax is 6% of the full selling price even if the property is sold at a loss.

CGT must be paid within 30 days from the date of notarization of the Deed of Absolute Sale. Late filing triggers 25% surcharge plus 12% annual interest, plus a graduated compromise penalty.

The 6% CGT is final. There is no further income tax on the gain.

For foreign corporate sellers (a foreign corporation owning a condominium), the rules differ. The 6% CGT does not apply. Instead, the gain is subject to 25% corporate income tax under Section 28(B) of the Tax Code as amended by the CREATE Act (Republic Act 11534, 2021).

Documentary stamp tax of 1.5% applies again on the sale.

Repatriation of sale proceeds

The Philippines has open capital controls for property sales by foreigners, but the Bangko Sentral ng Pilipinas (BSP) requires documentation of the original investment to permit repatriation of sale proceeds in foreign currency. Specifically:

The original Bangko Sentral registration of the inward foreign investment (BSRD) is required. If the funds were brought into the Philippines through normal banking channels but not formally registered with BSP, repatriation may be limited to peso conversion at prevailing rates rather than reconversion to the original foreign currency.

Most foreign buyers do not register their investment with BSP at purchase. This becomes a problem at sale. Foreign buyers planning to ever exit the Philippines should register the inward investment at the time of purchase through their depository bank.

Estate and donor's tax

Estate tax under the Tax Code, as amended by the TRAIN Law (Republic Act 10963, 2017), is a flat 6% on the net estate of a decedent. Non-resident aliens are taxed only on Philippine-located property. The first PHP 5 million of net estate is exempt.

Donor's tax (gift tax) is also a flat 6% on net gifts above PHP 250,000 per year.

A Philippine will covering Philippine assets is strongly recommended for all foreign property owners. Without one, the estate goes through judicial settlement under Philippine intestate succession rules, which can take 2 to 5 years and exposes the property to claims by Philippine-located heirs.

Practical takeaways for foreign owners

The Philippines is not a low-tax property jurisdiction for foreign owners. The combined annual carry (RPT + condo dues + management fees) on a Metro Manila condo typically runs 4 to 6% of property value per year before any rental income. The flat 25% rate on rental income for non-resident aliens is significantly higher than the rates faced by Filipino owners.

This makes pre-acquisition tax planning genuinely important. Consider whether holding through a 60-40 Philippine corporation (which qualifies for lower rates and access to corporate deductions but introduces Anti-Dummy compliance burden), or through direct foreign ownership of a condominium unit, makes more sense given your usage and exit horizon.

Bektu (https://bektu.com) maintains records of Philippine developer projects and project status that foreign owners commonly need years after purchase, including for tax filings that require original acquisition documentation.