Taxes for Foreign Property Owners in the Philippines: A 2026 Guide

A foreigner who owns a condominium in the Philippines pays the same property taxes a Filipino owner does, with one big exception: rental income is taxed at a flat 25 or 35 percent for foreigners, far higher than the graduated rates residents enjoy. Knowing the full tax picture before you buy changes the math on yield, especially if you plan to let the unit. Here is what foreign owners actually pay, at purchase, while holding, when renting, and when selling.

This guide covers condominium units, the only real property a foreigner can own outright under Republic Act 4726. Figures are national rules; local rates vary by city.

At purchase

When you buy, several one-time taxes and fees apply, and who pays which is partly negotiable but follows a standard convention.

Documentary Stamp Tax (DST) of 1.5 percent of the higher of the selling price or fair market value. This is typically borne by the buyer and must be paid promptly after the sale.

Transfer Tax, a local tax of around 0.5 to 0.75 percent of the price or fair market value, paid to the local government unit.

Registration fees with the Registry of Deeds to register the Condominium Certificate of Title in your name, on a graduated schedule.

One line item is often left out of the budget: the Deed of Absolute Sale must be notarized by a Philippine notary, and notarial fees are loosely regulated at 1 to 2 percent of the selling price, usually paid by the buyer. DST is computed at PHP 15 per PHP 1,000 of the higher of price or fair market value and must be filed within five days after the close of the month in which the deed was notarized. All in, buyer-side closing costs on a PHP 10 million condominium typically run 3.5 to 5 percent before any developer-side charges.

The Capital Gains Tax on a sale (6 percent) is conventionally the seller's cost, so as a buyer you usually do not pay it on the way in, though everything is negotiable and you should confirm the split in your contract.

While you own it: Real Property Tax

Every year, owners pay Real Property Tax (RPT), sometimes called amilyar, to the local government. It is assessed as a percentage of the property's assessed value, generally in the range of 1 to 2 percent depending on location (Metro Manila and provincial rates differ, and there is an added Special Education Fund levy). RPT is due annually and can usually be paid in quarterly instalments, with discounts for early full payment and penalties for late payment. As a condominium owner you pay RPT on your unit; common-area taxes are handled through the condominium corporation and funded by your association dues.

The ceilings come from the Local Government Code (Republic Act 7160), which caps basic RPT at 1 percent of assessed value in provinces and 2 percent in cities and Metro Manila municipalities, with the Special Education Fund adding 1 percent of assessed value on top. Assessed value is not market value. It is the assessor's market value multiplied by an assessment level, which for residential property rises with value to around 35 percent. Where the condominium corporation collects RPT through your dues, verify each year that it was actually remitted, because RPT delinquency lets the local government attach the unit and sell it at tax auction.

When you rent it out: the foreigner penalty

This is where foreign owners need to pay attention. Rental income earned by a foreigner is taxed at a flat rate on gross income, and the rate depends on your residency status:

A foreign resident (a non-citizen actually residing in the Philippines) is taxed at 25 percent of gross rental income.

A foreign non-resident (an owner living abroad) is taxed at 35 percent of gross rental income.

These are materially higher than the graduated income-tax rates available to Filipino citizens and resident aliens engaged in trade or business, and they apply to gross rent, which limits deductions. On top of income tax, rental of residential units can attract VAT or percentage tax depending on rent levels and thresholds. The practical effect is that a headline gross yield of, say, 6 percent looks very different after a 35 percent tax on the rent. Model the after-tax number before you treat a unit as an income investment.

When you sell

A sale of a condominium held as a capital asset is subject to Capital Gains Tax of 6 percent of the higher of the gross selling price or the fair market value, plus Documentary Stamp Tax of 1.5 percent. The CGT is conventionally the seller's burden and must be filed and paid within 30 days of notarization of the sale. Note that this 6 percent regime applies to property held as a capital asset; property treated as an ordinary asset (for example, units held by someone in the real estate business, or rental property in some cases) can instead fall under the ordinary income tax system rather than the flat 6 percent, which is a question to settle with a Philippine tax adviser based on how you hold and use the unit.

The valuation base is the highest of the gross selling price, the BIR zonal value, or the assessed market value, and there is no adjustment for your cost basis. The 6 percent applies to the full selling price even if you sell at a loss. Late filing draws a 25 percent surcharge plus 12 percent annual interest plus a graduated compromise penalty. If the seller is a foreign corporation rather than an individual, the 6 percent regime does not apply at all. The gain instead falls under 25 percent corporate income tax under Section 28(B) of the Tax Code as amended by the CREATE Act (Republic Act 11534, 2021).

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 percent of the net estate, and a non-resident alien is taxed only on Philippine-located property. The first PHP 5 million of net estate is exempt. Donor's tax is also 6 percent, on net gifts above PHP 250,000 per year. A Philippine will covering your Philippine assets is worth having. Without one, the estate goes through judicial settlement under Philippine intestate succession rules, which can run two to five years.

Getting the money back out

The Philippines permits repatriation of sale proceeds, but the Bangko Sentral ng Pilipinas requires documentation of the original investment to release it in foreign currency. That document is the BSP registration of the inward foreign investment (BSRD). Most foreign buyers never register the inflow, and it becomes a problem at exit: funds brought in through normal banking channels but never registered may only be taken out as pesos converted at prevailing rates. Register the inward investment through your depository bank at the time of purchase.

Practical points for foreign owners

You will need a Philippine Tax Identification Number (TIN) to transact and to pay these taxes, and the Bureau of Internal Revenue (BIR) is the national authority that collects DST, CGT, and income tax, while RPT and transfer tax are local. If you rent the unit from abroad, you remain liable for Philippine tax on that Philippine-source rental income regardless of where you live, and a property manager often handles withholding and filing.

None of this changes the appeal of the market, but it does change the spreadsheet. The buy-side taxes are modest and one-time; the holding tax is low; the rental tax is the line item that surprises foreign owners. Factor the 25 or 35 percent rental rate into any income projection, and before you commit to a specific building, confirm the developer's delivery record on a platform like Bektu (https://bektu.com), because a clean tax plan means nothing on a unit that never gets turned over.

Tax rules change and depend on your specific circumstances and home-country treaties. Treat this as a framework, not personalized tax advice, and confirm the numbers with a licensed Philippine tax professional before you transact.