Paying Real Property Tax in the Philippines

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It is barely two months to go before we leave the year 2022. Every first month of the year is allotted for paying yearly taxes to the local government. Business permits, professional taxes, and real estate property tax to name a few.

Last year, was the first time I paid for the real property tax of our house since it was transferred to our name in 2019. That was 3 years to pay.

 

I was shocked when I saw the total amount of more than PhP 8000. When I checked the details, penalties make the total amount to be paid at that much cost. The penalty imposed was made monthly.

 

Here are some ideas regarding Real Property Tax in the Philippines. (Disclaimer: I am not an expert on real property matters.)

 

Definition

Real property tax or RPT is one way to add income to the local government. The owners of the property are responsible and accountable when it speaks with RPT. This applies to residential, agricultural, and commercial properties. The provision regarding RPT is stated in the Republic Act No. 7160 or Local Government Code II.

 

Calculation

Under Section 233 of RA 7160, the tax depends on the location and the assessed value of the property. For those located in Metro Manila, the tax will be calculated as 2% of the assessed value; for provincial locations, only 1% shall be implemented.

 

The LGU may also impose an additional tax for the Special Education Fund to be used in the local school’s budget. The rate is fixed at a value of 1% of the assessed value of the property.

 

Schedule of Payment

The RPT is shall be paid on or before January 31. For large amounts, a quarterly payment can be an option. March 31, June 30, September 30, and December 31 are the schedules for the first, second, third, and fourth quarters, respectively.

 

Penalties

Unpaid properties will incur an accrued interest rate of 2%. If you fail to pay for three years, the total amount may increase to about 72% just like what happened to us.

 

Based on our experience, paying the RPT on or before the due date will avoid penalties. 

Remember that owning a property does not end after paying the total value. It was coined with the accountability to the Local Government.