Tuesday, June 10, 2014
If you have property in the Philippines, whether it's an apartment, a building or a house and lot, you’re required by law to pay real estate tax.
Properties are subject to both Real Property Tax (RPT) and Special Education Fund Tax (SEFT). These should be settled in full by March 31 or in four quarterly installments by the end of March, June, September and December.
You can determine the RPT with the help of an authorized local assessor, who sets the Fair Market Value (FMV) of your property. Local tax offices and local government units should also have a list of assessment levels for public notice, either at their offices or on their website. The RPT can be determined by multiplying the assessed value and the tax rate, while the SEFT tax rate can be calculated by multiplying the assessed value of the property by the city's SEFT percentage rate.
If you pay early, tax offices give tax breaks as high as 20 percent off the basic tax. The early bird rate varies according to different municipalities.
Failure to pay the RPT and SEFT is subject to a penalty interest of two percent per month, but not for more than 35 months. However, local government units can foreclose on your property and use the proceeds of the sale to pay off the RPT and SEFT. You’ll be allowed to participate in the auction, and if you win the bid, the property will be returned back to you upon payment.
RPT and SEFT rates are at two or three percent per city in Metro Manila for residential properties, lower if you’re outside of the NCR area. Visit your property's municipality for more information or check the BIR for updated rates.