There’s no doubt that the Philippines has recorded an increase in number of foreigners who own properties and live here. Apart from the constant growing economy and booming real estate market that have been recorded for the last few years, there are also a number of tourist destinations that are very friendly and hospitable for expats.
In our country, the constitution bars expats from owning land. They are only allowed to buy properties under several legal guidelines. If you are an expat and you are planning to buy a property, it’s important to ensure that you are familiar with the following legal exceptions.
- You are only allowed to own a maximum of 40% of the total units in a building
The law states that expats can own up to 40% of the total units in a condominium or apartment building. The other 60% of the property should be owned by the locals. It’s for this reason why you find some cities in the Metro Manila having a high number of expats.
Some of these cities where you will likely spot expats include Makati City, Quezon City, Paranaque City, and Taguig City. If you go to other urbanized provinces like Cebu and Davao, you will also witness a similar scenario.
- You can only own land under special conditions
Although land ownership is restricted in the Philippines, there are certain circumstances where an expat can be allowed to own a land. They include;
- If they were former Filipino citizens and they have a record to prove so
- Any foreigner who has a non-Filipino citizen spouse and who have retained Filipino citizenship
- You can buy land under the name of your spouse who is a Filipino citizen
- You can enter into a long-term lease agreement for a maximum of 50 years
- Under co-ownership in a corporation that has been registered in the Philippines
In addition, it’s good to also note that expats who wish to buy land under their Filipino’s spouses name are only allowed to buy a maximum of 1,000 square meters of urban land and 10,000 square meters of rural land respectively.
- Always hire professionals
In order to successfully buy a property in the Philippines, you need to work with the right people and professionals who understands the real estate market well.
Always go for a reliable real estate agency like TrueLiving Realty who has a track record of good professional background.
- How to get a property loan in the Philippines
You need to understand that not all banks in the Philippines have the capacity to offer a property loan. In addition, for an expat to be eligible for a property loan, the banks check on the type of their visa and of course their financial capacity.
If you are an expat and you are in need of a property loan, you can try the following banks;
- Banco De Oro (BDO)
- Bank of the Philippines Islands (BPI)
- Metro Bank
- Visa application
There are 5 different types of visas which are issued on different expats. For instance, if you are an expat who is planning to finally retire in the Philippines, your best visa application should be Special Resident Retiree’s Visa (SRRV) category.
Other visa categories for expats include;
- SRRV Smile
- SRRV courtesy
- SRRV Expanded Courtesy
- SRRV Human Touch
- SRRV Classic
- Cost and Fees
When you want to purchase land as an expat, you will incur certain fees throughout the process. Some of the notable costs and associated fees include;
- Deposit/down payment: 20% to 30% of the purchase price.
- Documentary stamp tax (DST): 1.5%, and multiplied with the sales value or zonal value—whichever is higher.
- Local transfer tax: apart from the stamp duty, expats will need to pay 0.5% to 0.75% of transfer tax, which is also multiplied with the sales value or zonal value or whichever is higher.
- Rental income tax: resident foreigners need to pay a specific amount and percentage of the excess depending on their income bracket. Non-residents are taxed a flat rate of 25% with no deductions for maintenance fees or depreciation of a property’s value.
- Real property tax: 2% in Manila and 1% in other provinces. The rate is multiplied by 20% of the appraised value for residential property, and 50% for commercial properties.
- Registration fees: 1%
- Notary fees: 1% to 2%
- Real estate agent fees: 3% to 5%
- Capital gains tax: 6%, imposed on the sales value or zonal value.
- SRRV application fee: USD 1,400, plus USD 300 for every dependent.
Just like in any other developing countries in the world, the real estate property prices in the Philippines are also affected by the current economic conditions and property location. That’s why it’s advisable to always contact a local real estate expert like TrueLiving Realty first before you commit to buying a property in Philippines.
Contact TrueLiving Realty today, and get your professional broker for efficient services.