Now that our Philippine house has been completed and we have moved in, our next task is to meet with the municipal assessors and make a declaration of market value of our improvements (house) as required under section 203 of the Philippine Local Government Code. The land is separately assessed and taxed.
In the U.S., assessors kept an eagle eye out for any improvements and were quick to reassess real estate. Copies of building permits and certificates of occupancy went to assessors to be sure they did not miss anything. That seems to be true in the Philippines too, but here the onus is on the property owner to prepare and submit a sworn statement of the market value of improvements to the municipal assessors.
These are the relevant sections of the code:
THE LOCAL GOVERNMENT CODE OF THE PHILIPPINES (R.A. 7160, Book II, Title II, Chapter 2, Sec. 201-214)
CHAPTER 2 – APPRAISAL AND ASSESSMENT OF REAL PROPERTY
SEC. 201. Appraisal of Real Property. – All real property, whether taxable or exempt, shall be appraised at the current and fair market value prevailing in the locality where the property is situated. The Department of Finance shall promulgate the necessary rules and regulations for the classification, appraisal, and assessment of real property pursuant to the provisions of this Code.
SEC. 202. Declaration of Real Property by the Owner or Administrator. – It shall be the duty of all persons, natural or juridical, owning or administering real property, including the improvements therein, within a city or municipality, or their duly authorized representative, to prepare, or cause to be prepared, and file with the provincial, city or municipal assessor, a sworn statement declaring the true value of their property, whether previously declared or undeclared, taxable or exempt, which shall be the current and fair market value of the property, as determined by the declarant. Such declaration shall contain a description of the property sufficient in detail to enable the assessor or his deputy to identify the same for assessment purposes. The sworn declaration of real property herein referred to shall be filed with the assessor concerned once every three (3) years during the period from January first (1st) to June thirtieth (30th) commencing with the calendar year 1992.
SEC. 203. Duty of Person Acquiring Real Property or Making Improvement Thereon. – It shall also be the duty of any person, or his authorized representative, acquiring at any time real property in any municipality or city or making any improvement on real property, to prepare, or cause to be prepared, and file with the provincial, city or municipal assessor, a sworn statement declaring the true value of subject property, within sixty (60) days after the acquisition of such property or upon completion or occupancy of the improvement, whichever comes earlier.
SEC. 204. Declaration of Real Property by the Assessor. – When any person, natural or juridical, by whom real property is required to be declared under Section 202 hereof, refuses or fails for any reason to make such declaration within the time prescribed, the provincial, city or municipal assessor shall himself declare the property in the name of the defaulting owner, if known, or against an unknown owner, as the case may be, and shall assess the property for taxation in accordance with the provision of this Title. No oath shall be required of a declaration thus made by the provincial, city or municipal assessor.
Taxes – The Bottom Line
According to the website below, the tax on assessed value is 1% of assessed value in the provinces and 1 1/2 to 2% in cities. The assessed value ranges from a basic 20% to as high as 60% on high value improvements. So, an improvement with a market value of P1,000,000 might be assessed at P300,000 and a 1% tax of P3,000 levied. More information is available at:
http://www.globalpropertyguide.com/Asia/Philippines/Taxes-and-Costs
The 2011 market value of our house and lot are assessed at P892,500. The assessed value of the house and lot is P260,550. Our annual property taxes will be P5,200 or about U$ 130.00. If paid in advance (in December for example) a 20% discount applies so our 2012 taxes should be about P4,200 or about $100 USD.
