Named after King Philip II of Spain by the Spanish explorer De Villabonos, the Philippines is an archipelago nation in the Pacific Ocean bound by maritime borders. With its ever-increasing GDP and HDI, the Philippines is a growing hotspot. This applies to tropical tourism and global investors who seek a well-placed investment in Asia Pacific. Though their official languages are Philippino and English, they are ready to accommodate visitors from all over!
Though investing in the worldwide property market has been riddled with steep supply and demand discrepancies, the property market in the Philippines sustained steady and unrelenting growth. That said, foreigners are not permitted to own land in the Philippines, but they may own residences. Any property that includes a freehold on the ground must be leased from a Filippino landlord. Similarly, a commercial or business venture must be acquired in conjunction with a local establishment or company such that 60% of the property belongs to Filipinos.
Major cities such as Manila and Davao come with amenities such as plenty of markets, easy access to advanced healthcare and education, and a bustling entertainment platform. However, with it comes congestion and traffic.
Tagaytay and Dumaguete are great options if you prefer locations removed from metropolitan crowds or tourists.
The former has many outdoor activities, including golf courses, and the latter is a major seaport and is straddled by many beaches for a quiet tropical getaway.
One great choice that stands out is a condominium. A local landlord would own the land, and Filipino buyers own at least 60% of the units. Essentially, $200,000 gives a shiny new beachfront property with all the perks of luxury available, much lower than that in the US. In the cities, the average price of homes that measure 1200 sq. ft. would amount to approximately 250,000 (208/sq ft), whereas the same would cost 145,000 (120/sq ft) in rural areas.
Transaction fees and duties are permanently excluded from the property price tag. Do expect to pay a significant amount for extras such as:
Amounts to 6% of property value, zonal value or fair market value, the value of whichever is highest.
It stands at 1.5% of property/zonal/fair market value, whichever is highest.
It falls between 0.5% and 0.75%, the highest of the 3 values.
0.25% of the sales price.
In total, expect to pay about 8.5% extra in Taxes. That said, rental yields are anywhere between 6 to 8 per cent depending on location.
Buying property in the Philippines begins with a thorough appraisal of the land and its legal ownership. This is accomplished by verifying and obtaining a photocopy "Certified True Copy" of the title from the Register of Deeds before purchase. It will help get your paperwork accelerated when the purchase is completed. That said, check the potential issues and read through the fine prints of the terms and conditions. Ask for a copy of the tax declaration for any due taxes. Verify all outstanding mortgages and other legalities after verifying the rightful seller, and secure notarised and signed sale deeds. Once that is completed, do settle BIR within 30 days.
Documents required are:
After that, the Capital Gains Tax (CGT) will be calculated and submitted in BIR form 1706 and BIR form 2000. Then CGT and DST documents need to be filed at BIR, following which you will be provided with:
After that, a copy of the new Tax Declaration document must be obtained from the municipal or provincial's assessor's office, which is released 5 days following the submission of the documents mentioned above. The old title is cancelled by the Registry of Deeds, issuing a new one. The process may be fast-tracked and conducted effortlessly by hiring one of the many real estate agents that specialise in this. Loans are provided to expats against a higher down payment and credibility establishment. Expats with disbursements and concrete proof of residence in the country, and solid incomes have a better chance of acquiring loans.
In conclusion, foreigners are now free to buy property in the Philippines, with some limitations. The buying process comes to verifying ownership, settling taxes and transfer of deeds to municipality approved sites and properties. The price of properties, though modest, is offset by rising demand for them. Rental returns bring in a good source of income. After meeting the needed criteria by the banks, loans are provided before being approved for foreigners who genuinely would like to invest or reside in the country.
All in all, a worthwhile investment opportunity deserving a shot!
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