How Safe Is Your Property From Being Repossessed?

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Last December 2013, it was all over the news that the Local Government of Quezon City had shut down the Manila Seedling Bank for failure to pay their real property taxes between 2001 and 2011.

Is your property next?

A gavel which is often used during tax foreclosure auctions

A gavel which is often used during tax foreclosure auctions

I hope that got your attention. The deadline for the annual payment of real property taxes passed last January 31, 2014. So, have you paid your real property taxes?

If not, don’t fret, you can still pay in installments, and the deadlines are on March 31, June 30, September 30, and December 31.

The January 31 deadline is for the full payment of the annual real property tax, usually with discounts as much as 20%.

2 Reasons why you should pay real property taxes (RPT)

1. Your property can be included in the next tax delinquent properties auction – Payment of RPT is your obligation as a property owner, and if not paid, the local government may auction your property in their next tax delinquent properties auction. Of course, no one wants to have their property auctioned off, and this alone should be enough reason to pay! For more information about RPT, you may read my old post on the topic.

2. A Tax Clearance is required if you are going to sell your property – Please note that a real property tax clearance is required before you can transfer the ownership of a property through the title and tax declaration, and you can only get a tax clearance if your real property taxes are paid in full.

What are the reasons why people don’t pay real property taxes?

Obviously, it would take many years of non-payment of real property taxes before it will be included in a tax delinquent properties auction, which brings me to my next question: “What are the reasons why people don’t pay real property taxes?”

Aside from the obvious that the property owner might be in the middle of a financial hardship, you would be surprised that there are instances where people have too may properties, and they lose track and simply forgot to pay taxes for some of them.

Another possible reason for first-time homeowners is they don’t know that they have to pay real property taxes. Hard to believe but true.

For example, condo owners  mistakenly think their association dues already include payment for real property taxes. More often than not, condo dues only include payment for real property taxes of common areas, which means the condo owner still has to pay for the RPT of their condo unit. If in doubt, ask your condo admin to be sure.

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Mistakes can also happen where properties are included in an auction even if real property taxes have been paid… so make sure you keep all your receipts as this will serve as proof that your taxes have been paid!

Sometimes the owner is out of the country and unless they come home, they have no way to pay their real property taxes. (I believe this can be solved by an online RPT payment system just like what Paranaque City used to have… I wonder what happened to that system?).

The same applies if you are too busy and you have no time to pay your real property taxes, although personally, I believe you should set aside time for this. Ideally, you should pay the RPT for the coming year in December of the current year. Aside from taking advantage of the discounts for early payment, there are usually no lines, and you can finish faster.

Another option that comes to mind would be to just let someone pay your real property taxes for you… just outsource it!

You can outsource the payment of RPT

If you are a very busy person and have no time to personally pay the RPT, specially if your properties are spread over a large geographical area, you can outsource the payment of RPT.

Just look for a trusted person you can rely on to pay your real property taxes for you. As a real estate broker, my husband Jay has done this for some of our clients, although he has been very vocal that this is not his highest and best use. In his own words “This is too time consuming and there are many more important things I can do than driving around the metro to pay RPT…”.

If you will ask us if we can recommend someone, we highly recommend OMI Land Title Services (OMI-LTS). We have availed of their title transfer services and we are very satisfied with them. Aside from RPT payment and title transfer, they also do title verification, reconstitution, and other services.

Those interested in their services you may visit their office at the 20th Floor, LKG Tower, Ayala Avenue, Makati City. You may also call them at telephone number 884-1106 or visit their website, www.omilandtitle.com. It won’t hurt to ask for a free quote for their services, just inform them that Jay and Cherry Castillo of ForeclosurePhilippines.com referred you.

Full Disclosure: OMI Land Title Services is a trusted business partner for our land title service needs.

Image courtesy of sscreations / FreeDigitalPhotos

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About Cherry Castillo

is a Real Estate Broker (PRC Real Estate Broker License No. 3187), Lawyer (Roll of Attorneys No. 55239), and CPA (PRC CPA License No. 0102054). She is the 2013 Internal Education Head of REBAP-LMP

  • Bebs

    Hi…is there a probability that the BIR could foreclose a real property if the heirs to the said property have not settled the estate tax.?

  • Laila Dee

    Hi Jay & Cherry! Both of you are a blessings to me and to your million followers. I read your Blog and learned a lot. Can I be a Real Estate Investor and Real Estate Broker in the Philippines even if I’m here in the U. S.? I know a lot of Filipinos here who wants to invest in the Philippines and they need your help but I won’t allow them as a victim of Real Estate Agent like what happened to me. I’ve got a bad experience. After that, I was stuck, of working day & night, 7 days a week just to pay my mortgage in the bank,got depressed, lost my job and sick for 3 years. Now, I’m starting moving on. Praise And thanks God, I will focus to my financial freedom as a gift to myself, I know that it’s not easy but as both of you Guys as my mentor, I believe ….I’m on the right track. Hoping for your response, thanks a lot. Laila Dee

  • Mabel G

    Hi Atty.Cherry, my parents had their house from GSIS loan program way back 1990’s. And my mom told me that she is paying the real estate tax religiously for the actual house or the building but not the land. This is because they dont have the title of the land due it was still with GSIS. By the way the housing loan was fully paid probably 5 years ago but until now they are not giving the title to my parents. They have returning numerous times to GSIS to get the titile but with no avail. How can they pay the real estate tax for land given this scenario? Thanks for sharing your knowledge.

    • http://www.foreclosurephilippines.com Jay Castillo

      Hi Mabel, I hope you won’t mind my answering your question while my wife Cherry finds time to answer herself.

      In
      my opinion, your parents should pay the real property taxes for the
      land, even if the title is not yet consolidated, especially since they
      have been living on the land right? Also, if no one pays for the RPT of
      the land, it will be just a matter of time before it is included in an
      auction of tax delinquent properties.

      To pay the RPT for the
      land, they just have to get a copy of the tax declaration for the land
      (to have an idea how much is the RPT) and then get a statement of
      account.

      • Mabel G

        Thanks Sir Jay for answering. According to my parents they were advised by the municipal hall treasury that they need to have the title prior to making payments in the RPT of the land. That’s wht they got confused now as to why GSIS sent them a letter to pay the RPT for the land given that they don’t have the title.

        Where can they can get a copy of tax declaration?

        Thanks

        • http://www.foreclosurephilippines.com Jay Castillo

          You’re welcome Mabel. Usually, the municipal treasurer’s main concern is that taxes are being paid, regardless of under whose name the title is. You can get a copy of the tax declaration from the municipal treasurer’s office, which should still be under the name of GSIS.