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?
I hope that got your attention. It can really happen so listen up.
Here are reasons why you should pay real property taxes:
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.
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!
Image courtesy of sscreations / FreeDigitalPhotos
What happens if you bought land and the last owner has not paid the land tax for 5 years?
Hi Mark, while it may sound unfair, the buyer usually ends up paying for the unpaid real property tax (RPT), just to avoid ending up in a tax foreclosure auction.
However, if there was a written agreement between the buyer and the previous owner that the RPT will be paid in full by the previous owner, then the buyer can run after the previous owner.
hello po ,ako si Nenita L.Cordez nkakuha po ako ng hulugang lupa sa camella homes sa south spring ville ii bacoor, cavite .nkpagdown npo ako ng 150k at 2nd rem sa capitol bank ng 93k at 17 months amortization n 10,376.nagkroon po ako ng mabigat n problema tungkol po sa pera kaya hindi k npo naituloy ang pagbabyad .sa in haus financing ko po naipasok yun .4/17/2000 up to 8/17/2001 po ako nkpghulog.May nagpunta po sa amin na manager daw po siya at yun 1 daw po ay ahente ng lupa n tintanong po nila ako kung gusto k daw po ibenta yun lupa ko sa knila.kung iyon daw po ay maipaclearance n sa carissa homes .Carissa n daw po ang may karapatan magbenta. Wala npo b ako pwedeng gawin sa bagay n iyon.Magkano ko po kya ibebenta iyon .Sana po mapagpayuhan nyo ako ao po ky mabuti kong gawin .MARAMI PONG SALAMAT.
Hi Atty. Cherry/Mr Jay, We acquired a foreclosed house and lot property from a bank thru bidding. We’re still paying the property by installments. The title is already transferred to the bank but the declaration of property tax is still in the name of the previous owner. We’re paying the tax every year. Is there any complications that the declaration of property tax is still in the name of the previous owner ? Thank you very much and more power.
Hi Marvin, the only complication there is you won’t be able to transfer ownership when you sell the property until you transfer the tax declaration.
Hi Mr Jay, Thank you very much for the response
You’re welcome!
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.?
Mam sorry po’ in umpisahan ko po’ pala ang pag hulog 2011 posalamat po’ ulit
Good morning po mam castillo isa po’ ako sa nakakuha ng hulugan bahay at lupa ,NGAYON po’ hindi ko na kayang magbyad ,nkakapag hulog na po’ ako ng kulan kulang 2 taon natigil po ako sa pag bayad ng June 2013 sa NGAYON po’ nag hulog po’ ulit ako kaso po’ akala ko hulog ko sa lupa yon pala na punta sa penalty daw po tulungan nyo po’ ako kung ano po’ ang gagawin ko pinag hirapan ko po’ yong pera maawa naman po’ Sila sa akin mam,makukuha ko pA yong naihulog mam tulungan nyo po’ ako pls po’ mam asahan ko po’ ang sago nyo po’ maraming salamat po’ mam
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
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.
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.
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
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.