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How To Easily Compute Documentary Stamp Tax (DST) On The Sale Of Real Properties

When buying a foreclosed property, the buyer often shoulders the Documentary Stamp Tax (DST). In the Buena Mano Green Tag Foreclosed Property listings for example, it is explicitly stated that DST is for the account of the buyer and DST is 1.5% of the Selling Price (SP) or Zonal Value (ZV), whichever is higher. To illustrate, I’ll reuse the example I used in my post about CGT.

Sample DST computation:

Example: A residential condominium in Makati City with a floor area of 50sqm has a Selling Price (SP) of 1.0M. The current zonal value per square meter for that condo in Makati is currently Php50,000/sqm. It is stipulated that the buyer shall shoulder DST. How much is the DST?

First let’s compute for the ZV:

ZV=Zonal Value x Floor Area
=50,000 pesos/sqm x 50sqm
=2,500,000 pesos

Since ZV is higher than SP, we shall use ZV to compute the DST:

DST=1.5% x ZV
=0.015 x 2,500,000 pesos
=37,500 pesos

Therefore, the buyer shall have to pay 37,500 pesos for the DST.

Is that it?! It’s that simple? Yes, it’s that simple. If you are looking for a more detailed (and more complicated) explanation about DST, you may also visit this particular page at BIR’s website.

Upcoming posts about taxes would cover Real Property Tax and Transfer Tax. Please do watch out for these posts. You may also want to read my previous posts about Capital Gains Tax and Creditable Withholding Tax.

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About Jay Castillo
People encounter problems and make mistakes when buying foreclosed properties, and Jay wants to help people avoid those problems/ mistakes. Jay encountered a lot of those, which is why he started this blog in 2008 to serve as a guide where he shares lessons learned, and how to overcome challenges you may encounter when investing foreclosed properties in the Philippines … [Read more]
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