Taxes are an unavoidable reality of real estate investment everywhere in the world, and the Philippines is no exception. For investors in Boracay, Palawan, Bohol, or any other Philippine island destination, understanding the applicable tax landscape is essential — not just for compliance but for accurate investment return modeling.
TaxRateNotes
Capital Gains Tax (CGT)6% of gross selling price or FMV (whichever is higher)Levied on the seller. Confirm who bears CGT in the contract.
Documentary Stamp Tax (DST)1.5% of selling price or FMVTechnically on the document; typically borne by the buyer.
Transfer Tax0.5–0.75% (varies by LGU)Assessed by provincial/city government; typically paid by the buyer.
Registration Fee~0.25% of transaction valueCharged by the Registry of Deeds; typically borne by the buyer.
Total buyer-side closing costs from these taxes and fees typically amount to 2.5–4% of the purchase price.
TaxRateNotes
Real Property Tax (RPT)1–2% of assessed value (Malay LGU for Boracay)Effective rate on market value: 0.2–0.8% per year. Due January 31 annually.
The assessed value is a fraction (typically 20–40%) of the property's market value, so the effective RPT rate on market value is significantly lower than the nominal rate.
TaxRateNotes
Resident Citizens (individual)Graduated rates 0–35%, or 8% flat tax on gross income exceeding PHP 250,000Annual income tax return required.
Non-Resident Foreign Individuals25% final withholding tax on Philippine-source rental incomeWithheld by the operator or payer.
For resort pool income, the condominium corporation or hotel operator may withhold taxes on rental distributions. Confirm the tax withholding arrangement with the operator.
TaxRateNotes
CGT on Sale6% of gross selling price or zonal value (whichever is higher)Levied on the seller. Note: CGT is based on gross selling price, not profit.
The BIR's zonal values — which represent the government's assessment of minimum property values for tax purposes — may be lower than actual market prices in desirable Boracay locations.
TaxRateNotes
Estate Tax (TRAIN Law)Flat 6% of net estate valuePhilippine real property held by both residents and non-residents is subject to Philippine estate tax.
Proper estate planning — including preparation of wills, designation of beneficiaries, and structuring of corporate ownership — can minimize the administrative burden and cost of property transfer to heirs.
Practical Tax Compliance Steps
Register with the BIR as a taxpayer and obtain a TIN
File quarterly and annual income tax returns
Maintain proper books of account or records of rental income and expenses
Retain all receipts for deductible expenses
Engage a Philippine tax accountant for portfolios exceeding PHP 1M annual income
