What Taxes Do You Owe When You Have a Real Estate Property in Daang Hari Cavite
Growing up, it is part of everyone’s dream to have a house of their own when the time comes. It is called the “dream house”. Dreaming such a big thing, you struggle a lot along the way, spend a little and save big. That is why when you reach your goal, you always make sure to takes care and maintain it. But those are not just a one-time process, it requires yearly preservation and up keeping as well as annual realty taxes. It may be a knowledge to few people, but majority are naïve about tax awareness affiliating to owning a house.
For your own sake, before buying a Daang Hari Cavite house, clarify with your client first if the selling price includes all the taxes upon purchasing such as the income tax, value-added tax, documentary stamp tax and local transfer tax.
Income tax is applicable if real estate property is primarily sold to customers by the taxpayer in a normal course of business or called as an ordinary asset. Usually, payable amount to the Bureau of Internal Revenue is the 30% of the selling price or zonal value of the property, whichever is higher.
Value-added tax is a popular way of implementing consumption tax. A 12% value-added tax shall be imposed in every Daang Hari Cavite real estate sale engaged in the business of selling, developing, leasing or subleasing of property and based on the commission of those involve in real estate brokerage business. Even if the property is not raised for sale but used in trade or business of the seller, the sales itself shall be susceptible to VAT.
Documentary stamp tax is used for mediums such as documents, papers or agreements documenting acceptance, assignment, sale or transfer of an obligation right or property. It is payable in BIR and the amount is either fixed or based on the face value of document. When documents involve in real estate properties, the tax shall be 1.5% of the selling price, or Bureau of Internal Revenue zonal value, or assessed value of the provincial or city assessor, whichever is higher.
Local transfer tax is payable to the local government where the property is located. The amount of the tax varies depending on the location of the property. You will have to make sure to pay this tax on schedule.