How can foreigners buy real estate in the Philippines?

Acquisition of real estate by foreigners in the Philippines

Foreigners have the opportunity to purchase real estate in the Philippines; however, they face a number of restrictions regarding land ownership. When buying a property, foreigners do not become owners of the land, as the land remains in the hands of Filipino citizens. They have the option to lease land for a period of up to 50 years, with the possibility of extending the lease for an additional 25 years after the initial term ends.

Ways to acquire land

If a foreign citizen still wants to become a landowner, there are several options available to them:

• Marriage conclusionwith a Filipino citizen. This opens up the possibility of registering land in the name of your Filipino spouse. However, it is important to consider that in the event of a divorce or the death of the spouse, the foreign citizen may lose the right to this property.
• Creating a companywhere the share of foreign investors must not exceed 40%. The maximum area that can be obtained is 1,000 square meters in urban areas and up to one hectare in rural areas.

Buying real estate

When choosing new real estate in the Philippines, it is very important to work with certified developers and real estate agencies. This is especially relevant for properties that are under construction or in the planning stage. The purchasing process usually goes through a simple agreement between the parties. Once a decision is made to purchase, after inspection and review of all necessary documents, the buyer signs a notarized contract.

Advantages of working with agencies

Turning to professional real estate agencies makes the process much more comfortable and safe, providing consultations and information about the real estate market, as well as assistance with mortgage loan inquiries.

Buying an apartment in a condominium

Regarding the purchase of an apartment in a condominium, foreigners can obtain a Certificate of Ownership (CST), but this document will only be issued after the full payment for the apartment. Typically, a down payment is required, which ranges from 10% to 30% of the total property value. It is important to note that foreigners can own no more than 40% of the apartments in the same building.

Special visas for retirees

In addition, holders of the Special Resident Retiree's Visa (SRRV), which is designed for foreign investors in the Philippine economy, can enjoy additional benefits. This includes the ability to purchase condominiums and the right to lease land or houses with adjacent lots. This visa has gained popularity among those seeking a new standard of living and planning to relocate to the Philippines for a more comfortable existence.

Permanent residency in the Philippines through SRRV

SRRV holders are granted the right to permanent residency in the Philippines through multiple visas, which frees them from the need to pay travel fees. To obtain this visa, one must invest at least50 thousand US dollarsin the country's economy. It is important to note that the investor's age should be at least35 years old.

Buying land: challenges and risks

The process of acquiring land in the Philippines can be quite complicated and requires significant effort. The main issue is that foreign citizens cannot own land. Additionally, the complex system of land registration and classification can raise many doubts for investors.

The further a plot is from the capital, the more cautiously one should approach the investigation of property rights and potential risks. However, even withinNational Capital Region (NCR)You may encounter serious legal difficulties.

Real estate legislation

The Philippines has a functioning...11 basic lawsregulating the process of land ownership registration, as well as nine additional acts related to land resource management. In additionDepartment of Environment and Natural Resourcesthere isBureau of Land Managementand a number of other agencies that oversee land transactions both directly and through intermediaries. The Philippine courts also have the authority to hear land-related disputes.

The process of transferring ownership rights

As for the process of transferring ownership of both land plots and apartments, it is a multi-stage procedure:

• In the first step, the seller and buyer negotiate the terms of the sale,
• whereupon a lawyer will execute and certify a deed of complete sale (DOAS).
• A land tax return is then filed, which is certified by theBureau of Internal Revenue (BIR)and handed over to the local tax office.

The buyer is subsequently required to payproperty taxto the local treasury. The tax inspectorate then assesses the market value of the object.

The situation with land documentation in the Philippines is marked by significant shortcomings, leading to a constant increase in errors and the proliferation of duplicate records. This trend has been observed year after year and requires careful monitoring. The official land inventory, which began under land ownership legislation back in 1903, is still not completed, creating difficulties for both owners and potential buyers.

Real estate registration process

The process of registering property in the Philippines consists of eight stages, which can take more than a month. Both sellers and buyers should consider the specific costs associated with completing the transaction. For example, the cost of drafting the deed of sale varies and includes not only direct expenses in the form of registration fees but also additional costs, the amounts of which can change depending on the transaction value.

Registration fees

The registration fees currently amount to4,398 Philippine pesos, this amount is added45 pesosfor each additional20,000, exceeding1,700,000 pesosNotary services cost approximately200 pesosfor each document. Let's take an example: if the value of the property is12,500,000 pesosThe total costs may reach28,898 pesosthat is equivalent to about0.231%from the price of the object.

Customer expenses

The expenses that the buyer incurs in a transaction can vary from5.73%to11.25%, and legal services account for5%to10%from the cost of real estate. The local property transfer tax is from0.50%to0.75%, and the buyer is the subject responsible for payment. The costs for the sales certificate are also significant, ranging from0.225%to0.50%Sellers are required to pay capital gains tax in the amount of6%from the difference between the purchase and selling prices.

Total real estate costs

It is important to emphasize that the total costs of purchasing and subsequently selling real estate vary from16.23%to23.75%This amount includes:

• Payment for legal services;
• Payment for notary services;
• Registration fees;
• Various taxes.

The main currency of transactions

In transactions, the main currency isPhilippine peso (PHP)As of the time of writing the article, the exchange rate is1 US dollar-42.2585 pesosThe local tax on the transfer of ownership rights, collected at the municipal level, ranges from0.5%to0.75%and it depends on the deal amount and the market value, which often exceeds the official appraisal.

Legal services

Legal services for transaction support are provided based on a contract, and their cost starts from20,000 pesosIn some situations, it can reach10%from the price of the property. Capital gains tax is also discussed for each transaction and amounts to6%from the total amount listed for sale, or the actual market price, depending on which of the indicators is higher. Understanding all the mentioned aspects will help market participants approach real estate transactions in the Philippines with greater preparedness.

Conclusion

In conclusion, I would like to emphasize that purchasing real estate in the Philippines for foreigners is a process that requires careful attention and awareness of local laws and regulations. Despite the restrictions on land ownership, there are several opportunities for those looking to invest in this beautiful country. It is important to remember that leasing land for up to 50 years, with the possibility of extension, can be a perfectly acceptable option for many.

Moreover,marriage to a Filipinoorcreating a joint business— these are reasonable steps that can open access to land acquisition. However, be vigilant: rights to land acquired through marriage may be lost in the event of divorce or the spouse's death. This aspect requires serious consideration and preparation.

Key points

• Working with professionals: licensed real estate agents and reputable developers.
• Providing necessary information and assistance in avoiding undesirable risks.
• Visa benefits, such as a special visa for retirees (SRRV).

When you decide which property you want to purchase, it's important to follow the correct legal procedures for transferring ownership. Despite the challenges posed by local laws and bureaucracy, you will be able to successfully navigate this process if you are well-prepared and informed.

Conclusions

Ultimately, the Philippines offers plenty of opportunities for real estate investment, and with the right assistance and knowledge of the laws, you can realize your dream of owning a home in this unique corner of the world. It's important to remember that every deal is not just a financial investment, but also a significant life step. Look to the future with optimism and make use of all available resources to achieve your goals in the Philippines!