Purchasing your very first home can be an exciting and scary thing all at the same time. And with your new property comes new responsibilities as well, one of them is paying your property tax. Here in the Philippines, it is referred to as Real Property Tax (RPT).
According to the Local Government Code of 1991 or Republic Act no. 7160, property owners are required by law to pay RPT annually, which applies to all types of real properties, including lands, buildings, improvements, and machinery. These are taxes that you pay yearly, they are used by the government for fixing roads, building schools etc. These are usually determined by municipalities who hire a tax assessor to determine it based on your property and its location.
If you don’t pay your taxes, not only will you incur heavy penalties but the government will have the right to auction it off. The interest rate for failing to pay is two percent (2%) every month on the unpaid amount until the property owners fully pay their debt. The maximum is 36 months, which is equivalent to a maximum interest rate of 72%.
With all that information in mind, it’s best to know how to compute for property taxes and to know a couple of important rules to always bear in mind, some of which can even help you save money!
The Real Property Tax rate for Metro Manila is 2% while provinces are 1%. To compute for this you need to multiply the RPT rate and the assessed value of the property. The assessed value is the fair market value of the real property multiplied by the assessment level. The assessment level, on the other hand, is the percentage applied to the fair market value to determine the taxable value of the property.
People have options on how they want to pay for their RPT; they can either pay it in full or installment (quarterly payments). People who opt to pay in advance can avail of certain discounts which they can discuss with their local treasurer; these payments should be made before or on January 31st of each year. If they choose to pay in installments it is crucial for them to remember these payment dates:
1st quarter: On or before March 31
2nd quarter: On or before June 30
3rd quarter: On or before September 30
4th quarter: On or before December 3
However, there are some types of properties that are exempted from these taxes. Some of these properties are as follows:
– Educational institutions
– Government owned corporations
– Machinery that are used to reduce pollution
– Equipment used for environmental protection
Honestly, this can be a lot to process at first glance but with proper study you’ll eventually gain the knowledge you need. Just make sure to contact your local city or municipal treasurer from time to time to check if there are any new fees or updates in order to stay in the loop. By paying your taxes in time, or even better yet in advance, you are taking a huge step forward in becoming a responsible property owner.