Real Estate Taxes: Why do I need to Pay for It?
Real Property Tax is the tax on real property imposed by the Local Government Unit (LGU). The legal basis is Title II of the Local Government Code (LGC), Republic Act (R.A.) no. 7160. The implementing rules and regulations of R. A. 7160 can be found here.
It is paid by the owner of administrator of the property at the city or Municipality’s Treasurers Office, and will be accure on the first day of January and from that date it shall constitute a lien on the property which shall be superior to any other lien, mortgage, or encumbrance of any kind whatever, and shall be extinguished only upon payment of the delinquent tax. In the failure to pay the basic property tax and other taxes when due, the interest at the rate of two percent (2%) per month shall be imposed on the unpaid amount, until fully paid. The maximum number of months is thirty-six (36) months, so effectively, the maximum interest rate is seventy-two percent (72%). Prior years’ delinquencies, interests, and penalties shall be paid and settled first before your tax payment may be credited for the current period.
Who is responsible for the tax payment?
Responsible for the payment is the owner or administrator of the property.
How much should be paid?
The RPT rate for the cities and municipalities in Metro Manila is two percent (2%) while for provinces it is one percent (1%).
To compute for RPT, the RPT rate is multiplied by the assessed value of the property.
Assessed value is the fair market value of the real property multiplied by the assessment level. It is synonymous with taxable value. On the other hand, the assessment level is the percentage applied to the fair market value to determine the taxable value of the property. It shall be fixed through ordinances imposed by the city or provincial government. It can be as high as twenty percent (20%) for residential land and fifty percent (50%) for commercial and industrial lands.
LGUs may levy and collect an annual tax of one percent (1%) on the assessed value of the real property which shall be in addition to the basic real property tax. The collection shall be accrued to the Special Education Fund (SEF). Moreover, at the rate not exceeding five percent (5%) of the assessed value of the property may be imposed annually as an additional ad valorem tax on idle lands.
Deadline for the payment of RPT
Options to pay the RPT in full or in installment, which is quarterly, can be preferred. Taxpayers can opt to pay for one whole year. If so, the payment is due on or before the thirty-first (31st) of January each year. Discounts can be availed by owners who settle their taxes in advance. If you want to avail of such benefit, you can check with your city or municipal treasurer. However, if they decide to pay in installment, they have to religiously remember these 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 31
What is the advantage of an advance payment?
Real Estate Taxes are paid at the Treasurer’s Office of the LGU is responsible for the collection of RPT. Failure to pay the RPT on the schedule will result in having penalties. Late payments shall subject the taxpayers to the payment interest at the rate of two percent (2%) per month on the unpaid amount to a maximum of seventy-two (72%) percent or thirty-six (36) months.