Residence

Citizenship

Real Estate

Country information

Population: 114.900 Mill hab Aprox.

Capital: Manila.

Official Language: Tagalog and English.

Income percapita: $12.200 Dólares PPA.

General Rule for Foreigners Buying Property:

Foreigners cannot own land in the Philippines. However, there are ways to legally acquire property through specific methods. Here's a breakdown of how you can buy property:

Can a Foreigner Buy Land in the Philippines?

Foreigners are prohibited from directly owning land in the Philippines, but they can own buildings, condominiums, or properties with land under certain conditions.

Key Restrictions on Land Ownership:

• Foreigners cannot own land: A foreigner is not allowed to own land in the Philippines outright.

• Ownership of land via corporations: If a foreigner wants to own land, one option is to create a corporation in the Philippines. The corporation must be at least 60% Filipino-owned. As a shareholder in a Filipino-owned corporation, you can effectively own land through that corporation.

• Ownership of agricultural land: Foreigners are restricted from owning agricultural land unless it is for a legitimate business or investment purpose. If the land is for commercial purposes (like a registered business investment), certain rules may allow foreign ownership in specific cases.

Can a Foreigner Buy Condominium Units?

Yes, foreigners can own condominium units in the Philippines, provided they adhere to the following rules:

• Condominium Ownership Limit: Foreigners are allowed to own up to 40% of the total units in any condominium building. This means that in a building with 100 units, only 40 units can be owned by foreigners. The remaining 60% of the units must be owned by Filipino citizens or Philippine entities.

• Foreign Ownership in Condominiums: As long as the building’s foreign ownership doesn’t exceed 40%, foreigners are free to purchase and own individual condominium units.

How to Buy Real Estate in the Philippines as a Foreigner:

Step 1: Research and Choose Property

You can look for properties on various online platforms like FundaCasa, DotProperty, or through real estate agents in the Philippines. The most common properties foreigners buy are condominiums, but they may also invest in commercial properties, provided they comply with regulations.

Step 2: Due Diligence

Before making any purchases, it’s important to:

• Check the property’s legal status: Verify that the title is clear, and there are no encumbrances or liens. You can do this through the Registry of Deeds.

• Verify the ownership: Ensure the seller is the legitimate owner and has the legal right to sell the property.

• Check the condominium’s foreign ownership: Confirm that the building has not exceeded the 40% foreign ownership limit.

Step 3: Sales Agreement and Payment

Once you find the property and verify its legal status, you will need to sign a Sale and Purchase Agreement. You may also need to pay an initial deposit, which can vary depending on the property.

Step 4: Closing the Deal

After the agreement, you will go through the closing process, which typically includes:

• Payment of taxes and fees: Buyers are responsible for the payment of documentary stamp tax, notarial fees, registration fees, and other taxes related to the transfer of property.

• Transfer of the title: The property title will be transferred into your name or the name of the foreign corporation if you are purchasing land through a corporation.

Step 5: Registration of Property

The final step involves registering the deed of sale with the Registry of Deeds in the city or municipality where the property is located. This is necessary for the legal transfer of the property ownership.

Legal Considerations:

• Notary Public: Ensure that the sale contract and title transfer are done in front of a notary public to make it legally binding.

• Real Estate Agent: It's advisable to work with a licensed real estate agent or lawyer who is familiar with Philippine property laws to avoid pitfalls and ensure the transaction runs smoothly.

Taxes and Fees:

There are several costs associated with buying real estate in the Philippines:

• Documentary Stamp Tax: This is 1.5% of the total purchase price of the property or the zonal value (whichever is higher).

• Transfer Tax: This varies by locality but typically ranges between 0.5% to 0.75% of the purchase price or zonal value.

• Registration Fees: A fee is paid to the Registry of Deeds for registering the transfer of ownership, typically around 0.25% to 0.5% of the total sale price.

• Notary Fees: Fees for notarizing the deed of sale are also a cost, typically around 1% to 2% of the property's sale price.

• Capital Gains Tax: If you sell the property in the future, there may be a capital gains tax of 6% on the sale price.

Foreign-Owned Corporation for Land Ownership:

If you want to buy land as a foreigner, setting up a Filipino corporation is an option. The corporation must be at least 60% Filipino-owned. Foreigners can hold 40% of the shares. The corporation can then purchase land on behalf of its shareholders.

Residency and Real Estate Ownership:

Owning real estate does not automatically grant you residency in the Philippines. However, foreign property ownership may be a factor that supports an application for a Special Investor’s Resident Visa (SIRV) or a Special Resident Retiree’s Visa (SRRV), which allows long-term stays in the country.

Mortgage for Foreigners:

It’s possible for foreigners to get a mortgage in the Philippines, but only Philippine banks offer mortgages to non-residents. You will typically need to meet certain requirements such as:

• A 50% down payment or more.

• Proof of income and financial capacity.

• Local address in the Philippines (in some cases).

Foreigners with a mortgage will also need to make sure they comply with the property ownership laws regarding land ownership.

Foreign Ownership Restrictions on Agricultural Land:

As previously mentioned, there are strict limits on foreign ownership of agricultural land. Foreigners are not allowed to own agricultural land in the Philippines unless they meet specific criteria, such as being involved in a registered business. Generally, this applies only to 5 hectares (12 acres) of land.

Conclusion:

• Yes, foreigners can buy property in the Philippines, but there are restrictions when it comes to land ownership.

• Foreigners can buy condominiums with up to 40% foreign ownership.

• Land ownership is possible through a corporation that is at least 60% Filipino-owned, or through special rules for agricultural land under certain conditions.

• The process involves doing due diligence, paying taxes, and registering the property with the appropriate authorities.

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