Penalties You May Get When Transferring a Land Title

Are you aware that there are penalties when transferring the title of your property? Not known to many, there are time restrictions given to specific documents that you need to submit for the title transfer. Some may give you five days to complete the process, while others may have up to 60 days for you to settle the requirements. Nevertheless, it’s important to be aware of these penalties so that you can avoid them and save money.

1. Delayed Capital Gains Tax

The Capital Gains Tax must be settled within 30 days after the notarization of the Deed of Sale. If you fail to settle this within the given period, you will incur a compromised penalty, 25% surcharge, and 12% interest rate per year.

2. Delayed Payment for the Documentary Stamp Tax

The Documentary Stamp Tax is 1.5% of the total value of the property. If you’re buying a 1-Million pesos property, you will need to pay additional Php 15,000 for the documentary stamp tax. This should be paid on or before the 5th day of the following month. For example, the notarization of the Deed of Sale is January 31, 2025. That means you must settle the documentary stamp payment on or before February 5, 2025. If not, you will have another compromised penalty, 25% surcharge, and 12% interest rate per year.

3. Delayed Transfer Tax Fee

The Transfer Tax Fee is .005% of the value of the property you are purchasing. So if the property is worth Php 1 million, you should pay an additional Php 5,000 for the transfer tax. It needs to be paid within 60 days after the notarization of the Deed of Sale. Or else, you will get another compromised penalty, 25% surcharge, and 2% interest per month.

Other Fees When Transferring a Title

In addition to these penalties, there are other fees that you need to pay when transferring the ownership of a property in the Philippines. The registration fee must be paid at the Registry of Deeds and this has a fix value according to the current formula to compute the amount. For example, if the property is worth Php 1 million, the registration fee is Php 5,730.

Lastly, you also need to ay the notarial fee in order to transfer the title of your property. Currently, this fee is up to 3% of the total selling price of the property. But since the most common rate is 1%, you will pay Php 10,000 if the property value is Php 1 million.

It’s not easy to transfer the title of any property because there are so many things that you need to process and huge fees to pay. So we suggest working with a real estate agent to simplify the process for you. At REALS Corporation, you can achieve your dream house or sell your property through our website. For inquiries, please don’t hesitate to contact us today!