Certificate of Non Arrearages for Tax Compliance
Compliance with tax laws involves fulfilling obligations such as filing tax returns, on-time tax payments, and keeping accurate financial records. Proof such as the Certificate of Non-Arrearages from the Bureau of Internal Revenue (BIR) testifies that a taxpayer has no outstanding tax liabilities. Obtaining such documents is necessary for various transactions and business activities in the country including title transfer.
What is arrearage?
Arrearage means the state or condition of being in debt. Arrears, on the other hand, means the actual obligation to a debt is unpaid. Thus, to summarize, arrearage means the state or condition when one is in arrears.
The Importance of Certificate of Non Arrearages on Title Transfer
This certificate serves as a proof that the property is free from any outstanding financial obligations or arrears, such as unpaid taxes, dues, or fees. It provides assurance to both parties (seller and buyer) that the property can be transferred without any encumbrances that may affect the transfer of ownership.
In essence, the Certificate of Non-Arrearages acts as a safeguard to guarantee a clean and transparent transfer of property ownership, offering peace of mind to both the seller and the buyer by ensuring that all financial obligations have been settled prior to the title transfer.
Title Transfer Process
For various reasons, a property owner may choose to let go of his or her land. This may be through sale, donation, or inheritance. Before the property shall be transferred to the person it is intended to, it must undergo a rigorous process.
Note that the corresponding taxes must also be paid before the processing of the transfer of title may even begin. Once you have finished the transfer of title process, the person that it has been transferred to may now have legal ownership and possession of the property. The procedure for the transfer of title from the previous owner to the new owner is a straightforward process, provided that the documentary requirements that each government agency needs is complete upon submission.
Get a Certified True Copy (CTC) of the property title
The first step in starting the process of title transfer is to get a certified true copy of the title of the property. This can be obtained through the Register of Deeds. To be sure that the title that is to be transferred is a clean title, you must make sure to check if there are any encumbrances to it. For any form of deed of conveyance, make sure that it is duly notarized by the notary public.
Obtain a Certificate of Non-Arrerages or Tax Clearance Certificate
Before you are issued a Tax Clearance Certificate, the owners of the property or the person who is selling the property must pay the corresponding tax arrears, if any, with the Treasury. This reiterates the point earlier made that the specific taxes and fees that are needed to be paid must first be issued to the government before the processing of the transfer of title shall progress. If one is fully paid with his/her real property taxes, the City Assessor’s Office shall issue a Tax Clearance Certificate or a Certificate of Non-Arrearages.
Obtain a Latest Tax Declaration
One must also obtain from the Assessor’s Office of the municipality of which its jurisdiction lies where the property is found the latest tax declaration or assessment. This must be processed right away so as to avoid penalties or fees.
Paying the tax
Payment of the transfer tax, capital gains tax, and documentary stamp tax must also be done as well. This shall be paid through any Authorized Agent Banks or AAB. After which, you may now proceed to file with the Bureau of Internal Revenue the Certificate Authorizing Registration or CAR.
Apply for Transfer Certificate of Title (TCT)
Once the Certificate Authorizing Registration has been issued to you, you may then process your application at the Register of Deeds for the Transfer Certificate of Title or TCT. Upon the issuance of the Transfer Certificate of Title, you may now file for the issuance of a new assessment or Tax Declaration Certificate.
Need further information and assistance regarding the tax clearance process for transfer of title and application for certificate of non-arrearages? Talk to our team at FILEDOCSPHIL to know more about the requirements and process. Call us today at (+63) 917 149 2337 or send an email to info@filedocsphil.com or simply message us through the live chat for more information.