Tax Declaration Transfer in the Philippines: Complete Guide to Transfer Tax and Property Ownership

Transferring ownership of real property in the Philippines involves more than just signing a Deed of Sale or inheriting land from a family member. One of the most overlooked, but legally important, is the transfer of tax declaration. Without completing this step, the new owner may face difficulties paying real property taxes, registering ownership, or even selling the property in the future.

In this comprehensive guide, we explain what a tax declaration is, how transfer tax affects the transfer of tax declaration, when and where transfer taxes must be paid, and how professional service providers can help ensure a smooth and compliant title transfer in the Philippine setting.

What is Tax Declaration?

A Tax Declaration is a document issued by the City or Municipal Assessor’s Office that identifies the property’s assessed value, its classification (residential, commercial, or agricultural), and the person liable for the Real Property Tax (RPT).

While the Transfer Certificate of Title or TCT proves legal ownership under the Torrens system, the tax declaration is the primary document used for fiscal purposes. In the Philippines, you cannot truly say a property is “fully transferred” until both the title and the tax declaration reflect your name.

What is Transfer Tax?

Transfer tax is a local tax imposed on transactions involving the sale, donation, barter, inheritance, or transfer of real property ownership. It is required before the Register of Deeds can issue a new title and before the tax declaration can be transferred to the new owner’s name.

Transfer tax rates vary depending on the Local Government Unit (LGU) where the property is located:

• Up to 0.50% of the property’s selling price or fair market value (municipalities)
• Up to 0.75% (cities and Metro Manila)

The applicable rate is based on the higher value between:

• Selling price stated in the Deed of Sale
• Fair Market Value (FMV) per tax declaration or zonal valuation

Who is Responsible for the Payment of Transfer Tax?

In standard Philippine real estate practice, the Buyer typically covers the transfer tax, registration fees, and documentary stamps. The Seller is usually responsible for the Capital Gains Tax (CGT) and any outstanding real property taxes or estate taxes. However, these terms are negotiable during the “birth” of the contract (the drafting of the Deed of Sale).

When are Transfer Taxes due?

As a taxpayer settling dues, transfer taxes must be settled within sixty (60) consecutive days starting from the execution of the contract or notarization (Deed of Sale or Transfer of Title).

Once your payment is settled, the LGU involved shall issue a clearance document that shall serve as evidence of the payment of your transfer taxes. Acquiring this document is highly significant as this is a mandatory requirement when registering the deed of Absolute Sale of the property at hand. This is also a mandatory requirement when requesting the cancellation of the old tax declaration for the acquisition of a new one.

Penalties Accrued due to Late Payment of Transfer Tax

In the event that the taxpayer fails to pay or is late to pay the transfer tax due, the 60-day window, provided by Section 168 of Republic Act 7160 (also known as our Local Government Code), the following penalties shall apply:

(a) Surcharge not exceeding twenty-five percent (25%) of the amount of taxes, fees, or charges not paid on time;

(b) Penalties no more than two percent (2%) per month of the unpaid taxes, fees, or charges, including the surcharge, until such amount is fully paid but should not exceed thirty-six (36) months or seventy two percent (72%).  

Beyond the financial loss, a “stale” transfer process can lead to the expiration of certain BIR documents, forcing you to re-apply and pay additional “re-issuance” fees.

Where to pay Transfer Tax?

You may settle your transfer tax at either the  or at the Local Treasurer’s Office (LTO) of the Municipality/City where the transferred or bought property is located. In most cases, it Bureau of Internal Revenue (BIR)is much easier to pay at the Local Treasurer’s Office (LTO), as their jurisdiction falls directly to the property located in their specific city/municipality.

Requirements for Tax Declaration Transfer

Be mindful that before visiting the respective Local Government Unit (LGU) handling and receiving transfer taxes. You must first acquire the original copies of the following:

• New Transfer Certificate of Title (TCT): Issued by the Registry of Deeds.
• Deed of Absolute Sale (DOAS): Must be notarized and stamped by the BIR.
• Certificate Authorizing Registration (eCAR): The electronic clearance from the BIR.
• Transfer Tax Receipt: The official receipt from the Local Treasurer’s Office.
• Real Property Tax (RPT) Clearance: Proof that the previous owner has no outstanding tax debts.
• Latest Tax Declaration: The old copy under the previous owner’s name.
• Photo of the Property: Some LGUs require a recent photo of the house or lot for assessment.
• Approved Survey Plan: Necessary if the property was recently subdivided.

Providing and saving photocopied duplicates of these documents is also a tactful way of keeping records up to date when the time comes when they are required for validation.

How to Transfer Tax Declaration: Step-by-Step Guide

Here’s the general process of transferring the tax declaration. Process may vary depending on the specific LGU.

Step 1: Secure the Certificate Authorizing Registration (eCAR)

After paying the Capital Gains Tax and Documentary Stamp Tax at the Bureau of Internal Revenue (BIR), you will receive the eCAR. This document proves the national taxes have been settled.

Step 2: Pay the Local Transfer Tax

Head to the City or Municipal Treasurer’s Office. Present your eCAR and Deed of Sale to pay the local transfer tax (usually 0.5% to 0.75% of the property value, depending on the LGU).

Step 3: Register with the Registry of Deeds (RD)

Submit the old TCT, eCAR, and Transfer Tax Receipt to the RD. They will cancel the seller’s title and issue a new Transfer Certificate of Title in your name.

Step 4: The Assessor’s Office

Once you have the new TCT, you must go to the Municipal or City Assessor’s Office to request the transfer of the tax declaration. This is where you officially “change the name” on the tax records.

Petition to File Protest under RA 7160

You may also file for a written protest pursuant to Section 195 of R.A. 7160, assuming that you disagree with the Local Treasurer’s computation regarding your transfer taxes.

“SECTION 195.  Protest of Assessment. — When the local treasurer or his duly authorized representative finds that the correct taxes, fees, or charges have not been paid, he shall issue a notice of assessment stating the nature of the tax, fee, or charge, the amount of deficiency, the surcharges, interests and penalties.  Within sixty (60) days from the receipt of the notice of assessment, the taxpayer may file a written protest with the local treasurer contesting the assessment; otherwise, the assessment shall become final and executory. The local treasurer shall decide the protest within sixty (60) days from the time of its filing. If the local treasurer finds the protest to be wholly or partly meritorious, he shall issue a notice cancelling wholly or partially the assessment. However, if the local treasurer finds the assessment to be wholly or partly correct, he shall deny the protest wholly or partly with notice to the taxpayer. The taxpayer shall have thirty (30) days from the receipt of the denial of the protest or from the lapse of the sixty-day (60) period prescribed herein within which to appeal with the court of competent jurisdiction, otherwise the assessment becomes conclusive and unappealable.”

Sounds Overwhelming? It doesn’t have to be!

Hiring a professional service provider is highly advisable when transferring a tax declaration and land title in the Philippines, as the process is notoriously bureaucratic and time-consuming. It requires coordination with multiple government agencies, including the Bureau of Internal Revenue (BIR), the Local Treasurer’s Office and Assessor’s Office (LTO), and the Register of Deeds (RD), each with its own procedures, documentary requirements, and strict cut-off times. 

A professional service provider, such as FileDocsPhil, conducts thorough due diligence by verifying whether the property title is clean and checking for hidden tax liabilities or encumbrances before you even proceed with payment. They also ensure efficiency by navigating the specific and often varying requirements of different LGUs, such as Quezon City, Makati, and Taguig, which can save weeks of unnecessary back-and-forth. Through careful accuracy, service providers make sure that all forms and supporting documents are correctly prepared and filed, helping clients avoid costly errors such as re-notarization or document rejection.