Before anything else, make sure that the person who will be doing the transfer of documents from Seller’s name to Buyer’s name has the notarized Special Power of Attorney (SPA) as this is now needed, to give legitimacy to the person processing the transfer.
Right after signing of Deed of Absolute Sale (DoAS) & full payment of agreed selling price of the property, DoAS needs to be notarized soonest and both Seller & Buyer shall get their original copies of DoAS, as soon as possible. This gesture shows competence on the part of the Broker or Brokers involved. It gives peace & assurance to Seller more so on the part of the Buyer, that he is holding on to something that’s tangible and legit, while documents are in process.
In a normal simple transaction such as this, given that the title of the property is under the personal name of the Seller, only Capital Gains Tax (6% of selling price) and Brokers Professional Fee of 3%-5% are shouldered by the Seller.
On the other hand, Buyer’s account are Documentary Stamp Tax (1.5 % of Selling Price), Transfer Tax and Registration Fee and other miscellaneous fees should be confirmed with the LGU where the property for sale falls under.
It’s noteworthy to know that prior to finalizing the sale transaction, to have the Tax Identification Number. (TIN) of the Seller checked, to make sure (better safe than sorry later…) that the he is not registered in the system of the Bureau of Internal Revenue (BIR) as a lessor or habitually engaged in buying and selling of properties, because if either of these will be red flagged, it means there’s Vat involved as well as income taxes on those years that the Seller has not declared income taxes, the amounts involved will all of a sudden be exponential.
These are the timelines that needs to be aligned with when you’re closing your sale transaction…
Capital Gains Tax (CGT): needs to be paid before within thirty (30) days from the date notarized, otherwise BIR will charge penalties for late payments.
Documentary Stamp Tax (DST): needs to be paid before the 5th of every month, it’s vital that your timeline should align in a manner that the notary of DoAS should be way before the 5th of every month or after the 6th of the month; make sure to skip the 5th, otherwise penalties will again the charged for late payment.
Transfer Tax: In general LGU’s require payment within 60 days from the notary date of the DoAS.
Registration Fee: should be paid to the Registry of Deeds when all the documents to include, titles, the Certificate Authorizing Registration, Real Property Tax Clearance and Transfer Tax payments are made and ready for submission.
Do note that incidental expenses like IT Fee (Registry of Deeds), notarial fee and all miscellaneous expenses shall be for the account of the Buyer, as these are all to effect transfer of title to the new owner, the Buyer.
CGT & DST shall be paid together right after notary of DoAS. These shall be paid in accredited banks of BIR. On a practical note, find the bank closest to which Revenue District Office (RDO) you will be filing. To determine your RDO, check first the location of your property, which LGU, municipality, city or province, then check specific RDO in the area.
After which, BIR will process payments of Certificate of Authority to Register (CAR), which will take about 2/3 weeks, more or less. While waiting you can be proactively pay already your Registration Fee and Transfer Tax to avoid unforeseen situations prior to deadline.
By the way, check payees for specific government agencies when paying these, you need to be very sure that you have the correct payees and details so as to avoid hassle and time delay of going back and forth, because it will be too much hassle to commit an error on these.
Processing time after release of CAR from BIR upon submission of documents (including original title, TCT / CCT) to Registry of Deeds will take about ⅔ weeks, more or less. Upon pick-up of new title under new owner’s name, make sure to have Tax Dec done too. Process will only take a few days.
Make sure that the Seller has a complete set of documents placed and submitted to all government agencies. Should you have questions with regards to transfer of documents, feel free to send us a message and we will get back to you at the soonest possible time.