Summary
The Philippines' Condominium Act, Republic Act No. 4726 of 1966, governs condominium ownership. Section 5 says a unit sale carries with it the owner's share in the common areas or in the condominium corporation that holds them. Where a corporation holds the common areas, a sale is invalid if it would push foreign ownership of that corporation past "the limits imposed by existing laws". Where unit owners co-own the common areas directly, units may be sold only to Filipino citizens or to companies at least 60% Filipino-owned, except by inheritance.
When a unit held as a capital asset is resold, the seller pays a final 6% capital gains tax (CGT) on the selling price, the zonal value or the assessor's market value, whichever is highest, and documentary stamp tax (DST), the Bureau of Internal Revenue (BIR) says.
What this means for foreign condo buyers in the Philippines
How the foreign limit works
| How the common areas are held | Who may buy a unit |
|---|---|
| By a condominium corporation | Anyone, as long as the sale does not take foreign ownership of the corporation past the legal limit |
| Directly by unit owners as co-owners | Filipino citizens and companies at least 60% Filipino-owned, except by inheritance |
Source: Republic Act No. 4726, Section 5.
For a foreign buyer, the question is how much of the condominium corporation is already foreign-owned. If a sale would breach the limit, it is not valid, even between willing parties. Ask the developer or the condominium corporation for the current foreign share before you pay a deposit.
Registering the purchase
A resale cannot be registered unless it comes with a certificate from the project's management body that it complies with the declaration of restrictions, Section 18 says. The Register of Deeds then issues a "condominium owner's" copy of the title. Each unit is assessed separately for real property tax (Section 25).
Taxes on a resale
For a sale of real property held as a capital asset, the BIR's Form 1706 guidelines set a final 6% CGT on the selling price, the zonal value set by the BIR, or the market value in the tax declaration, whichever is highest. The return is filed and paid within 30 days of the sale; for instalment sales, within 30 days of the first down payment and of each later instalment. DST is also due, on the consideration or market value, whichever is higher, using BIR Form 2000-OT. Property sold in the course of a business, such as a developer's sale, is not a capital asset and is taxed under different rules.
Illustration: a PHP 10 million resale
Illustration only. A foreign owner who holds a unit as a personal investment sells it for PHP 10 million. The zonal value is PHP 8 million and the assessed market value PHP 6 million. CGT is 6% of PHP 10 million, or PHP 600,000, due within 30 days of the sale.
FAQ
Can a foreigner own a condo unit in the Philippines? Yes, where the common areas are held by a condominium corporation and the sale keeps foreign ownership within the legal limit. Is capital gains tax always 6%? It is 6% on sales of real property held as a capital asset; sales in the ordinary course of business are taxed differently. Which value is CGT based on? The highest of the selling price, the BIR zonal value and the assessor's market value.
Education only — not tax, legal or investment advice. Confirm with a licensed professional.
What to do next
- Ask the condominium corporation for its current foreign-ownership share before you reserve a unit.
- Check the title and the master deed at the Register of Deeds.
- Agree in the deed of sale who pays CGT, DST and transfer costs.
- Ask a verified lawyer to handle the transfer: proprkey.com/en/pros?segment=legalFinance
- Compare condos for sale: proprkey.com/en/properties?segment=buyer&mode=buy