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Standard Taxes and Permits that Sellers must be Aware.

When selling a house, there are several standard taxes and permits that sellers must be aware of to ensure a smooth and legally compliant transaction. These taxes and permits can vary by country and region, but here is a general overview of what you might expect, with a focus on practices common in many jurisdictions, including the Philippines:

1. Capital Gains Tax (CGT)

  • Description: A tax on the profit (capital gains) earned from the sale of the property. This is not based on the income generated from the property, but rather on the difference between the selling price and the acquisition cost.

  • Typical Rate: In the Philippines, the CGT is typically 6% of the gross selling price or the zonal value or fair market value, whichever is higher.

2. Real Property Tax Clearance

  • Description: A clearance required to show that there are no outstanding real property taxes on the property being sold. This is necessary to transfer ownership to the buyer.

  • Process: The seller must go to the local government's treasurer's office where the property is located to pay any outstanding property taxes and obtain the tax clearance certificate.

3. Documentary Stamp Tax (DST)

  • Description: A tax imposed on documents, instruments, loan agreements, and papers evidencing the acceptance, assignment, sale, or transfer of an obligation, right, or property.

  • Typical Rate: In the Philippines, DST is 1.5% of the selling price, or zonal value or fair market value, whichever is higher.

4. Transfer Tax

  • Description: A tax imposed on any mode of transferring the ownership of real property, either through sale, donation, barter, or any other means.

  • Typical Rate: The rate varies depending on the location of the property. For example, in the Philippines, local government units (LGUs) charge this tax, and it can range from 0.5% to 0.75% of the selling price, zonal value, or fair market value, whichever is higher.

5. Broker's/Agent's Commission

  • Description: If a real estate agent or broker was involved in the sale, their commission must be paid. This is not a tax or a government-imposed fee, but it is a standard cost in the process of selling a house.

  • Typical Rate: Commission rates vary, but in the Philippines, they typically range from 3% to 5% of the total selling price.

6. Notary Fees

  • Description: The documents involved in the sale of the property, including the Deed of Absolute Sale (DOAS), must be notarized. This is a fee paid to the notary public for these services.

  • Cost: Varies depending on the notary and the amount of documentation. It's usually a small percentage of the property's selling price.

7. Home Inspection and Appraisal Fees

  • Description: While not taxes, these are costs associated with selling a house to determine its condition and value. These are usually paid for by the seller to help facilitate the sale and determine an appropriate selling price.

  • Cost: Varies depending on the service provider and the property size.

Important Considerations:

  • Compliance: Ensure all taxes and fees are correctly calculated and paid to avoid legal issues and penalties.

  • Documentation: Keep all receipts and documents related to the sale, including proof of tax payments and clearances, as these are required for the legal transfer of property ownership.

This overview provides a general guideline of the standard taxes and permits involved in selling a house. However, it's crucial to consult with a real estate professional or legal advisor in your specific region to ensure compliance with all local regulations and to get an accurate understanding of the costs involved in your particular case.

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