More information on settling on the beautiful island of Palawan.

The beautiful island of Palawan in the Philippines attracts plenty of foreign retirees and travelers that have an appetite for its warm climate, high quality of life, and low living costs. Palawan is comprised of thousands of islands and is the home of some of the most magnificent natural sceneries and animal wild-life in the Philippines. Another benefit of living in the Philippines is that you won’t have any issues communicating in English.

 

The Philippines offers several long-term visas that can be obtained comparatively easily. Due to its attractiveness, individuals and corporations alike want to buy land in Palawan to build a private home or a vast space of beachfront land to develop hotels. Buying land in the Philippines can be complex though, especially if you try to navigate the market as a foreigner. Not only do you have to deal with the regulations for foreign land ownership, but limited information about prices and the buying process.

 

Below, we cover the following topics:

 

·    Can foreigners buy land in the Philippines?

·    Buying Land Through a Company.

·    The Process for Land Acquisitions.

·    General Advice When Buying Land.

·    Taxes.

·    How to Find Land for Sale.

 

Can foreigners buy land in the Philippines?

 

In the Philippines, regulations are similar to that of Thailand, Vietnam, and Cambodia as foreign individuals can only purchase condominium units. These can be bought on a freehold basis.

 

When it comes to buying land, one option foreign individuals have is to lease land with a leasehold period of up to 25 years and that is renewable for another 25 years.

 

Buying Land Through a Company

 

Another option is to acquire the land either by having a spouse from the Philippines or through a company.

Keep in mind that in order for the Board of Investment (BOI) to grant and recognize the purchase, 60% of the company shares have to be allocated for Filipino citizens.

This is sometimes resolved through contractual setups which give you a majority of the voting rights and full control of the company.

This is not as straight-forward as it sounds in most instances and should be thoroughly discussed with a local lawyer.

As a foreigner, you can only own 1,000 square meters (0.25 acres) of urban land and around 2.5 acres of rural land. It’s important that you work with a credible local lawyer that can help you to check the title deed and draft a watertight contract.

 

The Process for Land Acquisitions

 

The legal process is as follows when foreigners buy land in the Philippines. Keep in mind that some important steps, such as the consultation with lawyers, have not been included.

 

·    You agree on the purchase with the seller and the lawyer helps you to create and notarize the Deed of Absolute Sale (DOAS).

·    Contact the Bureau of Internal Revenue (BIR) and request a Land Tax Declaration. The document should be submitted to the Assessor’s Office in your municipality.

·    You pay the real estate tax to the City Treasurer’s Office.

·    The value of the unit is confirmed by the Assessor’s Office.

·    You pay the transfer taxes to the Assessor’s Office, in accordance with the values appreciated.

·    The Documentary Stamp Tax and Capital Gains Tax are paid to the Bureau of Internal Revenue (BIR).

·    A new title should be issued and the old one canceled by the Registry of Deeds (RD).

·    You get a photocopy of the new title deed. Besides, you should contact the Assessor’s Office to ask for a tax declaration.

 

General Advice When Buying Land

 

Before you can find some important and general advice when buying land as a foreigner in the Philippines. Keep in mind that these are just some examples and you should add items to the list.

 

·    The further away you get from the capital, the more cautious you have to be.

·    Titled property is by far the best that you can find. A certified copy of the title, tax map, tax declaration, and other verified documents should be received.

·    There should not be any liens or encumbrances to the property and the record should be clean.

·    If there are any mortgages or encumbrances on the property, these should be canceled.

 

Taxes

 

You have to pay the following taxes when buying and selling land in the Philippines.

 

Notary Fee

 

The buyer generally pays a notary fee which is 1% to 2% of the zonal value or the total real estate value, whichever is the highest.

 

Transfer Tax

 

Buyers also have to pay for the transfer tax which is set to 0.50% to 0.75%. Again, the rate is multiplied by the zonal value or the sales value, whatever is higher.

 

Registration Fee

 

A registration fee of the land is paid by the buyer where the rate is 1% and multiplied by the zonal value or the sales value.

 

Documentary Stamp Tax

 

A documentary stamp tax also referred to as documentary stamp duty, is paid and 1.5%, multiplied by the sales value or zonal value.

 

Capital Gains Tax

 

A capital gains tax of 6% is generally paid by the seller, but sometimes included in the sales price and born by the buyer. Thus, the capital gains tax can be paid by either the seller, buyer, or both. It depends on what you and the seller agree on.

 

Real Estate Agent's Fee

 

Agents’ fees are generally lower for large real estate transactions where the buyer’s representative will ask 1%, and the seller’s representative also at 1%. Thus, the rate fluctuates and it’s not fixed. This rate is significantly lower for large transactions compared to usually around 6% for residential units.

 

How can I find land for sale?

 

It’s not always easy to find good land for sale and buyers sometimes try to scroll through listings that are sometimes not updated or with limited information about the land. A preferable choice can therefore be to work with a local partner that presents multiple choices at a time and don’t try to sell a specific listing.

 

If you’re interested in investing in land in Palawan and need help, feel free to send us a message through the form below and we will come back at the earliest possible.

 

More about Palawan

https://www.huffpost.com/entry/coron-palawan-philippines_n_6193058

https://www.tripadvisor.com/Tourism-g294255-Palawan_Island.html

https://www.cntraveler.com/galleries/2015-07-13/most-beautiful-island-in-the-world

https://philippinetourismusa.com/palawan-philippines-beautiful-island-world/

https://www.asianjournal.com/life-style/palawan-the-most-beautiful-island-in-the-world/

https://www.dream-palawan.com/best-island-in-the-world/