Guide to Buying Property in the Philippines as a Foreigner

Every year, many foreigners choose to move to the Philippines to set up their businesses or start a new life with an affordable cost of living and tropical climate. While many choose to rent, those who plan on staying for more than a few years often opt for buying property as it is more cost-effective. 

However, purchasing property in the Philippines as a non-Filipino citizen comes with specific legal restrictions and requirements.

In this article, we will take a look at these restrictions and walk you through the process of buying property in the Philippines as a foreigner.

Can Foreigners Buy Property in the Philippines?

First things first, can foreigners buy property in the Philippines? And the answer to this depends on the type of property.

• Foreigners cannot directly own land in the Philippines. The Philippine Constitution restricts land ownership to Filipino citizens and corporations with at least 60% Filipino ownership.
• Foreigners can purchase condominium units, but foreign ownership in the building must not exceed 40%.

4 Ways to buy property in the Philippines as a foreigner

Now that we’ve established the key restrictions on property ownership for foreigners, let’s explore the viable options available for purchasing property in the Philippines.

1. Buy a Condo

Condominium units are the most straightforward option for foreign property ownership in the Philippines. You can fully own condominium units, provided that the Filipino ownership in the entire condominium development is 60% or more.

This option is particularly appealing to foreigners who do not want to involve themselves in the complications of land leases or other restrictions.

Upon the purchase of a condominium unit, you’ll receive a Condominium Certificate of Title (CCT), which serves as proof of your ownership.

As for compliance with Filipino and foreign ownership requirements, it is the responsibility of the developer’s or building management rather than buyer. Therefore, as a buyer, you would not have to concern yourself with that.

2. Long-Term Land Lease for Building a House

If you plan on building a house in the Philippines for living or investment, the alternate solution is a long-term land lease. You can initially enter into a lease agreement for land for up to 50 years with the possibility of renewal for another 25 years.

This way, you “own” the property by leasing the land it sits on. While you don’t have the same level of control as ownership, a long-term lease is still a commonly used option among foreigners for building a house or investment property.

3. Set Up a Corporation

For those looking for a more long-term solution to buying property in the Philippines without limiting themselves to condos, it is advisable to register a corporation in the Philippines with 60% Filipino ownership.

Such corporations can buy land and hold the title to the property, making it suitable for larger-scale investments and the security of your assets. 

However, keep in mind that the process of setting up a Philippine corporation is complex, especially with a 60% Filipino-owned corporation. That is because you need to retain control despite having minority shares. 

Therefore, it is advisable to consult our legal experts who understand the local regulations and will handle the process on your behalf to secure your property investments in the Philippines.

4. Buy Property Under the Name of Your Filipino Spouse

If you’re married to a Filipino citizen, it is possible for you to purchase property in your spouse’s name. While this doesn’t grant you direct ownership, it can provide a workaround to the foreign ownership restrictions.

It is important to note that the property legally belongs to your Filipino spouse, not you. Therefore, you will not have any legal authority when it comes to any important decisions.

Before you choose any of the options mentioned above, it is highly recommended to discuss your needs and goals with local experts. You can book a free consultation with Emerhub’s property experts by filling out the form below. We will discuss your plans and how we can help you buy property in compliance with local regulations.

Property due diligence in the Philippines

It is not uncommon for foreign investors and buyers to become a victim of notorious property scams. Scammers often exploit the lack of knowledge and insufficient due diligence on the part of the buyers.

Common property scams in the Philippines include double-selling a property, using falsified documents to sell property not actually owned by the seller, and selling properties with ownership disputed in active court cases or other legal challenges.

Therefore, to safeguard your investment, you must conduct thorough due diligence before finalizing your property purchase in the Philippines. This process will help you ensure you’re making a sound investment and avoid potential legal issues that can go on for years.

Key aspects to focus on during property due diligence in the Philippines include:

• Title Verification: Check the property’s title at the Register of Deeds to confirm the seller’s ownership and identify any existing liens or encumbrances.
• Tax Clearance: Once you verify the title, obtain a tax clearance certificate from the local treasurer’s office to ensure all property taxes are up to date.
• Zoning and Land Use: Verify the property’s zoning classification with the local planning office to ensure your intended use is allowed.
• Building Permits and Compliance: For existing structures, confirm that all necessary building permits were obtained and there are no outstanding code violations.

Considering the importance of due diligence, it is advisable to have qualified local experts such as Emerhub review all documents and contracts. This helps to ensure that there are no potential issues related to the property and all documents are in compliance with Philippine law.

Fees and taxes for property ownership in the Philippines

In addition to the purchase price, the purchase of property involves additional fees and taxes that either the seller or the buyer needs to pay.

Here is an overview of the various property transaction fees in the Philippine as well who is responsible for the payment:

Fee	Rate	Basis	Responsible Party
Capital Gains Tax	6%	Sales price, zonal value, or fair market value (whichever is highest)	Normally paid by the seller
Documentary Stamp Tax	1.5%	Sales price, zonal value, or fair market value (whichever is highest)	Buyer
Transfer Tax	0.5% to 0.75%	Sales price, zonal value, or fair market value (whichever is highest; varies by location)	Buyer
Title Registration Fee	Generally around 0.25%	Sales price	Buyer

How to buy property in the Philippines as a foreigner

1. Property Search and Selection

Begin by researching different areas and properties that align with your investment criteria or personal preferences. Consider key factors such as location, price, potential for appreciation, and amenities. Emerhub’s team can assist you in identifying and shortlisting properties that meet your needs.

2. Letter of Intent (LOI) / Reservation Agreement

Once you’ve pinpointed a property, you may proceed by submitting an LOI to the seller or signing a reservation agreement, especially for pre-selling projects or properties from developers. This usually involves paying a reservation fee to secure the unit and take it off the market while terms are being finalized.

3. Conduct Thorough Due Diligence

This is a non-negotiable step before committing to the purchase. Comprehensive due diligence protects you from potential scams and future legal complications. Emerhub’s experts will conduct this on your behalf. This includes:

• Verifying the authenticity of the property title (e.g., Transfer Certificate of Title – TCT, or Condominium Certificate of Title – CCT) with the Registry of Deeds.
• Checking for any existing liens, encumbrances, or annotations on the title.
• Ensuring real estate taxes are up to date.
• Confirming zoning regulations and land use compliance.

4. Execution of the Deed of Absolute Sale (DOAS)

After successful due diligence and agreement on terms, the DOAS is prepared. This is a legally binding document that formalizes the sale, outlines the terms, and transfers all rights of the property from the seller to you. Emerhub’s legal experts will meticulously draft or review the DOAS to ensure your interests are protected. The full purchase price is typically paid upon the signing of the DOAS, unless an alternative payment schedule (e.g., for pre-selling properties) has been agreed upon. The DOAS must be notarized.

Processing National Tax Payments with the Bureau of Internal Revenue (BIR)

Before the property title can be officially transferred to your name, several national taxes must be paid:

• Capital Gains Tax (CGT): Typically 6% of the gross selling price, zonal value, or fair market value as determined by the City Assessor, whichever is highest. This is generally shouldered by the seller.
• Documentary Stamp Tax (DST): 1.5% of the actual consideration, zonal value or fair market value, whichever is highest. This is often paid by the buyer, or as agreed by the parties. Our team will facilitate these payments and secure the Certificate Authorizing Registration (CAR) from the BIR. The CAR is a mandatory document required by the Registry of Deeds for the title transfer.

5. Payment of Local Transfer Tax

In addition to national taxes, a local transfer tax must be paid to the City or Municipal Treasurer’s Office where the property is situated. The rate varies by location but is typically between 0.5% and 0.75% of the sale price, zonal value, or fair market value.

6. Property Registration with the Registry of Deeds (RD)

With the notarized DOAS, the CAR from BIR, and official receipts for all relevant tax payments (CGT, DST, Local Transfer Tax), the transaction is then registered with the Registry of Deeds. The RD will cancel the seller’s existing title and issue a new TCT or CCT in your name (or your corporation’s name). You will then receive the Owner’s Duplicate Copy of this new title.

7. Updating the Tax Declaration

The final step is to request an updated Tax Declaration for the property from the local City or Municipal Assessor’s Office. This document will reflect your name as the new owner and is important for future real property tax payments.

Emerhub can also manage this final step on your behalf.

Buy property in the Philippines with Emerhub

Emerhub offers expert assistance to foreign investors and individuals planning to explore the Philippines market.

Our team of local experts understands the nuances of Philippine real estate laws and can help you navigate ownership restrictions. Furthermore, we will help you find the right property as per your needs, conduct thorough due diligence on your behalf, and prepare the necessary legal documentation.

Schedule a free consultation with an Emerhub expert to discuss your plans and explore your options.