Procedure on Real Estate Sale Transaction - Part 3 of 3

[Basic Knowledge for Brokers]

This is the complex step-by-step procedure followed by a licensed Real Estate Broker to perfect a real estate sale transaction.

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Payment of Transfer Tax

§ Payee: Treasurer of the City of _______________

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Payment of the Registration Fee

§ Payee: Registry of Deed for __________________

§ Tip: The buyer should prepare a separate check representing the BIR payment in the account of the seller. (The amount is to be deducted from the final balance of the purchase price). This facilitates the processing of the BIR payments.

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Paying BIR: Capital Gains Tax/ Creditable Withholding Tax and Documentary Stamps Tax

Proceed to the Officer of the Day at the BIR office and present the following documents:

§ Original Owner’s Duplicate of Title or Certified True Copy of the Title

§ Deed of Absolute Sale (notarized)

§ Special Power of Attorney (if applicable)

§ Certified True Copy of Tax Declaration of the lot and improvement

§ Form 1706 or 1602-E

§ Form 2000

§ Form 1904 or 1903 (to check the TIN of seller and buyer)

§ For vacant lots: (1) Sworn Statement of No-Improvement (notarized) and (2) Certificate of No-Improvement from the Assessor’s Office

§ For condominium units: (1) Certificate of Management from the Condominium Association

§ For corporation: (1) SEC Registration, (2) Board Resolution authorizing registration, (3) Special Power of Attorney (if applicable)

The BIR Officer of the day will check all the documents and compute the Capital Gains Tax or Creditable Withholding Tax an Documentary Stamps Tax

The TIN of the seller and buyer will be verified in the computer. If the seller or buyer has no TIN, a new TIN will be assigned by the BIR.

Taxes are paid at the accredited bank nearest the BIR branch. Requirement of the bank:

§ Form 2000

§ Form 1706 or 1601-E

§ Deposit Slip

§ Cash or Manager’s Check

§ Get official receipts or deposit slips of the taxes you paid. Make sure that your also have the machine validation on Form 1706/ 1601-E and 2000. Make duplicate copies.

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Go back to the BIR office and submit your proof of payment from the bank together with all the documents that you previously presented to the Officer of the Day.

§ The Officer of the Day will again check the documents.

§ You will buy the documentary stamp and pay the Certification fee.

§ You will then submit all the documents and the stamp to the BIR personnel in charge of this work.

§ The personnel will record the transaction and the documents and will issue a claim slip indicating the date when you will return to claim the Certificate Authorizing Registration (CAR)/ Tax Clearance. It normally takes 5 working days to get the CAR/ Tax Clearance.

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Paying the Transfer Tax

For properties in Pasig and Quezon City, once you get the CAR from BIR, proceed to the Treasurer’s Office to pay the Business Tax aside from the Transfer Tax. In other cities, only the latter is necessary. Requirements of the Treasurer’s Office (photocopies only):

§ Title

§ Deed of Absolute Sale with BIR stamp

§ Tax Declaration- Certified True Copy, both of lot and improvement

§ CAR/ Tax Clearance from BIR

§ Form 2000

§ Form 1706 and 1602-E

§ Official receipts of the payment of the CGT/CWT/DST

§ Property Tax Clearance

§ Certificate of No-Improvement

§ If the seller is corporation, submit a Mayor’s Permit for Pasig and Quezon City

§ SEC registration/ Articles of Incorporation

§ Board Resolution/ Secretary’ Certificate

The Transfer Tax is 0.5% of the selling price or zonal value whichever is higher. However, there are municipalities where the Transfer Tax is based solely on the selling price. For Example: Quezon City charges 0.75% of the zonal or selling price, whichever is higher.

The Business Tax should be paid within 60 days from the date of sale. If the processing of BIR payment is expected to extend beyond 60 days, you can immediately pay the Business Tax and Transfer Tax without waiting for CAR to be released from BIR to avoid penalty.

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Transferring the title at the Registry of Deeds

Requirements of the Registry of Deeds:

§ Original Title

§ Original Tax Declaration/ Certified True Copy (lot and improvement)

§ Original Realty Tax Clearance- from Assessor’s Office

§ Original Official Receipts of the Capital Gains Tax/ Creditable Withholding Tax, Documentary Stamp Tax, Transfer Tax, Registration Fee (to be submitted to the Registry of Deeds after paying)

§ Original CAR or Tax Clearance Certificate from BIR

§ Original Deed of Sale with BIR stamp at the back

§ Special Power of Attorney, if applicable

§ For Corporations: (1) SEC registration/ Articles of Incorporation, (2) Board of Resolution/ Secretary’s Certificate

A personnel in the Registry of Deeds will check all the documents and then compute the Registration and Miscellaneous Fees. After paying the fees, a claim stub will be given indicating the date when the new Title will be released.

Tip: Always proofread the new Title versus the old one while in the premises of the Registry of Deeds for typographical errors. If there are errors, have them corrected immediately.

If the buyer will mortgage the new Title with the bank, get immediately a certified true copy of the cancelled Title (Title that was in the name of the seller). The bank will require for its submission.

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Procedure in transferring the Tax Declaration (Assessor’s Office)

Submit the requirements of the Assessor’s Office:

§ Certified True Copy of New Title or the original copy

§ Deed of Absolute Sale

§ Transfer Tax Receipt

§ Tax Clearance

§ CAR/ Tax Clearance

§ For Corporations:

§ SEC registration/ Articles of Incorporation

§ Board Resolution/ Secretary’s Certificate

You will be issued a stub indicating the date when you will get the new Tax Declaration. This usually takes a week.

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Get and submit the final documents to the buyer

Once you get the new title from the Registry of Deeds, immediately transfer the Tax Declaration in the name of the new owner so that you will not be required to get a certified true copy of the new Title. You just have to show the new owner’s duplicate copy of the Title.

Submit the final documents to the buyer

§ Title under the name of the new owner

§ Tax Declaration in the name of the new owner

§ Official receipts of the ff:

§ CAR/ Tax Clearance Certificate

§ Form 1706 or 1602-E

§ Form 2000

§ Other documents

All original documents should be given to the buyer except for the official receipts of the Capital Gains Tax and Documentary Stamp Tax (if paid by the seller). Provide one set of the above documents (photocopies only) to the seller for his file.
Get your Commission

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