How to Buy Land in the Philippines? (Paano ba bumili ng lupa sa Pilipinas?):

By: Timons Cabansi

 

Investing in land remains a prudent choice for individuals seeking to diversify their investment portfolio and capitalize on the long-term appreciation of real estate assets. Despite fluctuations in property prices due to various economic factors, land has historically proven to be a resilient and lucrative investment option.

 

In light of the economic uncertainties brought about by events such as the COVID-19 pandemic, many investors have turned to land as a safe haven for their capital. While certain segments of the real estate market may have experienced temporary declines, the inherent value of land endures, driven by factors such as population growth, urbanization, and limited supply.

 

Unlike other forms of investment, land possesses intrinsic value that is not subject to depreciation or obsolescence. It serves as a tangible asset with the potential for both short-term gains through development projects and long-term appreciation driven by rising demand and limited availability.

 

Moreover, investing in land offers investors a hedge against inflation and market volatility, as land values tend to appreciate over time, providing a reliable store of wealth. Additionally, land ownership provides opportunities for passive income generation through avenues such as agricultural leasing, mineral rights, or rental income from developed properties.

 

By strategically acquiring land assets, investors can benefit from diversification, capital appreciation, and income generation, making it an attractive investment avenue regardless of prevailing economic conditions. With prudent planning and careful consideration of factors such as location, zoning regulations, and future development potential, investing in land can yield significant returns and contribute to long-term financial stability.

Purchasing land can be a safe and lucrative investment if done correctly. However, it’s crucial to take necessary precautions to ensure a smooth and secure transaction. Here’s a step-by-step guide on how to safely acquire land and start earning profit with great returns!

 

1. Conduct a Background Check with the Seller and Have a Site Ocular Inspection

Before proceeding with any transaction, it’s essential to conduct a thorough background check with the seller. Request a copy of the Title from the Register of Deeds to verify the legitimacy of the seller’s ownership. This step ensures that the seller’s name is incorporated in the title and helps confirm the legitimacy of the land title.

 

In addition to the background check, it’s highly recommended to have a site ocular inspection on the land. This involves physically visiting the property to assess its condition, location, and surroundings. During the inspection, pay attention to factors such as the terrain, accessibility, neighboring properties, and any potential issues like encroachments or zoning restrictions.

 

An ocular inspection provides valuable insights into the actual state of the land and helps you make an informed decision about its suitability for your intended use. It allows you to identify any red flags or discrepancies that may not be evident from documents alone.

 

By combining a background check with a thorough ocular inspection, you can minimize the risk of encountering unexpected problems after completing the purchase. This proactive approach ensures that you have a comprehensive understanding of the land’s status and helps safeguard your investment in the long run.

 

Feel free to share this guide with your friends and family who might find it helpful in their land acquisition endeavors!

 

2. Verify Land Ownership and Real Property Tax Payment

Before proceeding further, it’s crucial to verify the updated payment of real property tax and ensure that the name of the Land Owner matches the certified true copy of the Tax Declaration. Obtain a Tax Clearance to verify the updated payment status. You can go to the provincial or city treasury division office where the lot is located to get the necessary supporting document.

 

3. Execute the Deed of Absolute Sale

Once you’ve confirmed the authenticity of the Title and all Taxes are clear, proceed to execute the Deed of Absolute Sale. This legal document serves as your contract for the transaction and must be signed by both the buyer and the seller. Additionally, ensure that the deed is signed in front of the lawyer (to avoid technicalities in accepting the legitimacy of the contract) and notarized (notaryo) to make it legally binding.

Again, both parties must be present in front of the public notary lawyer in signing or each party has signed in front of the lawyer. Today this is necessary to ensure everything is legitimate in executing the contract. We are buying a property, not a candy from the sari-sari store.

 

4. Submit Required Documents to the Bureau of Internal Revenue (BIR) and Payment of Taxes

After the purchase agreement is finalized, the buyer or its assisting representative must submit the necessary documents to the Bureau of Internal Revenue (BIR). These documents include the Notarized Deed of Absolute Sale, Tax Declaration, Tax Identification Number (TIN), and the Transfer Certificate of Title. The personnel from BIR will inspect our supporting documents and hand out a checklist to be completed which is always a pre-requisite.

If all is thoroughly completed from the checklist of BIR they will prepare the tax payment that will be incurred for the transfer which is the Capital Gains Tax (6% of the declared amount) and Documentary Stamp Tax (1.5% of the declared amount) which is needed to be paid for the transfer of the title. Both the buyer and the seller are required to pay specific taxes associated with the transaction. The buyer is responsible for paying the Documentary Stamp tax to the BIR, while the seller is obligated to pay the Capital Gains Tax.

 

5. Obtain a Certificate of Authority to Register

Once all taxes are paid, the BIR will issue an eCAR and Certificate of Authority to Register, confirming that all land taxes are settled, and the land can be transferred and registered to the name of the buyer.

 

6. Transfer of Title

Submit the Certificate of Authority to Register to the Register of Deeds along with the corresponding transfer fees. Upon completion, you will be issued with a New Owner’s copy of the Land Title.

 

7. Obtain a New Tax Declaration

After the title is transferred and registered to the buyer, it must be submitted to the Provincial or City Assessor’s Office to obtain a new Tax Declaration reflecting the change in ownership.

Purchasing land can be a straightforward process, especially with the assistance of real estate professionals. While the steps outlined above provide a general overview, it’s essential to remain diligent and seek guidance from professionals such as Geodetic Engineers and Real Estate Lawyers or Brokers to ensure a smooth and secure transaction.

 

By following these steps and seeking professional assistance, you can safely acquire land and embark on a profitable investment journey.