What Is Real Property Tax
What Is Real Property Tax
Real Property Tax is the tax on real property imposed by the Local Government Unit
(LGU). The legal basis is Title II of the Local Government Code (LGC), Republic Act
(R.A.) no. 7160. The implementing rules and regulations of R. A. 7160 can be
found here.
The RPT for any year shall accrue on the first day of January and from that date it shall
constitute a lien on the property which shall be superior to any other lien, mortgage, or
encumbrance of any kind whatever, and shall be extinguished only upon payment of the
delinquent tax.
If you have prior years’ delinquencies, interests, and penalties, your RPT payment shall
first be applied to them. Once they are settled, your tax payment may be credited for the
current period.
Where to pay
At the City or municipal treasurer’s office
When to pay
If you choose to pay for one whole year, the payment is due on or before January 31. If
the basic RPT and the additional tax accruing to the Special Education Fund (SEF) are
paid in advance, the sanggunian concerned may grant a discount not exceeding twenty
percent (20%) of the annual tax due. Jay wrote about the discount on RPT recently in
his post How To Get A 20% Discount on Real Property Taxes.
If you choose to pay in installments, the four quarterly installments shall be due on or
before the last day of each quarter, namely: March 31, June 30, September 30, and
December 31.
In case of failure to pay the basic RPT and other taxes when due, the interest at the rate
of two percent (2%) per month shall be imposed on the unpaid amount, until fully paid.
The maximum number of months is thirty-six (36) months, so effectively, the maximum
interest rate is seventy-two percent (72%).
Provinces 1%
Sec. 199 (l) of the LGC defines “Fair Market Value” as the price at which a property may
be sold by a seller who is not compelled to sell and bought by a buyer who is not
compelled to buy. In practice, however, the Fair Market Value is based on the
assessment of the municipal or city assessor as written in the Tax Declaration.
Timberland 20%
Agricultural 40%
Commercial 50%
Industrial 50%
Mineral 50%
1. Residential
FMV Over But Not Over Assessment Level
0.00 175,000.00 0%
10,000,000.00 60%
–
2. Agricultural
300,000.00 25%
2,000,000.00 50%
3. Commercial/Industrial
300,000.00 30%
10,000,000.00 80%
4. Timberland
300,000.00 45%
2,000,000.00 70%
II. Machineries
Agricultural 40%
Residential 50%
Commercial 80%
Industrial 80%
Sample Computation
Data:
Land – P350,000
Improvement – P350,000
Assessment Level for Land: 20%
Note: The assessment levels are fixed through ordinances of the Sangguniang
Panlalawigan, Sangguniang Panglungsod, or the Sangguniang Pambayan of the
municipality within the Metro Manila area. We will be using the maximum rates for
sample computation purposes.
Computation
Special Education Fund (SEF) for Land and Improvement = (P70,000 + P70,000) x
1% = P1,400
What are the assessment levels for special classes of real property?
Actual Use Assessment
Level
Cultural 15%
Scientific 15%
Hospital 15%
Exceptions
i. Lands planted to permanent or perennial crops with at least 50 trees to a
hectare; and
ii. Lands used for grazing purposes (Note: put goats or cows on your property).
2. Lands Other than Agricultural, located in a city or municipality, more than 1,000
sqm. in area, ½ of which remain unutilized or unimproved