In accordance with the 1987 Philippine Constitution, foreigners are not allowed to own land property in the Philippines. This restriction aims to protect the country’s resources for Filipinos. However, there are alternative ways in which a foreign national can acquire land ownership.
How Can a Foreigner Own a Property in the Philippines?
Owning property in the Philippines as a foreign national involves specific restrictions and legal considerations. However, there are certain circumstances under which a foreign national can own property in the country.
- Married to a Filipino Citizen. A foreign national who is married to a Filipino citizen can own a land in the Philippines, but they cannot directly own or hold an interest in the property due to constitutional limitations. The Philippine law presumes that all property acquired during the marriage is jointly owned by the spouses, unless it is specifically classified as separate property. Additionally, the 1987 Philippine Constitution governs property ownership in the country, particularly Article XII, Section 7, which states:
“Saves in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.”
- Dual Citizenship. Under the Republic Act No. 9225, Filipino citizens who acquired foreign citizenship can retain or reacquire their Filipino citizenship. Dual citizens are granted the same property ownership rights to natural Filipino citizens.
- Buying a Condominium Unit. According to Republic Act No. 4726, foreign nationals are allowed to purchase a condo unit as long as their ownership does not exceed 40%. The condominium company or its homeowner’s association must ensure that the remaining 60% is owned by the Filipino members.
- Buying Land Under a Corporation. Foreign nationals can acquire a property through establishing in a domestic corporation with at least 60% Filipino ownership. This process must be registered with the Securities and Exchange of Commission (SEC) and once approved by the commission, you can legally buy the property.
- Former Natural-born Filipino. These individuals are citizens of the country from birth but obtained a foreign citizenship. According to the Republic Act No. 8179, former natural-born Filipinos can buy a property in the Philippines but with specific limitations on the property’s measurements:
- Pursuant to Batas Pambansa 185, for personal use:
- Urban Areas: Up to 1,000 square meters (about a quarter of an acre)
- Rural Area: Up to 1 hectare (roughly 2.5 acres)
- Pursuant to Batas Pambansa 185, for personal use:
- Pursuant to Republic Act No. 8179, for investment purposes:
- Urban Areas: Up to 5,000 square meters
- Rural Areas: Up to 3 hectares
- Pursuant to Republic Act No. 8179, for investment purposes:
What are the Required Documents When Buying a Property in the Philippines?
The following documents are required when buying a property in the Philippines as a foreigner:
- Valid passport
- Alien Certificate of Registration (ACR) I-Card
- Proof of financial capacity to purchase the property
- PSA Marriage Certificate, if you are buying with your Filipino spouse
- Tax Identification Number (TIN)
- Sales and Purchase Agreement (SPA)
- Transfer Certificate of Title (TCT)
How to Buy a Property in the Philippines as a Foreigner?
The process on buying a property in the Philippines are as follows:
- Find a Property. Consult with a real estate agent or browse online listings to find the property you want to buy.
- Secure Funding. Ensure that you have enough funds to pay for the property you are planning to purchase. If you need financial aid, you can take out loans from Philippine banks or international banks.
- Make an Offer. Negotiate a fair price with the seller. If both parties have agreed to the price, a Sales and Purchase Agreement (SPA) must be signed. This agreement outlines the terms of the payment.
- Due Diligence. To verify the property’s title, it is advisable to hire a lawyer to help you conduct a due diligence. This process is crucial to know the property history and any liabilities.
- Property Transfer and Registration. Pay the necessary taxes and fees, and register the property with the local Registry of Deeds. After the Transfer Certificate of Title (TCT) is processed, the property will be officially transferred to you and if applicable, to your Filipino spouse or the corporation.
What are the Additional Fees and Taxes for Property Ownership in the Philippines?
After purchasing a property, either the buyer or the seller must pay the following transaction fees:
Fee and Tax | Rate | Basis | Responsible Party |
Capital Gains Tax | 6% | Sales price, zonal value, or fair market value (whichever is highest) | Seller |
Documentary Stamp Tax | 1.5% | Sales price, zonal value, or fair market (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 | Around 0.25% | Sales price | Buyer |
What are the Benefits of Owning a Property in the Philippines?
In the Philippines, owning a property as a foreign national has several benefits, including:
- Investment. Real estate is considered a stable and convenient investment option. The Philippines is a country that continues to grow and has a high demand for land and properties, particularly in Metro Manila, Cebu and Davao. As a result, investing in real estate in the country offers significant financial potential.
- Source of Income. Based on the data of the Department of Tourism (DOT), the total number of foreign tourists in the country has reached 3.3 million during the first eight months of 2024. If you often stay in the country, you can lease out your property for a long-term or short-term rental.
- Residency. Owning a property in the Philippines has an advantage when you plan to apply for residency, such as the Special Resident Retiree’s Visa (SRRV). This type of visa is offered to foreign nationals who wish to retire in the country and grant them multiple-entry privileges and long-term residency.
Need further information and assistance regarding Property Ownership in the Philippines as a Foreigner? Talk to our team at Duran & Duran-Schulze Law to know more about the requirements and process. Call us today at (+632) 8478 5826 or +63 917 194 0482, or send an email to info@duranschulze.com for more information.