Real Property Tax

  • Background on Real Property Tax
  • Real Property Tax Administration
  • Exemptions
  • Objectives
LEGISLATIVE HISTORY:The real property taxation in the Philippines was formerly instituted in the year 1901 during the American regime. Consequently, on January 31,1901, Act No. 82 (Municipal Code) was enacted by the Philippines Commission to organize and authorize the Municipal Government of the Philippines to levy ad valorem tax. It is where real property taxation in the Philippines was first formally implemented.Series of assessment laws was legislated and amended to improve the taxation system until the enactment of the New Society on September 21, 1972 when Pres. Marcos issued Proclamation 1081 “Proclaiming a State of Martial Law in the Philippines”. Several changes and reforms in the Real Property Tax Administration were instituted under PD#76, which was promulgated on December 6,1972 to correct the defects in real property assessment and taxation in the Philippines.On May 20,1974, PD 464 was promulgated to upgrade the assessment techniques, procedures   and practices in order to:

a)  Bring about equitable distribution of the real tax burden among real property owners through out the country.
b)  Fully tap the income potentialities of the real property tax, to make local government:

Financially self-reliant;
Capable of contributing their proportionate shares to the barangay, municipal and province;
Underwrite basic essential public services within their area of   responsibility.

Consequently, due to the enactment of Republic Act 7160, otherwise known as ” The Local Government Code of 1991″, PD 464 was superseded by the new provisions and fundamental principles of the said code. All laws governing Real Property Tax Administration is now governed by the aforementioned Republic Act.

REAL PROPERTY TAX ADMINISTRATION (RPTA)

RPTA Stands for Real Property Tax Administration . It is a body organized to implement the provisions of the Real Property tax Code. It has the responsibility of upgrading assessment services by updating assessment techniques, procedures and practices. The RPTA Is under The direct supervision of the Department of Finance.

THE APPRAISAL, ASSESSMENT,   LEVY AND COLLECTION    OF    REAL    PROPERTY   TAX SHALL BE GUIDED   BY THE FOLLOWING FUNDAMENTALS     PRINCIPLES:

  1. Real Property shall be appraised at its current and fair market value; Real property shall be classified for assessment purposes on the basis of its actual use;
  2. Real property shall be assessed on the basis of a uniform classification within each local government unit;
  3. The appraisal, assessment, levy and collection of real property tax shall not be let to any private person; and
  4. The appraisal and assessment of real property shall be equitable

APPRAISAL OF REAL PROPERTY

All real property, whether taxable or exempt, shall be appraised at the current and fair market value prevailing on the locality where the property is situated.

DUTY OF PERSON ACQUIRING REAL PROPERTY OF MAKING IMPROVEMENT THEREON

It shall also be the duty of any person, or his authorize representative, acquiring at any time real property in any municipality or city or making any improvement on real property. To prepare, or cause to be prepared, and file with the provincial, city or municipal assessor, a sworn statement declaring the true value of subject property; within sixty (60) days after the acquisition of such property or upon completion or occupancy of the improvement, whichever comes earlier.

AUTHORITY OF ASSESSOR TO TAKE EVIDENCE

For the purpose of obtaining information on which to base the market value of any real property, the assessor of the province, city or municipality or his deputy may summon the owners of the properties to be affected or persons having legal interest therein and witnesses, administer oaths, and take deposition concerning the property, its ownership, amount, nature, and value.

When any person, natural or juridical, by whom real property is required to be declared under Section 202 hereof, refuses or fails for nay reason to make such declaration within the time prescribed, the provincial, city or municipal assessor shall himself declare the property in the name of the defaulting owner, if known, or against an unknown owner, as the case maybe, and shall assess the property for taxation in accordance with the provision of this Title No. oath shall be required of a declaration thus made by the provincial, city or municipal assessor.

NOTIFICATION OF TRANSFER OF REAL PROPERTY OWNERSHIP

Any person who shall transfer real property ownership to another shall notify the provincial, city or municipal assessor concerned within sixty (60) days from the date of such transfer. The notification shall include the mode of transfer, the description of the property aliened, the name and address of the transferee.

ADDITIONAL AD VALOREM TAX ON IDLE LANDS

A province or city, or a municipality within the Metropolitan Manila Area, may levy an annual tax on idle lands at the rate not exceeding five percent (5%) of the assessed value of the property, which shall be in addition to the basic real property tax.

EXEMPTION FROM REAL PROPERTY TAX

  1. Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person.
  2. Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, nonprofit or religious cemeteries and all lands, buildings, and improvements actually directly, and exclusively used for religious, charitable or educational purposes;
  3. All machineries and equipment that are actually, directly and exclusively used by local water districts and government-owned or controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power;
  4. All real property owned by duly registered cooperatives as provided for under R.A. No.6938; and
  5. Machinery and equipment used for pollution control and environment protection.

PREPARATION OF SCHEDULE OF FAIR MARKET VALUES

Before any general revision of property assessment is made pursuant to the provisions of this Title, there shall be prepared a schedule of pair market values by the provincial, city and the municipal assessor of the municipalities within the Metropolitan Manila Area for the different classes of real property situated in their respective local government units for enactment by ordinance of the sanggunian concerned.   The schedule of fair market value shall be published in the newspaper of general circulation in the province, city or municipality concerned, or in the absence thereof, shall be posted in the provincial capitol, city or municipal hall and in two other conspicuous public places therein.

SPECIAL CLASSES OF REAL PROPERTY

All lands, buildings, and other improvements thereon actually, directly and exclusively used for hospitals, cultural or scientific purposes, and those owned and used by local water districts, and government-owned or controlled corporations rendering essential public services in the supply and the distribution of water and/or generation transmission of electric power shall be classified as special.

ASSESSMENT OF PROPERTY SUBJECT TO BACK TAXES

Real property declared for the first time shall be assessed for taxes for the period during which it would have been liable but in no case for more than ten (10) years prior to the date of initial assessment; Provided, however, That such taxes shall be computed on the basis of the applicable schedule values in force during the corresponding period.

WHAT ARE THE PROPERTIES SUBJECT TO REAL PROPERTY TAXATION?

    • Land
    • Buildings
    • Machinery
    • Other structure

CLASSES OF REAL PROPERTY FOR ASSESSMENT PURPOSES

    • Residential
    • Agricultural
    • Commercial
    • Industrial
    • Mineral
    • Timberland
    • Special

OBJECTIVES OF THE RPTA:

  1. To evolve a comprehensive system of real   property appraisal that will ensure fair and realistic property valuations for taxation purposes;
  2. To established uniforms assessment methods and procedures to standardize property values in each local government unit;
  3. To ensure that the ad valorem tax on real property shall be just, uniform and equitable;
  4. To adopt the necessary measures that will promote maximum tax collection efficiency at the local levels;
  5. To provide for optimum utilization by the local government of the proceeds from the real property tax collection;
  6. To formulate and adopt policies and procedures to improve technical skills and develop reasonable standards of performance in the local assessment and treasury services.

MAJOR COMPONENTS OR ELEMENTS OF THE RPTA

  • Tax Mapping
  • Tax Assessment
  • Tax Records Management
  • Tax Collection