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Deed of Sale and Deed of Donation: Transfer Land Title in the Philippines

Deed of Sale and Deed of Donation: Transfer Land Title in the Philippines

Transferring ownership is a legal process in which the rights, title, and interest in a property are transferred from one person to another. When it comes to land property ownership, there are different ways such as through sale, donation, partition, and extrajudicial settlement. But in this article, we will be focusing on the two commonly used legal processes of transferring ownership in the Philippines, which are through sale and donation. We’ll delve into the key differences between a Deed of Sale and a Deed of Donation. These documents serve distinct purposes and come with different processes and requirements.

Transfer Ownership of the property through Deed of Sale

Transferring your real estate ownership through a Deed of Sale is one of the common processes in the Philippines. A Deed of Sale is a legal document that serves as proof of the sale of a property. It outlines the details of the transaction, including the identities of the buyer and seller, the description of the property, and the agreed purchase price. This document is essential for transferring ownership from the seller to the buyer.

Requirements Needed for Transfer of Title

Prepare the following and make sure to have a certified true copy and at least 2 photocopies of each document needed:

  1. Notarized Deed of Absolute Sale.
  2. Notarized Acknowledgment Receipt/Official Receipt of the amount that the seller received.
  3. Tax Identification Number and ID of the buyer and the seller.
  4. Transfer Certificate of Title (for house or lot).
  5. Condominium Certificate of Title (for condominium).
  6. Certified True Copy of the latest Tax Declaration.
  7. Tax Clearance.
  8. Real Property Tax for the current year.
  9. Clearance from the Homeowners Association (HOA) if the property is located inside a subdivision.
  10. Management certificate from admin (if condominium).
  11. Certificate of non-tenancy from admin (if condominium).
  12. Photo of the property for sale.
  13. Sworn Declaration of No Improvements (for lots-only).
  14. Special Power of Attorney (SPA) *If someone other than the property owner is signing the Deed of Sale.
  15. Certificate of the Philippine Consulate *If the Special Power of Attorney was executed while you were abroad
  16. PSA Certificates (Birth, Marriage, or CENOMAR).
  17. Location map of the property.

 Transfer Process through Deed of Sale

`After you prepare the above mentioned necessary documents, these are the next steps that you need to go through:

  1. Submission of your documentSubmit the documents to the Bureau of Internal Revenue Regional District Office (BIR RDO) where it has the jurisdiction of your property. This will allow the BIR to compute the applicable taxes for the property transfer. This includes the Capital Gains Tax (CGT-BIR Form 1706) or Creditable Withholding Tax (CWT-BIR Form 1606), depending on the nature of the sale, and the Documentary Stamp Tax (DST) signed by a BIR Officer.

    Take note: The Capital Gains Tax should be paid within thirty (30) days from the date of notarization and the Documentary Stamp Tax should be paid on the nearest 5th day of the month following the notarization date. 

  2. Payment of Property Transfer TaxesTo pay property transfer taxes in the Philippines, visit an Authorized Agent Bank (AAB) accredited by the Bureau of Internal Revenue (BIR). Here’s what you need to bring:
    1. Signed computation sheet from the BIR: This details the taxes to be paid.
    2. Deed of Conveyance: This signifies the transfer of land ownership from the seller to the buyer.
    3. Three copies of BIR Form 1706: Filled out and signed by the seller, this is for the Capital Gains Tax.
    4. Three copies of BIR Form 2000-OT: Filled out and signed by the buyer, this is for the Documentary Stamp Tax.

    These documents ensure compliance with tax regulations for transferring a land title.

  3. Obtain Certificate Authorizing Registration (CAR)The CAR is a tax clearance document proving all taxes on the sold property have been settled. To get the CAR, make sure you have these BIR-stamped documents:
    • Deed of Sale: Original copy stamped by the BIR.
    • Duplicate Copy of CCT or TCT: Stamped by the BIR.
      Original Form 2000: Stamped Documentary Stamp Tax (DST) and BIR Form 1706 for Capital Gains Tax (CGT).
    • Tax Declaration: For both land and improvement of the sold property.

    After submitting these, you’ll receive two copies of the CAR:

    • Brown Copy: For your records.
    • Blue Copy: For transferring the land title.
  4. Paying Transfer of Tax to the Treasurer’s Office of the Local Government Unit
    • Submit CAR to the Local Treasurer’s Office: Do this within 60 days after notarizing the Deed of Conveyance to pay the Transfer Tax.
    • Pay the Transfer Tax: After payment, you’ll receive a receipt as proof.
    • Return to the BIR: Bring the receipt to the BIR to have the Deed of Conveyance stamped.
  5. Register to Registry of DeedsHead to and submit all documents to the Registry of Deeds for the issuance of new land title, and the duplicate copy of the TCT and CCT in your name.
    • Deed of Conveyance
    • Deed of Absolute Sale
    • Copies of IDs
    • Official Receipt from Notary Public
      Certified True Copy of Original Land Title
    • Tax Clearance
      Latest Tax Declaration
    • Clearances from Home Owners Association (if applicable)
    • Birth Certificate
      Certificate of No Marriage (if applicable)
    • Marriage Certificate
  6. Obtain New Tax Declaration Certificate from the Assessor’s OfficeOnce you have your new title from the Registry of Deeds, submit these documents and the new owner must pay all the associated  assessments fees to the Assessor’s Office.
    • New Land Title: Original and photocopy of the title from the Registry of Deeds.
    • Old Title Copy: Copy of the previous owner’s title to establish ownership history.
    • Deed of Conveyance: Proves the property transfer to you.
    • Certified True Copy of the New Tax Declaration: Specifies the property’s new assessed value.
    • Business Tax Receipt/Permit (if the previous owner is a corporation): Additional documentation for corporate sellers.
    • Certificate Authorizing Registration (CAR): Duplicate and photocopy from the BIR.
    • Tax Clearance: Verifies all required taxes and fees are settled.
    • Property Photos: Helps the Assessor’s Office in the assessment process.

Transfer Ownership of the Property through Deed of Donation

Transferring ownership of property through donation is another common process in the Philippines, allowing individuals to give their assets to family members, friends, or even charitable organizations, either real or personal, without any consideration or payment. A Deed of Donation is a legal document that formalizes the transfer of property from the donor to the donee without any monetary compensation. To be valid, this document must meet certain requirements as stipulated under the Civil Code of the Philippines.

Requirements Needed for Transfer of Title

Donations and acceptance of real property must be made in a public instrument (should be notarized). The notarized deed of donation qualifies as a public instrument. The donee can accept the donation in the same deed or a separate notarized document, but it must be done while the donor is alive. If accepted in a separate document, the donor must be officially notified, and this notification must be noted in both documents.

Here is the complete list of requirements involved to ensure the process is valid and binding:

  1. Notarized Deed of Donation. 
  2. Original and Certified True Copy (CTC) of Transfer Certificate of Title (for house or lot).
  3. Original and Certified True Copy (CTC) of Condominium Certificate of Title (for condominium).
  4. Tax Identification Numbers (TIN) of donor and donee.
  5. Notarized Special Power of Attorney (if applicable).

Transfer Process through Deed of Donation

  1. Pay Donor’s Tax
    • Rate: 6% of the total gifts over PHP 250,000 in a calendar year.
    • Filing: The donor must file the Donor’s Tax Return (DTR) within 30 days after the donation
    • Where: File and pay at an Authorized Agent Bank (AAB) of the Revenue District Office (RDO) where the donor lives.Requirements:
      1. Notarized deed of donation
      2. Tax Identification Numbers of donor and donee
      3. Proof of claimed tax credit (if any)
      4. Notarized Special Power of Attorney (if needed)
      5. Proof of payment
      6. Certified true copy of the property’s title
      7. Certified true copy of the property’s tax declaration
  2. Pay Documentary Stamp Tax (DST)
    • Rate: 1.5% of the current fair market value of the property.
    • Filing: The donor or donee must file within 5 days after the month the donation was made.
    • Where: File and pay at the BIR RDO where the property is located.
      Requirements:

      1. Photocopy of the deed of donation
      2. Proof of exemption (if applicable)
  3. Pay Transfer Taxes
    • Rate: Up to 0.5% of the property’s value (0.75% in Metro Manila).
    • Filing: Pay within 60 days from the date of the donation.
    • Where: Pay at the Treasurer’s Office of the LGU where the property is located.
       

      Requirements:

      1. Certificate Authorizing Registration (CAR) from the BIR
      2. Real property tax clearance
      3. Proof of DST payment
  4. Register the Deed of Donation
    • Where: Pay at the Treasurer’s Office of the LGU where the property is located.

Requirements:

      1. Certificate Authorizing Registration (CAR) from the BIR
      2. Real property tax clearance
      3. Proof of DST payment

Note: Verify the details on the new title for accuracy.

Cancel Old Tax Declaration

    • Where: Pay at the Treasurer’s Office of the LGU where the property is located.

Requirements:

      1. New Transfer Certificate of Title (TCT)
      2. CAR
      3. Certified true copy of the old TCT
      4. Certified true copy of the property’s tax declaration

Note: Pay the assessment fees for the new tax declaration in the donee’s name.

Prohibited Donations

The following donations are void:

  1. Between persons guilty of adultery or concubinage.
  2. Between persons guilty of the same criminal offense.
  3. To a public officer or their family due to their office.

Sounds Overwhelming? It doesn’t have to be!

Our experienced team of professionals are well-versed in the legalities involved in the transfer of title. We provide valuable insights and advice to ensure your transactions are legally sound and compliant with all relevant laws. At Filedocsphil, we specialize in assisting clients with their property transactions, whether it’s through a Deed of Donation or a Deed of Sale. Our comprehensive services include:

    • Consultation: We provide expert advice on the best approach for your property transfer.
    • Document Preparation: We meticulously prepare all necessary documents, ensuring accuracy and compliance.
    • Notarization and Registration: We handle the notarization and registration processes, ensuring all legal requirements are met.
    • Tax and Fee Management: We manage the payment of all applicable taxes and fees, preventing any legal complications.
    • Liaise with Government Agencies Involved

Let FileDocsPhil Do the Work!

Need further information and assistance in Title Transfer? Talk to our team at  FILEDOCSPHIL  to know more about the requirements and process. Call us today at  (+63) 917 149 2337 or send an email to info@filedocsphil.com or simply message us through the live chat for more information.

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