As one of the countries proudly displaying sunny views, affordable living, and hospitable neighbors, it is not a common notion that foreign nationals take interest in owning real estate properties within our territory. For foreigners, owning a real estate property such as a condominium in the Philippines is one of the most accessible paths to enjoy what the country has to offer.
Condominium within a business-run locations like Metro Manila, Cebu, and Davao is the most frequently sought properties that a foreigner considers when buying real estate property. Hence, owning one would not only be convenient but a smart choice as well.
To further walk you through, this article covers the intricacies of foreign ownership of condominium in the Philippines, from the legalities to the steps and benefits involved.
Can a Foreigner Own a Condominium in the Philippines?
As a foreign national, is it possible for you to own a condominium unit in the Philippines? An age-old property query that has been asked time and time again – to which we answer, YES.
Pursuant to Republic Act No. 4726, also known as the “Condominium Act” of the Philippines, nationals belonging to foreign countries may afford to own a condominium unit considering that they follow the “60-40 equity rule”. Stated under the act, foreigners are only allowed to possess units up to 40% of the full ownership from condominium projects located in the Philippines, provided that 60% of the building is owned by Filipino citizens.
“Section 5. Any transfer or conveyance of a unit or an apartment, office or store or other space therein, shall include the transfer or conveyance of the undivided interests in the common areas or, in a proper case, the membership or shareholdings in the condominium corporation:
Provided, however, that where the owners of separate units own the common areas in the condominium project as co-owners thereof, no condominium unit therein shall be conveyed or transferred to persons other than Filipino citizens, or corporations at least sixty percent of the capital stock of which belong to Filipino citizens, except in cases of hereditary succession. Where a corporation holds the common areas in a condominium project, no transfer or conveyance of a unit shall be valid if the simultaneous transfer of the appurtenant membership or stockholding in the corporation will cause the alien interest in such corporation to exceed the limits imposed by existing laws.” (Sec. 5, R.A. 4726)
Foreign owners are given the privilege to retain up to 40% of the condominium project along with the reservation of the right to absolute ownership of its unit title. Unless a foreigner has their citizenship naturalized, the 40% rule shall apply. In cases of dual-citizenship, where the individual in question settled to abdicate their citizenship as a Filipino, they shall be treated as a foreign national with restrictive rights to property ownership.
Are there any Exceptions to the 40% rule of Condominium Ownership?
Yes. The only instances where foreigners are exempted of following the 40% rule are the following:
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When the acquisition of Land was before the 1935 Philippine Constitution. Foreign nationals who acquired land in the Philippines before the ratification of the 1935 Constitution are permitted to retain ownership.
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As stated under Section 5 of R.A. 4726, when the acquisition of property was done by means of hereditary or intestate succession, provided that the foreigner in question is a natural/legal heir of the Filipino owner.
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Former natural-born Filipino citizens who have since acquired foreign citizenship can own condominium units without being subject to the 40% rule, as they are treated with fewer restrictions compared to other foreigners. This exception allows former Filipino citizens to acquire and retain ownership of Philippine condominium units under Republic Act 8179, with the same rights as Filipino citizens in terms of condominium ownership.
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When the acquisition of property was done during the time the foreigner was still a Filipino citizen, hence maintaining the ownership of the property even after their change of citizenship occurred.
The Difference between Rent and Full Ownership of a Condominium Unit
In the Philippines, owning a condominium can be a smart and rewarding decision for those looking to build long-term stability, financial growth, and a true sense of home. While renting may have lower initial costs and provide some flexibility, ownership offers tangible advantages that make it the wiser choice for those planning for the future.
Financially, owning a condo allows you to build equity over time. Monthly mortgage payments contribute to your investment, which could appreciate in value, unlike rent, which is an expense with no return. Ownership also comes with potential tax benefits, such as deductions on mortgage interest and property taxes, providing savings that renters simply miss out on. In addition, ownership gives you complete control over customizing your space. Want to renovate the kitchen or add personal touches to every room? As a condo owner, you’re free to design your home exactly as you envision it, adding value both to your property and to your everyday life.
Furthermore, owning a condo fosters a sense of stability and community. As an owner, you’re more likely to establish connections with neighbors and feel a lasting attachment to the area, building a community experience that enriches your lifestyle. Lastly, a condo offers flexibility, as owners can rent out the property if they decide to move temporarily, turning it into a potential source of passive income. Overall, condo ownership offers a stronger financial future, tax advantages, and a lifestyle with more stability and freedom, making it an ideal choice for those looking to truly invest in their lives and futures.
Common Process on Buying Condo in the Philippines
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Conduct thorough research about the condominium developer’s background to ensure solid reputation and the necessary permits for the project. You may check with the Housing and Land Use Regulatory Board (HLURB) or the Department of Human Settlements and Urban Development (DHSUD) to verify the developer’s legitimacy.
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After selecting a unit, negotiate terms such as payment schedules, fees, and other conditions with the developer or seller. Once agreed upon, both parties sign a “Contract to Sell,” which outlines the purchase agreement. This contract is not yet a deed of ownership but rather a commitment to proceed with the purchase.
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Once financing is in place and payment terms are met, you’ll sign the Deed of Absolute Sale (DOAS), a document officially transferring ownership from the seller to the buyer. This document is crucial as it legally confirms the sale. The DOAS must be notarized to be valid and enforceable.
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Payment of taxes such as Capital Gains Tax (CGT), Documentary Stamp Tax (DST), and Transfer Tax. These fees are typically a percentage of the selling price, fair market value, or zonal value, whichever is higher.
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Submit the notarized Deed of Absolute Sale, tax clearances, and other required documents to the Registry of Deeds. This office will facilitate the transfer of ownership and issue a Condominium Certificate of Title (CCT) in your name. The CCT serves as the official proof of ownership of the condominium unit, similar to a Transfer Certificate of Title (TCT) for land but specific to condo units.
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After processing, the Registry of Deeds will issue the CCT under your name. This document affirms your legal ownership of the unit, detailing the unit’s specific location, size, and other particulars, as well as the 40% cap on foreign ownership. The CCT is essential, as it legally establishes your rights over the unit.
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Once ownership is finalized, coordinate with the condo’s management or homeowners association to handle any ongoing fees, such as association dues and maintenance fees. This ensures compliance with the condominium corporation’s regulations and continued use of shared amenities and services.
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Finally, visit the local Assessor’s Office to update the property tax records under your name. Pay the Real Property Tax (RPT) annually to keep the ownership records up-to-date with local government records.
Sounds Overwhelming? It doesn’t have to be!
FileDocsPhil streamlines the condominium acquisition process by managing every essential step for you. From preparing and reviewing documents like the Contract to Sell and Deed of Absolute Sale to verifying title authenticity, we ensure that each detail is handled accurately. Our team assists with tax compliance, including the computation and payment of Capital Gains Tax and Documentary Stamp Tax, and facilitates the property’s registration with the Registry of Deeds, ensuring you receive your Condominium Certificate of Title (CCT) seamlessly.
Additionally, we guide you on Real Property Tax (RPT) obligations and act as your liaison with government agencies, saving you time and effort. Let FileDocsPhil handle the complexities, so you can confidently secure your condo ownership.
Let FileDocsPhil Do the Work!
Need further information and assistance in Condominium Ownership? 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.
