Foreign Ownership of Land in the Philippines
Ownership of land in the Philippines is highly-regulated with
land ownership reserved for persons or entities considered
Philippine nationals or Filipino citizens. For this purpose, a
corporation owned 60% by Filipino citizens is treated as a
Philippine national. Foreigners interested in acquiring land or real
property through aggressive ownership structures must consider the
provisions of the Philippines' Anti-Dummy Law to determine how to
proceed. A major restriction in the law is the restriction on the
number of alien members on the Board of Directors of a landholding
company which is limited to 40% alien participation. Another concern
is the possible forfeiture of the property if the provisions of the
law is breached.
Exceptions to the restriction on foreigners acquisition
of land in the Philippines are the following:
- Acquisition before the 1935 constitution
- Acquisition through hereditary succession if the foreigner
is a legal or natural heir
- Purchase of not more than 40% interest in a condominium
project
- Purchase by a former natural-born Filipino citizen subject
to the limitations prescribed by law. (natural born Filipinos
who acquired foreign citizenship is entitled to own up to 1,000
sq.m. of residential land, and 1 hectare of agricultural or farm
land)
- Filipinos who are married to aliens who retain their
Filipino citizenship, unless by their act or omission they have
renounced their Filipino citizenship
Foreigner Ownership as a Philippine Corporation
Foreign nationals or corporations may completely own a
condominium or townhouse in the Philippines. To take ownership of a
private land, residential house and lot, and commercial building and
lot foreigners may set up a Philippine corporation in the
Philippines. This means that the corporation owning the land has
less than or up to 40% foreign equity and it is formed by 5-15
natural persons of legal age as incorporators, majority of whom are
Philippine residents.
Foreigners Leasing Of Philippine Real Estate Property
Leasing land in the Philippines on a long term basis is an option
for foreigners or foreign corporations with more than 40 percent
foreign equity. Under the Investor's Lease Act of the Philippines a
foreign national and or corporation may enter into a lease agreement
with Filipino landowners for an initial period of up to 50 years
renewable once for an additional 25 years.
Foreigners owning Houses in the Philippines
Foreigners owning a house or building in the Philippines is legal
as long as the foreigner does not own the land on which the house is
build.
Foreigners owning Condominiums & Townhouses in the
Philippines
The Condominium Act of the Philippines, R.A. 4726, expressly
allows foreigners to acquire condominium units and shares in
condominium corporations up to not more than 40% of the total and
outstanding capital stock of a Filipino owned or controlled
condominium corporation. However, there are a very few
single-detached homes or Townhouses in the Philippines with
condominium titles. Most condominiums are high rise buildings.
Foreigners Married to a Filipino Citizen
If holding a title as an individual, a typical situation would be
that a foreigner married to a Filipino citizen would hold title in
the Filipino spouse's name. The foreign spouse's name cannot be on
the Title but can be on the contract to buy the property. In the
event of death of the Filipino spouse, the foreign spouse is allowed
a reasonable amount of time to dispose of the property and collect
the proceeds or the property will pass to any Filipino heirs and or
relatives.
Former Natural-born Philippine Citizen now Naturalized
American Citizen
Any natural-born Philippine citizen who has lost his Philippine
citizenship may still own private land in the Philippines up to a
maximum area of 5,000 square meters in the case of rural land. In
the case of married couples, the total area that both couples are
allowed to purchase should not exceed the maximum area mentioned
above.
Filipinos & Former Filipino Citizens (Balikbayans) & OFW
Former natural-born Filipinos who are now naturalized citizens of
another country can buy and register, under their own name, land in
the Philippines but limited in land area. However, those who avail
of the Dual Citizenship Law in the Philippines can buy as much as
any other Filipino citizen. Under Republic Act 9225 (Philippines
Dual Citizenship Law of 2003), former Filipinos who became
naturalized citizens of foreign countries are deemed not to have
lost their Philippine citizenship, thus enabling them to enjoy all
the rights and privileges of a Filipino regarding land ownership in
the Philippines.
Steps to Gain Dual Citizenship:
- If you are in the Philippines, file a "Petition for Dual
Citizenship and Issuance of Identification Certificate (IC)
pursuant to RA 9225” at the Bureau of Immigration (BI) and for
the cancellation of your alien certificate of registration.
- Those who are not BI registered and overseas should file the
petition at the nearest embassy or consulate.
Requirements:
- Birth certificate authenticated my the Philippines National
Statistics Office (NSO)
- Accomplish and submit a “Petition for Dual Citizenship and
Issuance of Identification Certificate (IC) pursuant to RA 9225”
to a Philippine embassy, consulate or the Bureau of Immigration
- Pay a $50.00 processing fee, schedule and take an "Oath of
Allegiance" before a consular officer
- The Bureau of Immigration in Manila receives the petition
from the embassy or consular office. The BI issues and sends an
Identification Certificate of citizenship to the embassy or
consular office.
If a former Filipino who is now a naturalized citizen of a
foreign country does not want to avail of the Dual Citizen Law in
the Philippines, he or she can still acquire land based on BP (Batas
Pambansa) 185 & RA (Republic Act) 8179 but limited to the following:
For Residential Use
(BP 185 - enacted in March 1982):
- Up to 1,000 square meters of residential land
- Up to one (1) hectare of agricultural of farm land
For Business/Commercial Use (RA 8179 - amended the Foreign
Investment act of 1991):
- Up to 5,000 square meters of urban land
- Up to three (3) hectares of rural land
Real Estate Transaction Costs in the Philippines
Purchases from Individuals:
- Philippines Capital gains tax - 6% of actual sale price.
This is paid by the seller but in some cases it might be
expected that the buyer pays. This percentage could differ if
the property assessed is being used by a business or is a title-
owned by a corporation, in this case the percentage is 7.5%
- Philippines Document stamp tax - 1.5% of the actual sale
price. This is paid by wither the buyer or the seller upon
agreement. Normally however, it is the buyer who shoulders the
cost.
- Philippines Transfer tax - 0.5% of the actual sale price
- Philippines Registration fee - 0.25% of the actual sale
price
Purchases from Developers:
- Philippines Capital gains tax - 10% of actual sale price.
This value might be expressed as part of the sale price
- Philippines Document stamp tax - 1.5% of the actual sale
price
- Philippines Transfer tax - 0.5% of the actual sale price
- Philippines Registration fee - 0.25% of the actual sale
price
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