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Real property taxes are the largest that most taxpayers have to remit annually to local government units. There are ways to reduce these payments.
It’s nice to own a house, especially if you have a growing family of your own. But owning a home could be quite expensive and probably one of the costliest that taxpayers have to deal with. It’s not just the regular maintenance and repair expenses that you have to worry about, but also the real property tax levied on it.
If your home is fancier and bigger than others, expect to pay way more in real property tax. Of course, the more homes you own, the more money you need to shell out for real property taxes every year. In fact, real property taxes are the largest that most taxpayers have to remit annually. This is clearly spelled out under the Local Government Code of the Philippines or Republic Act No. 7160. These RPTs often range between one and two percent of the assessed value of a real estate property and must be paid annually by the homeowner.
Like other tariffs imposed on goods and services in the country, property owners can take advantage of several exemptions so that their real property tax could be lowered, provided, of course, they are able to meet certain criteria set by the government. It entails some sacrifice. Unless you have a trust fund that’s large enough to regularly cover your property taxes with great ease over the course of a lifetime, it would be best to look at some options that could help you lower your annual RPT instead.
Downsize and live a cozier abode
If you have a luxurious house sitting on an expansive lot in a fancy and upscale residential village in Metro Manila that’s worth in the hundreds of millions of pesos, then you’re expected to pay millions of pesos annually in real property tax alone.
But if you prefer to downsize and live in a cozy abode that’s just right enough for you and your loved ones, then imagine how much lower you’d shell out for your RPT annually. That’s a ton of money that could be used for, say, a family vacation overseas. Improvements on your property, by the way, are also levied. Make sure you don’t make your house look fancier every so often that they need to unless you’re willing to part some extra money with tax authorities.
Reside outside the metropolis
If your property is located in Metro Manila’s cities and municipalities, your annual RPT is pegged at two percent of its assessed value; for the rest of the provinces in the country, the annual RPT is at one percent. Settling down outside the metropolitan urban jungle isn’t just good for your sanity, especially when dealing with the daily traffic chaos, but it’s friendly on your pockets, too. Not only do you enjoy a lower cost of living expenses if your home is located outside Metro Manila, but you also get to save a ton of money with your annual RPT.
Pay your RPTs ahead of time
Although it’s not exactly an exemption if you pay your RPT early enough to the city or municipal treasurer’s office you might just be able to get some discounts on your RPT. Similarly, missing out on your RPT payments on time, which is on January 31st of every year, could lead to penalties, even home loss. There’s a degree of indemnity that applies to property owners who pay their RPT ahead of the scheduled deadline. Better talk to and consult with your local treasurer’s office if discounts apply to those who pay their RPTs ahead of time. These discount opportunities vary from one local government unit to another.
Homeowners could also pay their RPTs early through quarterly installments if the annual amount is a bit too heavy on the wallet. There are local government units that offer property owners a discount if they pay their RPT early even if it’s on an installment basis.
Consider using a chunk of your property for educational or religious functions
If your property is being used for religious, charitable, or educational purposes, then your property is exempt from a real property tax even if it is not necessarily owned by any religious, charitable, or educational institution that utilizes it. If you want to convert a large portion of your property into a pre-school area and allow a small area for your living accommodation then you could either get an RPT exemption at most or a heavily discounted one. It’s best to talk to legal experts and tax authorities about the nitty gritty details of converting your property for such purposes.
There’s no escaping the tax authorities as it is a part of our civic duties as citizens. But there are always ways to make your tax payments lower and smaller than they ought to be.
Read our previous journal for more tips.
