Q&A: What Happens if I Fail to Pay My Real Property Tax?

Failing to pay your real property tax or amilyar not only leads hefty penalties; it can also lead to your property being sold off by the government in part or as a whole

The cost of property ownership does not end at the purchase of real estate. In fact, in a way, it is just the beginning. Along with the monthly payments for the loan taken out to buy the property, there are also the expenses for repairs, maintenance, or improvements, which are eventually incurred down the line, as well as the insurance needed for the financial protection of the property.

Then there is also the matter of taxes periodically imposed on the property, the most common of which is real property tax (RPT). Amilyar is the Tagalog word for real property tax, also known as land tax or property tax. According to the Local Government Code of 1991 or Republic Act no. 7160, property owners are required by law to pay RPT annually, which applies to all types of real properties, including lands, buildings, improvements, and machinery.

In the event that the payment of the RPT is missed, then like with other taxes, there are penalties.

Q: What Happens if I Fail to Pay My Real Property Tax?

A: There are consequences in the event that you fail to pay the RPT or amilyar of your property, the most immediate of which is interest accruing on top of the unpaid taxes. According to Section 255 of the Local Government Code of the Philippines, failing to pay RPT “shall subject the taxpayer to the payment of interest at the rate of two percent (2%) per month on the unpaid amount or a fraction thereof, until the delinquent tax shall have been fully paid: Provided, however, that in no case shall the total interest on the unpaid tax or portion thereof exceed thirty-six (36) months.”

If after the said 36 months you still fail to pay your annual RPT, and the maximum interest of 72 percent had accrued on top of it, then per Section 258: “real property subject to such tax may be levied upon through the issuance of a warrant on or before, or simultaneously with, the institution of the civil action for the collection of the delinquent tax.” Among the actions that your local government unit can take is to auction off your property as a whole, or a usable portion of it, to satisfy the delinquency as well as cover the expenses of the sale.

Pay Early to Avoid Penalties, and Even Get Discounts

One way to avoid the penalties associated with late or non-payment of RPT is to make sure that your property is properly appraised with the resulting RPT duly paid on or before January 31, which is the tax’s annual due date. In the event that an entire year’s worth of RPT is too large to cover in one payment, owners also have the option of paying in quarterly installments. If want to do so, then be mindful of the following due dates:

  • On or before March 31
  • 2nd quarter: On or before June 30
  • 3rd quarter: On or before September 30
  • 4th quarter: On or before December 31

While being able to avoid penalties and additional interest is a benefit in itself when promptly paying your RPT, there is also the opportunity to benefit further by paying it much earlier than at the end of January. Depending on the location of your property and the local government unit it falls under, you may be granted a discount not exceeding 20 percent of the annual tax due when you pay your property’s RPT early.

An example of this was the offer carried out by the local government of Quezon City earlier this year, where property owners who paid for their annual RPT on or before March 31 were granted a 20 percent discount, while those who made early quarterly payments were given a discount of 10 percent.

Again, the discount opportunities depend on the local government unit concerned with the collection of your RPT, so it is recommended to check with your city or municipal treasurer.

Real Property Tax Amnesty

If you defaulted on real property taxes, you could first check if the city where your property is situated offers amnesty on default payments on real property taxes. An example is the Quezon City Council which passed the ordinance SP-3096, formally known as Real Property Tax Amnesty of 2022, last February 18, 2022. This ordinance allows delinquent payers to pay without incurring penalties and imposes a relief scheme for taxpayers who cannot pay the full amount in cash. However, this offer was limited only until June 30, 2022. 

Always check whether or not the local government unit (LGU) of your property’s location grants amnesty so you can take advantage of the waiving of penalties and interests. 

Sources: PPP, Foreclosure Philippines

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