Tax Articles

Relief Measures on Real Property Ownership

By: Atty. Rodel C. Unciano

Atty. Rodel C. Unciano Partner   +632 8403-2001 loc.380 This email address is being protected from spambots. You need JavaScript enabled to view it. View Profile

Another important feature of Republic Act (RA) No. 12001 or the Real Property Valuation and Assessment Reform Act (RPVARA) is the grant of real property tax amnesty on unpaid real property taxes.

As provided under the law, the real property tax amnesty shall cover penalties, surcharges, and interest from all unpaid real property taxes, including Special Education Fund, idle land tax, and other special levy taxes that accrued prior to the effectivity of the RPVARA on July 5, 2024. This can be availed within a period of two years from the effectivity of the RPVARA on July 5, 2024, or until July 5, 2026.

Pursuant to its Implementing Rules and Regulations and as circularized by the Bureau of Local Government Finance in Memorandum Circular No. 003-2025, the concerned Local Government Units (LGUs) need not issue an ordinance for the implementation of the grant of the real property tax amnesty. The non-issuance of the ordinance shall not prevent the grant of tax amnesty provisions of the law.

So, delinquent real property owners may already avail of the real property tax amnesty without awaiting for an ordinance to be issued by the concerned LGU. An LGU may nevertheless issue an ordinance, at its option, only to determine the means and method of payment of the delinquent real property taxes.

The grant of real property tax amnesty pursuant to RA 12001 is an essential complement to the Estate Tax Amnesty program of the government pursuant to RA 11213 as amended by RA 11569 and further amended by RA 11956. To recall, the estate tax amnesty has granted concerned taxpayers the opportunity to transfer their inheritance from their decedents through the payment of an estate tax at a rate of six percent (6%) of the decedent’s total net taxable estate so that the title to the properties may be transferred to the heirs without having to pay the penalties that had accumulated due to the failure to pay the estate tax on time.

As it stands now, the estate tax amnesty covers the estate of decedents who died on or before May 31, 2022, whose estate taxes have remained unpaid or have accrued as of May 31, 2022. The period of availment is only until June 14, 2025.

Hopefully, the real property tax amnesty pursuant to RA 12001 and the estate tax amnesty pursuant to RA 11213, as amended, would be able to encourage heirs and administrators alike to facilitate the transfer of real property ownership from the name of the decedents to the heirs.

There is one more obstacle though that heirs will have to face in transferring their inheritance to their own name. And that is the payment of the tax on the transfer of real property ownership as required under the Local Government Code (LGC) of 1991.

Note that aside from the national internal revenue tax, which is the estate tax, the LGC of 1991also allows Local Government Units (LGUs), specifically, the provinces and cities, to impose tax on sales, donations, barters, or on any other modes of transferring ownership or title over real properties within their territorial jurisdictions, at the rate of not more than fifty percent (50%) of one percent (1%) of the total consideration or fair market value of the properties involved in a transfer. And like any other tax, the tax on transfer of ownership over real property is also subject to surcharge and interest due to late payment. The Tax Amnesty Act and its amendments as well as the RPVARA failed to extend amnesty on the local transfer tax.

To recall, in support of the government’s estate tax amnesty program and to align with the national government’s objective of giving reasonable tax relief to estates with deficiency taxes, the Bureau of Local Government Finance attempted to provide relief to taxpayers by encouraging LGUs to grant relief on surcharges and interest on tax on transfer of real property ownership.

LGUs however cannot grant this relief without a local ordinance duly enacted by the local sanggunian for this purpose. This is pursuant to Section 192 of the LGC of 1991 which allows LGUs to grant reliefs or even tax exemptions to taxpayers under such terms and conditions as the local sanggunian may deem necessary.

Thus, to further encourage concerned taxpayers to avail of the government’s tax amnesty program on real property ownership, LGUs may enact ordinances granting reliefs on the imposition of surcharges and interests on tax on transfer of real property ownership.