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Vinnie

Documentary Stamp Tax (Dst) On Leases

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Hi all, first post on the forum!  Glad to be here.

 

 

Documentary Stamp Tax (DST)

 

Does anybody ever pay this?

 

According to: http://www.bir.gov.ph/taxinfo/tax_docstm.htm

 

Tax section code 194 states that leases should be subject to DST otherwise its unenforceable and even a notary shouldn't touch it.

 

Weird, but I've never paid stamp tax as a tenant nor even heard of it.

 

Signing another lease shortly and agent wants me to cover this DST (whereas I think the owner should pay it).

 

Any suggestions or experiences?

 

 

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Never heard of it in connection with renting. I don't think it applies to leasing an apt or house from the owner, if that's what you're doing. That Section 194 seems to apply to leasing of land. Welcome to the forum. 

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Very interresting 1st post and question, hopefully 1 of our well inform members can answer

. since your here in the philippines, why not submit this question to

pinoylawyer.org   or

read the DEAR PAO in manilatimes.net

http://www.manilatimes.net/category/legal-advice/

 

i myself have never occurred any extra charges in my "rentals"

yes i  have had  to pay a "VAT" or "Association/condo fees"association 

but never a DST ,

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In over 7 years dealing with real estate rentals, we have never had a single contract that states the tenant has to pay DST. I can only think that this would be payable on a long term lease. With the usual 1 year contract of lease this has never been applied, all taxes are usually paid by the owner.

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If you do for some reason have to pay the DST make sure your not paying too much, you need to get the assessed values for the land and property

 

 

Current assessment levels for land are: 20 percent for residential, 50 percent for commercial, industrial, and mineral, 40 percent for agricultural, 20 percent for timber, and 15 percent for scientific, cultural, and hospital.

Improvements like houses or buildings are assessed separately and have assessment levels different from land.

Let’s say for example that we want to compute the assessed value of a residential land whose fair market value is pegged at 2 million pesos by the municipal assessor.

The formula for getting the assessed value of this property is: fair market value x assessment level = assessed value. Hence, 2 million x 20 percent = 400,000 pesos.

Since we already have the assessed value for this property, we can now compute the basic real estate tax.

To do this, we multiply the assessed value by the rate of basic real estate tax, which is pegged at not more than 1 percent for the provinces and not more than 2 percent for cities and Metro Manila municipalities.

The basic real estate tax for residential land with an assessed value of 400,000 pesos is computed this way: assessed value x tax rate = amount of tax.

Let us say that this land is located in a town in Cebu, where the tax rate is 1 percent, then the amount of tax for a residential land with an assessed value of 400,000 is 4,000 pesos.

If, on the other hand, this land is located in Cebu City or in a Metro Manila municipality, where the tax rate is pegged at 1.5 percent (remember that the tax rate for these areas must not exceed 2 percent), then the tax amount can be arrived at by multiplying the assessed value of 400,00 with the tax rate of 1.5 percent. The tax amount therefore, in this case, is 6,000 pesos.

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