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Need some advice regarding property sale

Discussion in 'Banking - Investing - Finances' started by Dutchie, Sep 30, 2020.

  1. Dutchie

    Dutchie DI Forum Adept Showcase Reviewer Veteran Army

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    From what I understand, the law in this country states that the payment of the 6% capital gains tax regarding the sale of a property is an obligation for the seller.

    I also understand that in most cases this tax is paid by the buyer. However, if the seller insists on fulfilling that obligation, so the buyer negotiates a buying price that takes this into account, then how is the transfer of the title ensured?
    What I mean is, if the seller just "forgets" to go pay that tax, then I assume that will make the transfer of the title impossible? What assurances if any can be written into the deed of sale or otherwise?

    So, if the seller insists on paying the Cap. gains tax, and the buyers' lawyer says: then we'll run into trouble with the transfer of the title, then who's playing some game?
    Seller, or lawyer, or both?

    I understand that tax avoidance is probably as big an issue here as elsewhere, and without that explanation the whole thing doesn't make sense to me, but if someone could advise how things can or can't work here then I'd be grateful.

    Maybe I'm seeing trouble looming where there is none, all I know is that I'm used to settling real estate transactions in a totally different way, where payment is made by the buyer into an escrow account at a certified notary, who pays all taxes and other stuff (like a mortgage bank) and assures that all paperwork is fine, before paying the remaining money to the seller. The (lack of) system here is totally alien to me.
     
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    Last edited: Sep 30, 2020
  2. ex231

    ex231 DI Member

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    My research and experience from a few years ago says you're right. Capital gains tax is the seller's responsibility but as with most things, it's negotiable. I think what sometimes happens is that the seller does not pay the tax and the title can't be transferred until it's paid, usually by the buyer at that point.
    ****This is not legal advice and should not be taken as such.

    I suggest talking to Atty Michael Miguel. He's very straightforward and reasonably priced.
    Unit 2E, 2nd Floor, Yala Bldg., South Road, Calindagan (beside Robinsons Mall) 6200 Dumaguete City, Philippines
     
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  3. Show Pony

    Show Pony DI Forum Patron Highly Rated Poster Showcase Reviewer

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    One sales agreement had a list of all the assorted fees and who was responsible to pay the fee. All the fees payable by the vendor were deducted from the money paid to the vendor. The buyer made the payments to the assorted government agencies so everything got done.
    Some buyers have been known to become total a$$hats once they have their money. Consider having a clause added requiring the seller to provide all necessary assistance to complete the sale FREE OF CHARGE.

    Atty Miguel is one of the most reliable lawyers I know of.
     
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  4. Philpots

    Philpots DI Senior Member Restricted Account

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    I know of a case where the buyer was responsible for all the taxes and fees, she then presented another Deed of Sale she concocted and got it notarized would you believe showing a completely different amount to present to the BIR and the Titles office. Sale was P5 5 million, ocean frontage, declared sale. P600,000. And the BIR and ROD believed that an ocean frontage just north of Sibulan would sell for that amount. Crazy.
     
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  5. PatO

    PatO DI Forum Luminary Highly Rated Poster Showcase Reviewer Veteran Marines

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    In my 3 transactions here, if I am the buyer I try and get the seller to pay fees and taxes; if I am the seller, I try and get the buyer to pay fees and taxes. Normally, you negotiate and settle on a fair outcome for both parties.
     
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  6. Philpots

    Philpots DI Senior Member Restricted Account

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    Yes understand but although the Ordinance requires the seller to pay the taxes, because it is the seller who is benefitting form profit or capital gain, it appears to be normal or relatively normal, for the buyer to made to pay by the seller demanding it to be so. I see this to be the safer of the two because the buyer is the one who has to be protected by proper payment of the taxes to be allowed to have the Title in issued in their name. Relying on the seller to do this could mean a lengthy court procedure to gain control of the Title and control of the Title is required for the buyer to be able to anything with it.
     
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  7. andiflip

    andiflip DI Forum Adept Restricted Account

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    This is totally true,, these people do not trust each other even within their own family's, never mind what they say.. if you have been here long enough you will see where property's are sold because mom and dad died and there is no way the sharing is anyway near equal or fair..
     
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  8. Philpots

    Philpots DI Senior Member Restricted Account

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    I hope the person who opened this thread is following this because here is another example. Another friend of mine paid for a rather large piece with his wife as title owner on the ocean again just north of Dumaguete. The entire process was cleared through an Attorney who shall remain nameless because the lot was subject to a large family made subdivision. The guy was advised all problems had been solved with the family and he built a nice three bedroom home on it only to find sometime a later, a Filipino at the gate, waving a piece of paper which clearly showed that not all family members had been involved. This 'Filipino still actually owned a strip completely dissecting the entire property and the house on it. He had not given his clearance to the sale and was demanding that the guy pay him for that strip or he would seek order to have the building demolished. They guy had to pay up. Forget the amount now but it wasn't cheap. Beware and do your own homework.
     
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  9. OP
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    Dutchie

    Dutchie DI Forum Adept Showcase Reviewer Veteran Army

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    Pat, assuming that in at least one of those transactions where you were the buyer you succeeded in having the seller pay the taxes, how did you ensure there was no trouble with registering the title in your name?
     
  10. Show Pony

    Show Pony DI Forum Patron Highly Rated Poster Showcase Reviewer

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    I would not rely on the seller to actually go to the BIR and pay the taxes. Just deduct the amount due from the cash you hand over to the seller and make the trip to the BIR yourself. That's the only way to be certain it gets done.
    Don't expect the seller to have any motivation to do anything once they have their money in hand.
     
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