Frequently asked questions by foreign investors:
- Rental Yield and Property Appreciation
- Restriction on Foreign Ownership
- Taxes involved in Buying and Selling a property in the Philippines
- Withholding tax when remitting money back to your country
- Typical Maintenance Condominium Fee
- Property Management of Condominiums
- Bank Loans for Foreign Borrowers
1. How much is the rental yield and property appreciation?
As of today, in both our developments in McKinley Hill and Bonifacio Global City, units can be rented out for Php 650 – Php 1,000 per sq. m. per month (at a conservative rate), giving you a gross rental yield of around 7.6% -11.7% for a residential condominium in the area.
As for the property appreciation, our projects in Megaworld increase its prices of about 5-12% annually.
2. Any restriction on foreign ownership when buying condo apartment?
Foreigners are not restricted to own condominium units in the Philippines. Provided, the development comprises of only 40% foreigner owners or less. For example, for a stand-alone condominium (a residential property that is not part of a township development) with only 100 units, only 40 units should be owned by foreigners and the remaining 60 units should be owned by Filipino citizens.
Furthermore, foreigners are restricted to buy land.
3. What are the taxes and stamp duties involved when buying an apartment in Philippines?
Upon handover of keys, the following Transfer Taxes and Fees are due (one time payment):
- Documentary Stamp Tax Registration Fee
|Document||Taxable Unit||Tax Due Per Unit||% of Unit||Taxable Base|
|Deed of Sale, instrument or writing and Conveyances of Real Property (except grants, patents or original certificate of the government)||First 1,000For each additional P1,000 or fractional part thereof in excess of P1,000||15.0015.00||1.5%1.5%||Consideration or Fair Market Value, whichever is higher|
|Lease and other Hiring agreements of memorandum or contract for hire, use or rent of any land or tenements or portions thereof||First 2,000For every P1,000 or fractional part thereof in excess of the first P2,000 for each year of the term of the contract or agreement||3.001.00||1.5%1%|
|Mortgages Pledges of lands, estate, or property and Deeds of Trust||First 5,000On each P5,000 or fractional part thereof in excess of 5,000||20.0010.00||.4%.2%||Amount SecuredAmount Secured|
- Transfer Tax
– paid to the City Treasurer’s Office
– rate differs per city, ranges from .5% – .85% of property price
- Real Estate Tax
– Computed as: Real Estate Tax = Fair Market Value or Purchase Price (whichever is higher) x 45% Assessment Level x 1% Basic Tax Rate
- Miscellaneous Fee
- Electric Meter Deposit
Annually, there is a very minimal amount of Real Property Tax (RPT), which is assessed value x 1%. Also, enjoy big discounts up to 20% on advance tax payments on properties.
On selling, there is no capital gains tax during the pre-selling stage. Only after the handover of the keys that 6% capital gains tax will take effect.
4. Any withholding taxes when remitting the money back to base country?
There is no withholding tax when remitting the money back. However, there are bank charges when remitting money from the Philippines internationally. The rates would depend from bank to bank.
5. What is the interest rate on housing loan at the moment and how much can a foreigner loan?
Foreigners are allowed to bank finance their condominium with our tie up local banks as long as they have an attorney-in-fact in the Philippines. For, international banks such as HSBC and CITIBANK, it processes home loans to their foreign depositors.
Foreigners with Special Retirement Residence Visa (SRRV), may bank finance your properties for 15 years up to 80% loanable amount. Foreigners are eligible to apply for SRRV once they have paid at least P2,000,000 on their property.
At the moment, bank loan rates are 5.95% fixed for 1 year (can be lower) and 7.75% (fixed for 3 years), depending on the terms and bank applied to.
Megaworld Corporation can also offer in-house financing to our clients.
6. What is the typical maintenance fee for the apartment?
As of to date, our existing and operation residential properties have a maintenance fee (association dues) of Php 68 / sq. m. / month + 12% VAT. Hence it’s about Php 76.16 / sq. m. / month. For a 90 sq. m. unit (968.40 sq. ft.), maintenance fee is about Php 6,854.40 per month.
7. Does your company provide Management services to manage the apartment (finding tenants, minor repairs etc) and how much does is the commission?
Megaworld Corporation has a sister company called First Oceanic Property Management, which is the entity that manages most of Megaworld Corporation’s residential properties. They take care of minor repairs and yes, you may also list your unit/s with them for lease or sale. They will take care of your unit/s for you.
Aside from that, there are many brokerage firms and freelance brokers who are very aggressive in marketing Megaworld units. They can help you lease out or sell your units in no time. The standard commission for rental is one (1) month commission for every one (1) year contract, or 10% of monthly rental if short term or transients. If you’re looking to sell your residential properties, broker fees are usually 3% – 5% commission depending on your agreements and Capital Gains Tax is 6% of the selling price.