Real Estate Investments in the Philippines for Foreign Nationals

Before thinking about real estate investments in the Philippines, a number of considerations must be made. Aside from a variety of ownership, surroundings, and the allocated funds, foreign nationals need to take certain factors into account. Because there are particular legislative limits on foreign ownership, it is crucial to comprehend the procedures of purchasing properties in the Philippines for foreign citizens.

Investment and savings are important concepts in building a solid socioeconomic structure. However, they aren’t synonymous. Even though both can help individuals achieve a more secure financial future, it’s critical to comprehend the differences and when saving and investing are best. Here’s how foreign nationals can invest in the Philippines through real estate.

Can Foreign Nationals in the Philippines own land?

In the Philippines, land ownership is typically restricted to Filipino nationals exclusively. Nevertheless, there are a few exceptions that enable foreigners to purchase property or real estate in the Philippines.

Are Foreign Nationals exempt from owning establishments?

Condos, established properties, and other real estate investments in the Philippines may be purchased and owned by citizens of other nations. The foreign ownership of condominium units is still prohibited at 40% since condominium developments are similar to commercial setups in which 60% of the shares must be owned by Filipinos. Even though it is expressly forbidden by law for foreigners to buy property or other financial assets, there are occasionally deviations from this rule.

Which types of real estate investments in the Philippines are prohibited from acquisition by foreign nationals?

When purchasing real estate, an investor has the option of purchasing single-family homes or condominiums. It should be remembered that housing land was excluded because it is illegal for a foreign national to possess property.

Ownership of Condominium Units or Establishments

Foreign ownership condos of condominiums is restricted by the Condominium Act. Units may only be owned by Philippine residents or enterprises with at least 60% Filipino ownership if unit owners possess shared spaces. Foreigners are allowed to obtain units in condominium corporations that own common facilities, provided that their ownership percentage is not above 40%.

Can foreign nationals have real estate investments in the Philippines in the long term?

By renting land for a maximum of 50 years with the possibility of extending it for an additional 25 years, foreign nationals can take advantage of the chance to establish substantial investments in the Philippines. It is essential to comprehend these leasing agreements while preparing long-term and successful real estate projects.

Regulatory Framework on Foreign Ownership in the Philippines

Land, structures, highways, and different immovable property attachments are all considered real estate investments in the Philippines.  A number of laws, including the Civil Code, The Maceda Law, the Foreign Investors’ Lease Act, the Public Land Act,  the Condominium Act, and the Property Registration Decree, regulate real estate transactions.

Can foreign nationals married to Filipino spouses acquire land?

A foreigner may purchase property in the Philippines through marriage to a Filipino. However, the Filipino spouse will receive the title to the assets, known as the Transfer Certificate of Title, or TCT. The foreigner’s name may appear in the legal document of acquisition or contract, but it is not permitted in the TCT or ownership deed.

Property Succession to a Foreign National in Special Cases

Foreign nationals are expressly prohibited from purchasing real estate in the Philippines by the 1987 Philippine Constitution. However, Article XII, Section 7 of the aforementioned Constitution provides a limited provision that allows heirs to inherit the property, irrespective of whether they are foreign nationals.

Real Estate Investments in the Philippines through Foreign-Owned Corporations

Foreigners can lawfully and expeditiously purchase real estate in the Philippines by establishing a local firm. In this instance, the only need for the establishment of the company is registering with the Securities and Exchange Commission (SEC).

Corporation Ownership

Once approved by the SEC, the corporation may now acquire any type of tangible real estate, whether office spaces, land, homes and lots, apartments, or other types of real estate. Having a stake in a business offers many benefits, one of which is access to the income and assets of the firm. 

However, foreign ownership is limited to a maximum of 40% of the total. The 40 percent foreign ownership cap still applies to businesses, meaning that a minimum of 60% of the company’s shares must be owned by Filipinos.

Property Transaction Fees for Real Estate Investments in the Philippines

There is perpetually more to a real estate acquisition than the asking price. When purchasing real estate in the Philippines, there are a number of costs to be aware of, such as:

Title Registration Fee

This varies and is typically equal to 0.25% of the selling price, as stated in an estimate of registration expenses that are shared by the seller or real estate broker.

Documentary Stamp Tax

1.5% of the highest amount sales price, the zonal value, or the fair market worth.

Capital Gains Tax

6% of the largest percentage of the selling price, the home’s zonal value, or its actual market value. Usually, the seller is responsible for paying this, but occasionally, the buyer does as well, or it is included in the purchase amount.

Transfer Tax

With respect to the location of the real estate, 0.5% to 0.75% of the selling cost, zonal value, or the fair market value, whichever is higher.

Can a Non-Citizen Filipino who was Natural-Born Filipino Purchase Real Estate Investments in the Philippines

According to the 1987 Constitution, natural-born Filipinos who obtained foreign citizenship and then relinquished their Filipino citizenship are entitled to land ownership in the Philippines. 

Ownership Limitations for Non-Citizen Filipinos who were Natural-Born

  1. Lot size restrictions when purchasing land that will be used for trade or business:
  • 5,000 square meters of urban property
  • Three hectares of farmland
  1. Lot size restrictions for purchasing land to be occupied as a home:
  • 1,000 square meters of urban property
  • One hectare in a rural area

This right may be used by any of the spouses, who both happen to be former native-born Filipinos; nevertheless, the overall acquisition cannot exceed the maximum size permitted.

Potential Real Estate Investments in the Philippines

One well-liked and profitable source of income is real estate investing. When it comes to renting out their properties, investors have a number of possibilities. Apartments, business spaces, and residential residences are all good choices. High levels of occupancy can result in sizable rental income from both long-term and short-term leases in popular tourist locations.

Similar to every other place in the globe, the Philippines has a wide range of property prices based on factors including location, size, condition, and features. Giving foreign nationals important information so they can choose wisely when investing in real estate in the Philippines. Purchasing real estate in the Philippines has several benefits, including the possibility of capital growth, appealing retirement and tourism destinations, reasonably priced property values, and chances for rental income. Comprehending the laws and workings of the Philippine real estate market is essential to making profitable real estate investments in the Philippines.

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