On January 1, 2018, the Tax Reform Acceleration and Inclusion or TRAIN Law took effect, which now affects not only the business sector, buyers, and consumers, but the real estate industry as well.
Although dubbed as a blessing for those earning meager salaries (P250,000 annual salary) – others branded is as an anti-poor since it set a chain of price increases for products often purchase by the majority of Filipinos.
Although a real estate property is not something that a typical Filipino would often buy on a regular basis, the Train Law has certainly changed the way Filipinos can invest in real estate market this year forward.
For instance, in the past tax regime, you will be taxed of up to 15% of property value (30% if strangers) whenever you donate a property. Now, donor’s tax is only at 6% flat rate no matter the relationship of the donor to the donee!
On the other side of the coin, brand new properties priced at P1.5 million (vacant lots) and P2.5 million (house and lots/condos) are now subjected to the VAT. This is a significant change especially for those who are still saving up for their first property as they have to make changes in their budget as well.
Check out the infographic below, courtesy of Premium Properties Ph, which details the tax payment changes of real estate properties under the newly enforced Train Law.