Can Foreigners Buy Property In The Philippines? [Options, Tips, Laws]

“Can foreigners actually buy property in the Philippines?”

• The legal requirements and regulations for foreigners to buy real estate
• The types of property you can own
• The process of buying a property
• The different exceptions to expats owning land

We’ll sift through the strict rules, insider tips, and land ownership guidelines so you can decide if a brand-new beachfront condo is in your future.

INSIDER TIP: US Expat Taxes- If you’re a US citizen or resident who resides or travels outside the United States, you might have tax obligations to the US government if you own properties in the Philippines (for example, annual real estate taxes or capital gains tax if you sell the property). Consult a tax professional about filing the proper forms and paying applicable taxes.

• Dispose of the property and collect the proceeds,
• Transfer the ownership to your children, or
• Transfer the title to your spouse’s relatives if you have no children.

INSIDER TIP: Divorce In The Philippines- Any foreigner putting property under their wife’s name should consider a premarital agreement to clarify property ownership in the unfortunate event of a split.

Despite the restrictions, certain exceptions permit foreigners to own land or acquire real estate property in the Philippines. I will provide further explanation below.

Non-Filipinos who acquired and possessed land in the Philippines before the enactment of the 1935 Philippine Constitution retain the right to maintain ownership of their property even after the constitution came into effect.

On the other hand, the Parity Amendment to the 1935 Constitution empowered Americans to dispose of, exploit, develop, and utilize public domain agricultural, forest, and mineral properties.

This amendment allowed Americans to extract and utilize the Philippines’ oceans, minerals, coal, petroleum, and other potential energy sources. However, on July 3, 1974, the rights granted to United States citizens and businesses or associations controlled by them were terminated.

INSIDER TIP: Philippines Constitution- The 1935 Constitution should not be mistaken for the more recent 1987 Philippine Constitution. Both emphasize that ownership of land in the Philippines is exclusive to Filipino citizens. Therefore, the 1935 Constitution serves as a noteworthy reference milestone.

The 1887 constitution explicitly prohibits individuals who are not Filipino citizens from acquiring property in the Philippines. However, a slight exception is outlined in Article XII, Section 7 of the same constitution, which allows heirs, regardless of their nationality, to inherit property if the deceased Filipino spouse did not leave a will.

It means a foreign individual can acquire real estate in the Philippines if they’re a lawful or natural heir through hereditary inheritance AND NOT by being explicitly named in the “Last Will and Testament” of a property owner.

Article 887 of the New Civil Code of the Philippines states that “legitimate children and descendants, with regard to their legitimate parents and ascendants,” are mandatory heirs.

Succession of property in the Philippines follows a hierarchy:

1. Legitimate children or descendants of the deceased;
2. Legitimate parents or ascendants;
3. Illegitimate children or descendants;
4. Surviving spouse;
5. Siblings (brothers and sisters), nephews, and nieces;
6. Other collateral relatives within the fifth degree; and finally,
7. The State (Philippines).

Under the hierarchy above, foreigners can possess and acquire real property, whether farmland or private land, inherited from their deceased Filipino spouse, subject to the shares of any surviving relatives.

The overview above concerns a foreign expat inheriting last from their Filipino spouse. This does not allow expats to inherit land from someone they were not married.

The Philippine Supreme Court ruled in 1982 that foreigners inheriting land from any Filipino who wasn’t their spouse would be unconstitutional.

“Any alien would be able to circumvent the prohibition by paying money to a Philippine landowner in exchange for a devise of a piece of land.” – Ramirez vs. Vda. de Ramirez, G.R. No. L-27952

INSIDER TIP: I’m Not An Attorney, Nor Do I Play One On TV- Just a friendly reminder, as stated in Nomadic FIRE’s disclaimer and Terms of Use, the information here is informational only. I am not a licensed attorney and highly suggest you consult a properly licensed attorney on all legal matters.

According to the Philippine Constitution, a natural-born Filipino citizen refers to an individual who is a citizen of the Philippines from birth without the need to take any actions to acquire or perfect their Philippine citizenship. This definition encompasses the following criteria:

• Filipino citizens who have possessed dual citizenship
• Filipino citizens who have possessed derivative citizenship
• Married a foreign national but retained their Filipino citizenship (they have not yet acquired foreign citizenship)
• A naturalized citizen according to the Philippines’ Naturalization Law
• A Filipino citizen during the time of the 1987 Constitution adoption
• Those who were born before the signing of the 1973 Philippine Constitution (January 17, 1973) and have decided to elect Filipino citizenship by the age of 18 years old (they may be born anywhere in the world, as long as to a Filipino citizen; regardless if father or mother)
• Those who were born after the signing of the 1973 Philippine Constitution (January 17, 1973), whose parents were Filipino citizens at the time of their birth (regardless if father or mother)

INSIDER TIP: Derivative Citizenship Defined- This affects unmarried children whose parents reacquire their Philippine citizenship.

• If you are under 18, then you are also considered a Filipino citizen
• If you are over 18, you do NOT become Filipino citizens when your parents reacquire their citizenship. The exception is if you were born while your parents were still Filipino citizens. In that situation, you are considered a natural-born Filipino and can apply for the reacquisition of your Philippine citizenship.

1

Buy A Condominium Unit

I always lead with this option because acquiring condominium units is the most convenient option for foreigners to own real estate property in the Philippines.

According to the Condominium Act of the Philippines, also known as Republic Act (RA) 4726, foreign nationals are permitted to purchase condominium units in any condominium project, provided that the overall foreign ownership of the project doesn’t exceed 40%.

For example, a condo project with 100 units in total. Only 40 condo units can be sold and owned by non-Filipino citizens.

Even better is the affordability of housing compared to the US. You can still find furnished 387 sqft/36 sqm BGC or Makati studio apartments starting at $500 per month in a luxury condominium complex with fitness gyms, rooftop swimming pools, movie theaters, and more.

INSIDER TIP: Ownership Of Condominium Units- Some freestanding houses or villas have condominium titles, allowing foreigners to own them. You can ask your real estate broker about the type of title the property has before making a purchase. While this is not a typical scenario, it’s important to note that the 40% foreign ownership restriction still applies to these properties.

2

Buy A House With Leased Land

As mentioned earlier, non-residents are generally prohibited from purchasing land in the Philippines. However, this restriction doesn’t completely prevent them from owning real property in the country.

The provisions on foreign ownership don’t extend to legally acquiring houses and other building structures. One solution is for expats to buy freestanding homes and get a long-term lease on the land.

According to the Investor’s Lease Act of the Philippines or the Republic Act No. 7652, it’s stipulated that a foreigner and a Filipino landowner can enter into a long-term land lease agreement. This involves initial periods extending up to 50 years, with a one-time option to renew for 25 years.

INSIDER TIP: SRRV Lease Of House and Land- If you want to use your SRRV Classic deposit on a long-term lease of the lot and house, the lease term must be a minimum of 25 years and $10,000 USD or $20,000 in lease value depending on the type of visa.

3

Marry A Philippine Citizen

Foreigners married to Filipino citizens can acquire property under their spouse’s name. Even though the foreigner’s name may not appear on the land title (Transfer Certificate of Title), it’s possible to include their name in the property purchase agreement (Deed of Sale). This arrangement allows for a seamless and legally sound process while ensuring the interests of both parties are duly protected.

In case of a legal separation between the couple (as there is no divorce law in the Philippines) or the unfortunate passing of the Filipino spouse, the transfer of land to the foreign spouse is not permitted.

This is due to the foreign spouse’s restriction on land ownership in the Philippines. However, a reasonable amount of time will be granted for the sale of the property and the collection of proceeds. You can also transfer ownership to your children or legal heirs. Alternatively, if you don’t have any children, you can pass it on to your spouse’s relatives.

4

Acquire Through A Company With Philippine Majority Ownership

Philippine corporations are allowed to own land, provided Filipino citizens own at least 60% of the company, while foreign partners can own the remaining shares. When corporations meet this equity stake requirement, they must register with the government’s Board of Investment (BOI) to obtain permission to engage in real estate transactions, including buying, selling, or acting as an intermediary.

INSIDER TIP: Additional Foreign Ownership Rules- The same maximum land restrictions imposed on foreign individuals also apply to the maximum area that expatriates can acquire through a company.

5

Buy a property as a Balikbayan foreign citizen

Former Filipino citizens who return to the Philippines as Balikbayan are fortunate to have the legal right to purchase property and own land in their home country. The Balikbayan program, established by the Philippine government, aims to encourage Filipinos who have migrated abroad to reconnect with their roots. This program grants Balikbayans special privileges, including purchasing property and owning land in the Philippines.

Even if they are no longer Philippine citizens, Balikbayans can take advantage of this legal provision to invest in real estate or own land in their native country.

The specific Balikbayan land ownership rights are covered under the 1982 Batas Pambansa 185 (BP 185) and Republic Act 8179 (RA 8179), which amended the Foreign Investment Act of 1991.

INSIDER TIP: Definition of Balikbayan- A Balikbayan is a Filipino citizen who has acquired foreign citizenship and wishes to return to the Philippines for personal, business, or investment purposes. The Balikbayan Program is a government initiative to encourage Filipino citizens living abroad to maintain ties and contribute to the country’s development.

6

Become A Filipino Dual Citizen

Under the Dual Citizenship Law of 2003 (also known as RA 9225), Filipinos born in the Philippines who lost their Filipino citizenship to become naturalized foreign citizens of another country can regain their Philippine citizenship by swearing allegiance to the Philippines.

After reacquiring Philippine citizenship, they are considered citizens and may own any property without foreign citizen limitations.

7

Buy land before the 1935 Philippine Consitution was passed

This is pretty rare in 2023. As someone who purchased property at 18 years old in 1935 would now be years old. If your parents or family purchased the property before 1935, then the exceptions around property inheritance come into play (see section above under Hereditary Succession).

While the Balikbayan exception above allows non-Filipinos the right to own land and property, there are restrictive limits on the size of land owned:

• Residential Land Ownership Limit: Balikbayan foreigners can acquire residential land up to a maximum of 1,000 square meters in urban areas or one hectare in rural areas.
• Owning Land For Business or Investment: Foreign citizens who were originally Natural-Born Filipinos are limited to 5,000 square meters of urban land or three hectares of rural land used for business, investment, or agricultural land.

INSIDER TIP: Dual Citizen Lot Size Restrictions- Balikbayan lot size rules do not apply to Filipino dual citizens. Dual Citizens have no restrictions on buying housing or land in the Philippines. As a dual citizen, they have the same rights to own land as any other natural-born Filipino citizen.

Yes, Balikbayans can own up to two land titles in different cities or municipalities. However, the combined areas owned cannot exceed 1,000 urban sqm or 1 hectare of land in rural areas for residential property, 5,000 square meters for urban land, or 3 hectares for rural land for business property.

Another restriction from RA 8179 is that a Balikbayan cannot own both urban and rural land.

If you’ve already decided to live in the Philippines and obtain an SRRV, it’s important to note that the visa doesn’t automatically grant you the right to own land.

As per the Philippine Retirement Authority (PRA), the governing body responsible for issuing SRRV, foreigners who possess an SRRV are still prohibited from owning land or real estate property in the Philippines.

However, if the foreign retiree legally marries a Filipino citizen, the foreigner may purchase land but, again, only in the name of the Filipino spouse.

After familiarizing yourself with the exceptions and limitations surrounding foreign ownership of properties in the Philippines, it’s time to clearly understand the steps you must take when purchasing your future investment.

A Special Resident Retiree’s Visa (SRRV) is not required to own land in the Philippines, but it is one of the easiest ways to stay in the Philippines long-term legally. The SRR Visa requires a deposit of $10,000 or $20,000, depending on the visa version you apply for. A key benefit to the visa is that expat retirees can use this deposit to purchase property rather than sit in a bank.

While an SRRV still doesn’t allow you to own land, it is one of the world’s best retirement visas and will enable you to live in the Philippines without the hassle of frequent trips to the Bureau of Immigration for visa extensions.

Book a consultation with a Visa Specialist today to learn more about the benefits of the Philippines retirement visa.

When choosing the best location for an expat, you can’t go wrong with vibrant areas in Manila like Makati, Quezon City, Pasig, and Taguig. Properties within these major cities come with amenities like plenty of markets, easy access to advanced healthcare and education, and a bustling entertainment platform.

However, with it comes congestion and traffic.

Tagaytay, Sta Rosa, Cavite, and Subic are great options if you prefer locations removed from metropolitan crowds or tourists yet have close proximity to Metro Manila.

There’s also Cebu and Davao City from the Visayas and Mindanao region. Both cities are popular destinations for expats who’ve had enough of the city life and want to enjoy the island life while still having access to modern amenities.

Alternatively, you can head to popular tourist destinations like Boracay, Bohol, Dumaguete, or Siargao.

These are some of the areas that boast thriving expat communities, providing instant connections and helping you adapt quickly to Filipino culture.

Similar to anywhere else in the world, property prices in the Philippines vary based on factors such as location, size, condition, and features. So, browsing real estate listings allows you to evaluate current market prices.

Some site listings come with accompanying images, so you can better assess if a property aligns with your aesthetic preferences. And make sure to list down your favored property options to take with you on the next step.

A real estate broker knows the ins and outs of the market, allowing them to provide you with invaluable advice on the most favorable deals, including prime locations and lucrative investment opportunities.

If you already know what type of property and location (e.g., city or resort area) you’re after, a broker is your best bet in finding the ideal home for you and ensuring that all documents are correctly prepared.

In addition, they can also connect you with reliable lawyers, appraisers, and building inspectors.

Setting up a visit gives you an idea of how vibrant, inviting, and livable the area is in real life. Additionally, you can assess whether the property is well-maintained, note any necessary repairs, and ask the landlord or seller direct questions.

You can also ask questions about utilities, transportation, security systems, etc.

Before purchasing your dream property, you must exercise due diligence in verifying the proper ownership. Once confirmed, it’s advisable to exclusively engage in transactions with the duly verified owners or their duly authorized representatives.

Check all the documents. The land title contains crucial information about the property, encompassing potential issues that may arise.

Ensure you have a clean title and that all real estate taxes are paid on time. Always request the latest real estate tax clearance. Confirm the property estate taxes are paid.

INSIDER TIP: Real Estate vs Property Estate Taxes- The real estate tax you pay annually and the estate tax (BIR FORM 1801) differ from the property estate taxes. You only pay estate tax if the owner listed on the title is deceased. FYI, Significant penalties are imposed for filing estate taxes late.

It’s advisable to seek assistance from a professional to thoroughly assess the technical aspects of the documents, such as the right of way, tax declaration, and Special Power of Attorney (SPA). Buying property in the Philippines is not like the US.

The applicable rules are different. Buying without understanding the building rules can lead to costly mistakes. Many expats have purchased beachfront property only to find out that there is no right-of-way access to any roads.

After completing the previous two steps, the actual sale process begins. You must obtain a signed and notarized deed of sale, which confirms the transfer of ownership of the prior land owner or property developer to you.

After completing the Deed of Sale, allocate the next 30 days to settle tax obligations to the Bureau of Internal Revenue (BIR). The following are a few transaction fees to be prepared for:

• Capital Gains Tax (CGT) – The amount is calculated as 6% of the property value, zonal value, or fair market value, whichever is highest.
• Documentary Stamp Tax (DST) – It’s calculated based on 1.5% of the highest value among property/zonal/fair market value.
• Transfer tax – It ranges from 0.5% to 0.75%.
• Title registration fee – 0.25% of the sales price.

The documents required are:

• Original and Photocopy of Deed of Absolute sale
• Original and Photocopy of the Transfer certificate of title
• Tax declaration of land and improvement
• Buyer and seller’s tax ID numbers
• Check with the office for any added documentation required to avoid inconveniences.
• Each municipality has its policies regarding taxes and rates, so ask your broker before purchasing any properties.

After filing the CGT and DST documents at BIR, you will receive the following:

• Certificate Authorizing Registration (CAR)
• Original Copy of BIR stamped absolute deed of sale
• Owner’s copy of the transfer of certificate Title
• Original copy of tax clearance
• Original copies of official receipts of all payments made (including Transfer tax, CGT, and DST)
• Original copy of latest Tax declaration for land and improvement

The municipal or provincial assessor’s office will issue the new tax declaration document, typically 5 days after submitting the mentioned documents.

After you and the seller have settled the payments and completed the necessary document signing, the Registry of Deeds will cancel the old property title. Once the land or property has been officially transferred, a new title will be issued in the new owner’s name.

To obtain a copy of the updated title, you can request it at the city assessor’s office.