Buying real estate in the Philippines as a US citizen?

We've created a guide to help you avoid pitfalls, save time, and make the best long-term investment possible.

How to buy and own real estate in the Philippines as a US citizen

Last updated on 

real estate The Philippines

Everything you need to know is included in our Philippines Property Pack

Maligayang pagdating sa Pilipinas!

The Philippines is an archipelago of natural beauty, friendly locals, and vibrant culture.

If you're an American citizen who craves island living and cultural diversity, owning property in the Philippines is a captivating option.

However, making a property investment in the Philippines as a US citizen involves navigating new laws and regulations, which can be quite challenging.

No worries, we will give some indications in this blog post made by our country expert.

Our goal is to simplify this information for you, ensuring it's easy to understand. Should you have any further questions, please don't hesitate to get in touch with us.

Also, for a more detailed analysis, you can download our property pack for the Philippines, made by our country expert and reviewed by locals.

Can American people buy property in the Philippines?

Do you need to be a local or a permanent resident to buy a property in the Philippines?

In the Philippines, foreign nationals, including Americans, are subject to specific restrictions when it comes to owning property.

You don't need to be a citizen or a permanent resident to buy property, but there are limitations on what type of property you can own.

Firstly, foreigners cannot own land in the Philippines. However, you can own condominium units or apartments in high-rise buildings as long as the foreign proportion in that condo corporation does not exceed 40%.

This is a common way for foreigners to invest in Philippine real estate.

For buying property online from the United States, it's technically possible to complete most of the process remotely.

However, it's essential to have someone trustworthy in the Philippines to oversee the transaction, like a reliable lawyer or real estate agent. They can help navigate the local legal system and ensure that all documents are legitimate.

Regarding a tax ID, if you are buying property in the Philippines, you will need a Tax Identification Number (TIN). This is a requirement for all property buyers, regardless of nationality, to ensure proper tax documentation.

A local bank account is not strictly necessary for the purchase itself, but it's highly advisable to have one for ease of transaction and managing your finances in the Philippines, especially if you plan to stay or do more business in the country.

Other specific documents you'll need include a valid passport and Alien Certificate of Registration if you're a non-resident.

Additionally, you'll need to have the property's title, tax declaration, and other relevant documents from the seller to ensure that the property is legally transferable and free of any encumbrances.

What are the rights and requirements to buy real estate in the Philippines as a US citizen?

American citizens, like other foreigners, have specific restrictions when it comes to buying and owning property in the Philippines.

These restrictions are different from the rights of local Filipino citizens.

Firstly, as a foreign national, you cannot own land in the Philippines. This restriction applies equally to all foreigners, regardless of nationality. There are no special privileges for Americans in this regard.

However, you can own buildings or structures on the land, such as houses or commercial buildings, provided that you lease the land. The lease is typically valid for 25 years and can be renewed for another 25 years.

When it comes to owning condominiums or apartments, as mentioned before, you can do so as long as the total foreign ownership within the condominium corporation does not exceed 40%. This rule ensures that the majority ownership of any condominium project remains with Filipino citizens.

There is no limit to the number of condominium units you can own, as long as the 40% foreign ownership cap in the condominium corporation is not exceeded.

Regarding location-based restrictions, the Philippines does not generally impose restrictions on foreigners buying property in specific areas, like near borders or coastlines.

However, it's crucial to be aware that certain areas may be designated as special economic zones, protected areas, or military zones, where different rules might apply.

These areas might have specific regulations that restrict or control property ownership and should be researched case by case.

There is no legislated minimum investment requirement for foreigners buying property in the Philippines.

The investment value is typically dictated by the market price of the property you're interested in purchasing.

Thinking of buying real estate in the Philippines?

Acquiring property in a different country is a complex task. Don't fall into common traps – grab our guide and make better decisions.

buying property foreigner The Philippines

What about buying land in the Philippines as an American?

Let’s focus a bit more on the land ownership system in the Philippines.

As a US citizen, you cannot buy land in the Philippines.

This restriction applies to all types of land, whether for residential or commercial use.

The Philippine law specifically prohibits foreigners from owning land, regardless of their nationality. This includes land along borders, coastal areas, or anywhere else in the country.

However, there are some ways that foreigners, including Americans, get involved with land in the Philippines. One common method is through leasing, as already mentioned.

Foreigners can lease land for a period, typically up to 50 years with the option to renew for another 25 years. This allows for long-term use of the land for various purposes, including residential and commercial developments.

Another way is through forming a corporation.

If you form a corporation in the Philippines, that corporation can own land, but the corporation must be at least 60% Filipino-owned. This means that as a foreigner, your ownership in the corporation (and indirectly in the land) can only be up to 40%.

In terms of where foreigners usually get involved with land in the Philippines, popular areas include major cities like Manila and Cebu, as well as tourist destinations like Boracay and Palawan. These areas are attractive due to their economic and tourism potential.

Zoning and land use planning in the Philippines can affect how land is utilized in different regions.

Each area has its own zoning regulations that dictate what the land can be used for—whether residential, commercial, agricultural, industrial, etc. This is crucial to consider, especially when involving in land through a corporation, as it will determine what types of developments or businesses can be legally built on the land.

Common land ownership issues in the Philippines include disputes over land titles, zoning violations, and challenges related to land use regulations.

It's essential to ensure that any land you are involved with has a clear title and that its use complies with local zoning laws.

Buying property and becoming resident in the Philippines

In the Philippines, there isn't a direct program that grants permanent residency solely through the purchase of real estate.

However, there is a residency program that involves real estate investment, known as the Special Resident Retiree's Visa (SRRV). This program is designed for foreign retirees, but it has flexible age requirements and can be an option for Americans seeking residency in the Philippines.

The SRRV has several options, but the most relevant for real estate investment is the SRRV Smile or Classic.

For the SRRV Smile, you need to deposit USD 20,000 in a Philippine bank if you're 50 years old or above (or USD 50,000 if you're below 50). This isn't directly a real estate investment but rather a bank deposit.

For the SRRV Classic, you can invest in real estate in the Philippines. The minimum investment amount is USD 50,000 if you're 50 years or older and retired, or USD 75,000 if you're below 50 or not retired. The property must be purchased from a list of accredited developers.

The process involves applying through the Philippine Retirement Authority (PRA), submitting necessary documents (like a valid passport, medical clearance, police clearance from your country of origin, and photos), and paying the required fees.

Once you've completed these steps and your application is approved, you'll be granted the SRRV, which is a form of permanent residency.

The SRRV does not have an expiry date, so it's effectively a permanent residency status as long as you comply with the program's conditions. However, it's essential to note that holding an SRRV does not directly lead to Philippine citizenship.

Gaining citizenship requires a separate legal process and meeting different criteria, including a period of continuous residency and proficiency in the Filipino language.

Make a profitable investment in the Philippines

Better information leads to better decisions. Save time and money. Download our guide.

buying property foreigner The Philippines

What is the process to buy property in the Philippines as an American?

How to get started? What are the different steps?

If you need a detailed and updated analysis of the process (and the mistakes to avoid), you can check our full guide about property buying in the Philippines.

When you're looking to buy property in the Philippines as an American, the process begins with finding the right property.

As mentioned earlier, you're limited to purchasing condominium units or buildings on leased land, as you can't own land outright.

Once you've selected a property, the first crucial step is to conduct a thorough title search. This involves verifying the authenticity of the property title at the local Registry of Deeds.

It's important to ensure the title is clean, meaning there are no liens, encumbrances, or any legal issues that could affect your ownership rights. You'll want to confirm that the title is in the seller's name and that there are no outstanding debts associated with the property.

After the title is verified, you'll enter into a reservation agreement with the seller. This involves paying a reservation fee, which essentially secures your exclusive right to purchase the property.

It's like a holding deposit, ensuring the property is taken off the market while you complete the necessary steps for the purchase.

The next phase is the sales agreement or contract to sell. This document outlines the terms and conditions of the sale, including payment schedules, the responsibilities of each party, and other important details.

It's vital to have a lawyer review this agreement to ensure your interests are protected.

Regarding the transfer of funds for the purchase, you'll need to comply with both Philippine and US regulations on international money transfers.

Typically, you'll transfer the funds to a Philippine bank account. It's advisable to consult with a financial advisor or a bank to understand any fees or regulations involved in this process.

As for closing costs and fees, these can vary but generally include transfer taxes, registration fees, and notarial fees. There might also be additional costs depending on the specific transaction. It's important to budget for these expenses as they can add up.

Now, about getting a mortgage in the Philippines, it's possible for foreigners, but it can be more challenging compared to local buyers.

Some banks offer mortgages to foreigners, but they may require a higher down payment and have stricter terms. You'll need to provide proof of income, identification, and other documents.

It's a good idea to shop around and compare terms from different banks.

Risks and potential pitfalls related to property investment in the Philippines

When you're considering buying residential real estate in the Philippines, there are several risks unique to the country that you should be aware of, differing from those typically encountered in the United States.

Title issues are a significant risk. The Philippines has a history of disputes over property ownership, partly due to inconsistencies in land registration and titling processes. This can lead to situations where multiple parties claim ownership of the same property.

It's more crucial here than in the U.S. to conduct a thorough title search and possibly even seek legal assistance to ensure the property you're interested in doesn't have any existing disputes or liens against it.

Zoning regulations in the Philippines can also be a risk factor.

While zoning laws exist, they can sometimes be inconsistently applied or subject to change, which could affect your property in the future. For example, the area you invest in could be rezoned for different use, potentially impacting the property's value or your ability to develop it as intended.

Cultural and local customs play a significant role in real estate transactions in the Philippines.

It's important to be sensitive to these practices, which might include negotiations and interactions with local community leaders or understanding local norms around property use and community living.

American citizens often face pitfalls related to navigating these local customs and legal processes.

There might also be a language barrier, differences in legal systems, or unfamiliarity with local practices, all of which can lead to misunderstandings or missteps in the property buying process.

In case of disputes or conflicts, the primary mechanism for resolution is the local legal system. The Philippines has courts that handle property disputes, including issues with neighbors or authorities.

However, these processes can be lengthy and complex, and the legal system may operate differently from what you're accustomed to in the U.S.

International arbitration is not commonly used for local real estate disputes in the Philippines.

Tax implications for US citizens buying property in in the Philippines

As an American citizen owning property in the Philippines, you'll encounter specific tax implications.

Firstly, you're required to pay an annual real property tax on your property in the Philippines. This tax is similar to property taxes in the U.S. and is based on the assessed value of the property.

The rate varies depending on the location but generally falls between 1-2% of the property's assessed value. This tax must be paid to the local government where the property is located.

When it comes to selling property, you'll face capital gains tax. The Philippines has a unique approach to this tax: it's a flat rate of 6% of the gross selling price or the current fair market value, whichever is higher.

This differs from the U.S. system, where capital gains tax is based on the profit made from the sale. It's important to note that this tax applies whether or not you actually make a profit on the sale.

Besides these, there are other taxes like the documentary stamp tax, transfer tax, and registration fees when transferring property.

The documentary stamp tax is a tax on documents, instruments, loan agreements, and papers evidencing the acceptance, assignment, sale, or transfer of an obligation, right, or property. The transfer tax is usually a smaller percentage, but it varies depending on the local government unit.

Regarding tax treaties, the United States and the Philippines have a bilateral agreement to avoid double taxation. This treaty ensures that you won't pay taxes twice on the same income.

However, as a U.S. citizen, you're still required to file tax returns in the U.S., reporting your global income, including any income from your property in the Philippines.

Property ownership in the Philippines also affects inheritance and estate planning.

The Philippines has its own set of laws governing inheritance, and these may differ from U.S. laws. For instance, there are compulsory heirs in Philippine law, and certain portions of your estate might be automatically allocated to them.

Additionally, estate taxes in the Philippines need to be considered, as your estate would be subject to these taxes upon your demise.

Don't lose money on your property in the Philippines

100% of people who have lost money in the Philippines have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.

buying property foreigner The Philippines

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.