Local Transfer Tax in the Philippines: Who Pays and How Much?

Local transfer tax is a one-time tax that a city or provincial treasurer collects whenever Philippine real property changes hands — by sale, donation, barter, or any other transfer of ownership — capped at 50% of 1% (0.5%) of the tax base in provinces and 75% of 1% (0.75%) in cities and Metro Manila municipalities. It is separate from the BIR’s 6% capital gains tax and 1.5% documentary stamp tax, is paid to the local treasurer rather than the BIR, and is due within 60 days of the deed’s execution under Section 135 of the Local Government Code (Republic Act No. 7160, the Local Government Code of 1991). Here is exactly how the rate is set, who the law says must pay it, when it’s due, and why the Registry of Deeds won’t process your title transfer without proof it was settled.

Decision Snapshot

• What it is: A one-time local government tax under Section 135 of the Local Government Code (RA 7160), charged on the sale, donation, barter, or other transfer of real property ownership — distinct from the BIR’s capital gains tax and documentary stamp tax.
• The rate ceiling: Not more than 50% of 1% (0.5%) of the tax base in provinces; cities and Metro Manila municipalities may set their own rate up to 50% higher than a province’s, which works out to a ceiling of 75% of 1% (0.75%).
• The tax base: The higher of the total consideration stated in the deed or the property’s fair market value (the BIR zonal value or the assessor’s fair market value) — the same comparison used for capital gains tax and documentary stamp tax.
• Who owes it, on paper: Section 135 puts the duty to pay on the seller, donor, transferor, or the executor/administrator of an estate — though market practice, especially in ordinary resales, often has the buyer shoulder it as a closing cost.
• The deadline: Within 60 days of the deed’s execution (or of the decedent’s death, for a transfer by succession) — paid at the treasurer’s office of the city or province where the property is located, not to the BIR.
• Important caveat: The Registry of Deeds will not register the transfer, and the assessor will not issue a new tax declaration, without proof this tax has been paid — confirm the exact current rate, deadline, and any local surcharge with the treasurer’s office before relying on any figure here.

What Is the Local Transfer Tax?

The local transfer tax (sometimes called the “tax on transfer of real property ownership”) is imposed under Section 135 of the Local Government Code of 1991 (Republic Act No. 7160), which authorizes provinces — and, by extension, cities and Metro Manila municipalities — to tax “the sale, donation, barter, or on any other mode of transferring ownership or title of real property” (RA 7160, Local Government Code of 1991). Unlike capital gains tax and documentary stamp tax, which are national taxes collected by the Bureau of Internal Revenue, the local transfer tax is a purely local government charge, assessed and collected by the treasurer of the city, municipality, or province where the property is located.

Because it shares a closing table with two much larger national taxes, buyers and sellers frequently lump it together with capital gains tax and documentary stamp tax, or assume “transfer tax” is simply informal shorthand for the whole closing-cost bundle. It isn’t: it is its own specific, LGU-collected charge, and confirming it separately from the BIR-collected taxes prevents a common gap in a buyer’s or seller’s closing budget (see our related guide on who pays which closing costs for the full picture of a Philippine property closing).

Transfer Tax Rate: Provinces vs. Cities and Metro Manila

Section 135 sets a ceiling, not a fixed rate: each province may impose the tax “at a rate not exceeding fifty percent (50%) of one percent (1%)” of the tax base — a maximum of 0.5%. Cities and municipalities within Metro Manila are not bound by that same ceiling. Under the Code’s general rule on city taxing powers, a city may levy any tax a province may impose, at a rate up to 50% higher than the province’s own ceiling — which for transfer tax works out to a maximum of 75% of 1%, or 0.75% (ForeclosurePhilippines.com, Transfer Tax Computation in the Philippines, citing RA 7160). Each city or provincial council sets its own actual ordinance rate within that ceiling, so the figure that applies to a specific property depends on the local government unit (LGU), not a single nationwide number:

Because each LGU sets its own ordinance rate within these ceilings, the only way to know the exact percentage that applies to a specific property is to ask the treasurer’s office where that property is located — the same way this site’s guide to documentary stamp tax recommends confirming BIR rates directly with the RDO.

How the Tax Base Is Computed

Transfer tax is not simply a percentage of the price the buyer and seller agreed to. Section 135 computes it on “the total consideration involved in the acquisition of the property or of the fair market value in case the monetary consideration involved in the transfer is not substantial, whichever is higher.” In practice, LGUs apply the same three-way comparison used for capital gains tax and documentary stamp tax: the gross selling price in the deed, the BIR zonal value, and the assessor’s fair market value on the tax declaration — whichever of these figures is highest becomes the tax base. Our guide to BIR zonal value explains how that government-set benchmark is determined and why it can push a tax base above the contract price.

This is also why a property sold “at a discount” relative to its zonal value or assessed value doesn’t reduce the transfer tax bill: the treasurer will still assess the tax on whichever government valuation is highest, not on the lower price actually paid.

Who Is Legally Liable to Pay?

On paper, Section 135 is specific: it is “the duty of the seller, donor, transferor, executor or administrator” to pay the transfer tax, within 60 days of the deed’s execution (or of the decedent’s death, for a transfer through succession). That statutory default mirrors the one for documentary stamp tax — the party giving up the property is nominally responsible for the tax on the transfer.

In practice, though, market convention frequently shifts this cost onto the buyer, particularly in an ordinary resale between private individuals. This site’s own guide to closing costs notes that “the buyer shoulders the local transfer tax and the Registry of Deeds registration fee” as standard market practice, even though the statute names the seller-side party as the one with the legal duty to pay. As with documentary stamp tax, this allocation is not fixed by any single law and remains negotiable between the parties:

• Resale between private individuals: Market convention commonly assigns transfer tax to the buyer as part of the cost of acquiring the title, even though the seller/transferor is the party Section 135 names as legally responsible for remitting it.
• Pre-selling or developer-sold units: Developer contracts to sell routinely itemize transfer tax as a buyer-side cost, alongside documentary stamp tax and registration fees, as part of the “miscellaneous” or “other charges” line item.
• Whatever the private arrangement, the LGU looks to its own ordinance: the treasurer’s office collects from whoever presents the deed for payment; it does not adjudicate private disputes over who should have advanced the cost.

Because the statutory default and market practice can point in different directions, “who pays the transfer tax” is a line item worth confirming in writing in the deed or contract to sell — not an assumption to carry over from a previous transaction.

Transfer Tax vs. Documentary Stamp Tax vs. Capital Gains Tax

These three charges are frequently confused because they are computed on a similar (often identical) tax base and typically settled around the same closing. Here is how they differ:

All three are typically required, in combination with real property tax clearance, before the BIR will release the eCAR and before the Registry of Deeds will register the new title.

Filing Deadline and Where to Pay

Section 135 gives a firm window: the tax must be paid “within sixty (60) days from the date of the execution of the deed or from the date of the decedent’s death” for a transfer by succession. Unlike documentary stamp tax, whose deadline is tied to the end of the calendar month of execution, the transfer tax deadline runs on a straight 60-day count from the date the deed itself was signed.

1. Identify the LGU with jurisdiction. Payment is made at the treasurer’s office of the province, city, or municipality where the property is physically located — not where the buyer or seller resides.
2. Bring the notarized deed and supporting documents. Treasurer’s offices typically require the notarized deed of sale (or donation, or extrajudicial settlement), the latest tax declaration, and proof that real property tax is current, though exact requirements vary by LGU.
3. Have the tax base computed and pay within 60 days of notarization. The treasurer’s office computes the tax on the highest of the selling price, zonal value, or assessed fair market value, and issues an official receipt once paid.
4. Keep the receipt for BIR and Registry of Deeds processing. The eCAR application and the eventual title transfer both require proof that local transfer tax has been settled.

Notaries public also carry a reporting duty under the Code: a notary who notarizes a deed of conveyance is generally required to furnish the provincial treasurer with a copy of the deed within 30 days of notarization, which is one of the ways an LGU cross-checks that a taxable transfer was reported.

Why the Registry of Deeds Won’t Process Your Transfer Without It

Section 135 builds in its own enforcement mechanism: the Register of Deeds is barred from registering any deed of conveyance without proof that the local transfer tax has been paid, and the provincial or city assessor is likewise barred from cancelling the old tax declaration and issuing a new one in the buyer’s name without the same proof. This mirrors how the BIR withholds the eCAR until capital gains tax and documentary stamp tax are settled — the practical effect is that a title transfer cannot be completed while any one of these taxes remains unpaid, regardless of which party was supposed to advance the cost.

Penalties for Late Payment

Local governments generally penalize late payment of local taxes, fees, and charges — including transfer tax — with a surcharge of up to 25% of the amount due, plus interest of up to 2% for each month of delay, capped at a maximum of 36 months (roughly 72% of the unpaid tax) (ForeclosurePhilippines.com, Transfer Tax Computation in the Philippines). Because the exact surcharge and interest rate an LGU applies are set by its own local tax ordinance within that ceiling, confirm the specific figures with the treasurer’s office rather than assuming every city or province charges the maximum.

Exemption for Agrarian Reform Transfers

Section 135 carves out one specific exemption: the sale, transfer, or other disposition of real property made pursuant to the Comprehensive Agrarian Reform Law (Republic Act No. 6657) is exempt from the local transfer tax. This exemption is narrow — it applies to transfers under that specific agrarian reform program, not to agricultural land transfers generally — so a buyer or seller who believes a transfer qualifies should confirm the exemption with the treasurer’s office and the Department of Agrarian Reform rather than assuming it applies.

Recent Context: The RA 12001 Valuation Reform

Because transfer tax is computed on “fair market value” the same way capital gains tax and documentary stamp tax are, it is indirectly affected by Republic Act No. 12001, the Real Property Valuation and Assessment Reform Act, which is gradually replacing BIR zonal values and local assessors’ separate fair market values with a single, LGU-by-LGU Schedule of Market Values (SMV). As our guides to BIR zonal value and documentary stamp tax explain in more detail, existing zonal values remain in force in a given locality until its LGU adopts an approved SMV, so the safest practice for a 2026 transaction is to confirm with the property’s assessor or treasurer whether an updated schedule already applies there.

Worked Example: Computing Local Transfer Tax

The figures below are a hypothetical illustration only — not a real transaction, not a real zonal value, and not tax advice.

• Inputs: A townhouse in a Metro Manila city is resold under a Deed of Absolute Sale for ₱3,500,000. For illustration, assume a hypothetical BIR zonal value of ₱3,200,000 and an assessor’s fair market value of ₱3,000,000.
• Step 1 — determine the tax base: Compare all three figures (₱3,500,000 selling price; ₱3,200,000 zonal value; ₱3,000,000 assessor’s FMV) and use the highest: ₱3,500,000.
• Step 2 — apply the local rate: Assuming this city has set its transfer tax ordinance at the maximum allowed, 0.75% × ₱3,500,000 = ₱26,250.
• Step 3 — compare against a provincial rate for context: The same ₱3,500,000 tax base in a province capped at 0.5% would instead produce ₱17,500 — illustrating why the LGU location, not just the price, determines the bill.
• Step 4 — check the deadline: If the deed was notarized on June 18, transfer tax is due within 60 days — on or before August 17 of the same year.
• Result: A hypothetical ₱26,250 local transfer tax is due in this scenario, on top of the separately computed capital gains tax and documentary stamp tax — underscoring why closing-cost budgets should list transfer tax as its own line item rather than folding it into “miscellaneous fees.”

What to Verify Before You Rely on This

• Confirm the exact ordinance rate with the treasurer’s office where the property is located, since the actual rate can be anywhere up to the 0.5%/0.75% ceilings and varies by LGU.
• Pull the property’s current zonal value and assessor’s fair market value before finalizing the deed price, since either can push the transfer tax base above the contract price.
• Check whether the property’s LGU has adopted an updated Schedule of Market Values under RA 12001, which can change which fair-market-value figure legally applies.
• Calendar the 60-day deadline from the notarization date, not from a later closing or registration date, to avoid surcharges and interest.
• Put transfer tax allocation in writing in the deed or contract to sell, since who actually advances the payment is negotiable despite the seller/transferor being the statutory default.
• Ask about any exemption only if the transfer genuinely falls under the Comprehensive Agrarian Reform Law (RA 6657) — do not assume an agricultural property qualifies without confirming with the treasurer and the Department of Agrarian Reform.

Frequently Asked Questions

Is local transfer tax the same as documentary stamp tax?

No. Both are computed on a similar tax base (the higher of price or fair market value) and are typically settled around the same closing, but they are entirely separate charges: documentary stamp tax is a national tax of 1.5% collected by the BIR under the Tax Code, while local transfer tax is a local government tax of up to 0.5% (provinces) or 0.75% (cities/Metro Manila) collected by the city or provincial treasurer under the Local Government Code.

Who pays local transfer tax, the buyer or the seller?

Section 135 of the Local Government Code puts the legal duty to pay on the seller, donor, transferor, or estate representative. In practice, market convention in many resale transactions has the buyer shoulder this cost instead, so confirm the specific allocation in the deed or contract to sell rather than assuming either default.

What is the maximum transfer tax rate in Metro Manila?

Up to 75% of 1%, or 0.75%, of the higher of the selling price or the property’s fair market value. The exact rate a specific city has adopted within that ceiling should be confirmed with that city’s treasurer’s office.

What happens if transfer tax is paid late?

Local governments generally may impose a surcharge of up to 25% of the tax due, plus interest of up to 2% per month of delay (capped at 36 months), under the Local Government Code’s general framework for penalizing unpaid local taxes. Confirm the exact surcharge and interest rate with the specific treasurer’s office, since ordinances vary by LGU.

Is transfer tax computed on the selling price or the zonal value?

Whichever is higher. Treasurer’s offices compare the gross selling price in the deed against the property’s fair market value (the BIR zonal value or the assessor’s fair market value) and compute the tax on the higher figure — the same comparison used for capital gains tax and documentary stamp tax.

Is any property transfer exempt from local transfer tax?

Section 135 exempts sales, transfers, or other dispositions of real property made pursuant to the Comprehensive Agrarian Reform Law (RA 6657). This is a narrow, specific exemption tied to that program, not a general exemption for agricultural land, so confirm eligibility with the treasurer’s office and the Department of Agrarian Reform before assuming a transfer qualifies.

Do I pay transfer tax to the BIR or to my city hall?

To your city hall or provincial capitol — specifically, the treasurer’s office of the city, municipality, or province where the property is located. This is different from capital gains tax and documentary stamp tax, which are filed and paid to the BIR at the Revenue District Office covering the property.

Does the Registry of Deeds check that transfer tax was paid?

Yes. Section 135 specifically bars the Register of Deeds from registering a deed of conveyance without proof the local transfer tax has been paid, and bars the local assessor from issuing a new tax declaration in the buyer’s name without the same proof.

What to Do Next

If you’re closing on a property purchase or sale, ask the city or provincial treasurer’s office where the property is located for its current transfer tax rate and any specific documentary requirements before you finalize the deed. Calendar the 60-day deadline from the date of notarization, not from a later closing or turnover date, and confirm in writing which party is actually advancing the payment, since the statutory default (seller/transferor) and market convention (often the buyer) can point in different directions. Keep the official receipt on hand, since both the BIR’s eCAR process and the Registry of Deeds will ask for proof this tax was settled before completing the transfer.

Figures in this article reflect the Local Government Code (Republic Act No. 7160) and secondary legal-reference sources as of September 19, 2026. Transfer tax rate ceilings, deadlines, and penalties are set by national law but implemented through each local government unit’s own ordinance, and specific LGU rates, surcharges, and documentary requirements can vary and change. This article is general information, not tax or legal advice — confirm the current rate, deadline, and requirements with the treasurer’s office where the property is located, or with a licensed professional, before relying on any figure here for an actual transaction.