This was originally published several years ago. I’ve decided to edit it, correct errors and bring it up to date, because I now am a Philippine home owner … something I didn’t think I would ever be when I wrote the original article. Please remember that although I write from experience and personal research I am not a real estate nor a legal professional, so what you read here is personal opinion only. If you need professional assistance, seek it, please.
In eight 10 plus years of dealing with questions about moving to the Philippines I think there is a no-contest winner for the number-one most frequently asked question … Can I own my own home in the Philippines?
Unfortunately this is also a question which raises many people’s ire … because the Philippine laws on land ownership are … to put it mildly … different to what many foreigners are used to. Here’s a capsule description:
Foreigners Owning Philippine Land
- Only Filipino citizens and corporations and associations at least 60% of whose capital is owned by Filipinos may acquire private lands.
Test question. Did you read the phrases in bold above?
If not, please move your eyes back to the first sentence and re-read it. If you don’t read anything else, this will easily serve as all you need to know about Philippine real estate law. Simple, isn’t it?
A reader once commented, seeing me struggling to answer yet another convoluted scheme to get around the law from another reader once said to me … “Why don’t you learn to just tell them NO“?
Perhaps he was right.
- Foreigners are allowed to purchase a condominium unit, provided that total foreign ownership of the condominium corporation does not exceed 40 %.
- They may also inherit real property from their deceased Filipino spouses.
- Children (legitimate or illegitimate) born to a Filipino parent, may inherit the property of the Filipino parent, even if the child is not a Filipino citizen
And that is about the sum total of the legal methods. Here are some common “work arounds” I hear often about from fellow foreigners. Some are legal, some maybe not. Just presented for your viewing pleasure.
- Form a corporation where you put up the money and you pay some Filipino partners to hold shares of stock.
This is a very common thing I have seen foreigners falling for. It is also one of the most common causes of foreigners being prosecuted under the “Dummy Corporation” laws … and deported … with no compensations for the property they tried to buy.
Philippine property law is rigid. Philippine corporate law is downright draconian. Don’t mess with it.
The Filipino partners must actually control the corporation … in which case my thought is I’d much rather just trust my wife … or, if the foreign owner somehow retains control through some quasi-legal stratagem … the corporation is not legal with respect to land ownership.
- Lease land for 25 to 50 years and build your house on it.
Poor choice in that the improvements (house) become the property of the land owner.
Good choice in that many of us don’t care what happens 50 years from now, and you can often lease land cheap.
- Buy the property in the name of a your Filipino-citizen minor child.
I don’t know how many times I have heard this canard. I don’t have enough space to list all the reasons against this.
First of all, it’s not legal … although I have seen real estate agents signing foreigners up to this. A minor child can not own property … it would become his/her parents under law anyway, so who needs all the legal expense?
- Give your wife money to buy the property and lease it back from her.
Again, simply a way to generate money from unscrupulous lawyers, in my opinion. Under the Philippine Family Code a husband can not contract with his wife.
Time and time again I get questions, especially from Americans, involving schemes like this. In the US, in most states, a husband and wife can do a lot of things independently. It doesn’t work like that here in the Philippines, so stop scheming and start moving forward honestly, rather than underhandedly.
- Buy the land in your spouse’s name (your name can go on the deed as well) and trust in your marriage vows.
We Don't Have Service Like This in the Philippines
That’s my own personal plan. If you die before her, she inherits your interest. If she dies before you, you can inherit her interest, even if not a Philippine citizen.
For those who worry about losing “their” house in a divorce? Relax … plan to lose the house anyway, no matter who thinks they own it … been there, done that, got the t-shirt, don’t got the house (and I had a good lawyer).
Just relax and be of good cheer. Even better, see the first sentence. Don’t get divorced. Simple.
Not sure? Then why on earth are you married?
Wish I had a lot more “legal” techniques to throw into the mix, but currently that is the way things stand. Questions, comments, corrections are always welcome. In the comments box or via my spam-free contact form above.
More in this series to follow, tomorrow.
Dvae;
My question to you is simple. How would I be able to transfer a large amount of money from my NFCU to my Fhilipino Bank to build my house safley and without IRS Interference? I’m talking about $40000?.
Bruce: With all of the money laundering, anti-terror laws and such, it is getting to be very, very difficult. ANY suspicious transactions are reported by banks… NOT just over the $10K limit. So, If your bank account has no foreign wires for a long time, and they see a bunch like $5K, $7K, $3K, $8K, $6K, $5K close together, the transactions will most likely be reported. Far better to simply disclose and declare it (Also, large amounts coming INTO the RP are reprted to BSP, so there really no way around it.) You need a place to live, legitimate expense…
@BMichels (ID 5009): Mike (and others who may be interested in this question) … I’m waiting to get a chance to chat with my bank manager friend, probably tomorrow, on the Philippines side of this issue. On the US side, I’m not quite sure of what the IRS would have to do with this. If this is money you earned legally, paid taxes on, etc., I don’t see what taxable event would happen if you moved it here.
What would happen is the treasury Department would be informed, by law, of the movement. That’s part of the US anti-money laundering and anti-terrorism laws. All amounts over $10,000 USD must be reported. Actually the law originally called for ALL transactions to be reported, but the data would be staggering, so the $10K limit was decided upon to make things manageable.
If you decided, instead, to carry a certified check, or cash, then you must declare that as well, or risk confiscation. But wire transfers are made every day, and there is nothing illegal (yet) about moving your money from one bank to another. See John’s comments regarding way that people try to circumvent the law … likely not worth it … say doing 5 transfers of $8000 USD instead of one of $40,000 USD … the increase in wire charges you’d pay alone make that silly.
Now, suppose you wrote a check to yourself while here, and deposited in your Philippine bank, and waited for it to clear? I am sure when the check is presented for payment by the Philippine bank to your US Bank/Credit Union, so type of reporting takes place. But so what? The $10k “limit” that frequently gets talked about online is not a “limit”, it’s a reporting threshold … and we assume the IRS already knows you have this money.
Again, I want to learn more about the Philippine end. I wrote a check for about $9,000 USD once and deposited it in my Philippine bank. It cleared and got credited to my account in the standard 20-something days, no one asked any questions or made me fill up any forms. Would it be different for a $40,000 USD check? That’s what I’m going to ask the manager.
Dave: as to the IRS, it could come back to haunt you in that, since they know that you have shifted funds overseas, you might b earning income from investments that are not reported to the IRS . Hence, since Americans are taxed on worldwide income, it is best simply to declare it instead of taking the risk (as I stated above, you still need a place to live)
that being said, 99 pct of the expats don’t earn enough or have anywhere near enough assets to be concerned, realistically. As to bsp, same issue and you are right….. Why risk confiscation over what is, in most cases, a non-issue?
Dave & John;
I will call the Irs to find out what I would have to do to declare it because it would be to build my house with. Will get back to you on that. I’ll also talk with the NFCU and find out if they declare it for me.
@BMichels (ID 5040): Haven’t had a a chance to talk to my guy, here yet, but I would strongly urge you to talk with a bank manger or someone else who knows the money transfer business. Calling the IRS on something like this? Fraught with peril … again, what you are proposing has nothing at all to do with the IRS, moving your own money from one bank to another is NOT a taxable event. The banks know the law and will do what reporting they are required to do … IMO, you are ‘building’ a problem here where one doesn’t exist.why stir the pot?
Secondly, the IRS is required, by law, to give you the advice that will cost you the most taxes. Really, that’s their role.
There may, in fact, be many ways to pay less taxes, which are 100% legal, that the IRS will never tell you about. They are a very poor choice for information about taxes, just for that reason.
An accountant, especially a tax specialist, would be a much safer and more reliable source. One who lives here in the Philippines (USN-Retired) is Paul Keating. You may know him, he writes for Bob Martin regularly. You can reach Paul at keachiltd@gmail.com , I recommend you do.
To save on money transfer cost, it would be best to use a reliable Filipino-owned money remittance business in the US. In Canada, we pay $12/transaction to provinces or $10/transaction to Metro-Manila to a maximum of $2,800 each transaction. Wiring it using the bank costs more.
I don’t think sending more than $2,800 will be allowed because of the new anti-laundering law. Two years ago, I think, they allow $4,000 per remittance but FINTRAC lowered it. We always use a Filipino-owned money remittance business than banks or even Western Union because they’re cheaper.
Hi Manuel, thanks for contributing to the community here. I think what you are saying about money transfer services is correct, but they are not the only way.
There is no limit imposed on how much money a person can transfer from his/her ow3n account in the US to his/her own account in the Philippines. Or from the Philippines to the same person’s account in the USA. I just worked with my bank manager to help the former owners of my house move a couple million Peso’s worth, so I know the procedures.
If you move more than $10,000 USD (or equivalent in foreign funds) there is a report the bank does to the US Treasury, but that is simply a declaration, NOT a limit.
Moving money from an account you own to another account you own is also NOT a taxable event, in either country. At the Philippine end there is also a declaration form that goes to the BIR, but, again, if it is your own money, or money from a legal event, like selling a house, there’s no problem.
The bank charges for moving a million Pesos came up to less that $50 USD, way lower than any money transfer service .. quick, reliable and realatievly cheap.
The money I bought my house with came to the Philippines, legally, by writing a check on my US bank account and depositing in my Philippine bank account …no fees at all with BDO, other banks may vary.
I went with the “Buy it in your wife’s name” option. There is no need to get too fancy. I like what you said about being honest going forward. Every scam has already been thought of. No need to lay awake nights trying to figure out “another way”, there have many who have tried before you!
@Randall (ID 5012): Exactly, Randall. There’s an old saying in the world of con artists … you can’t cheat an honest man … I know of several foreigners who lost a lot of money on property schemes here, and more than one has made the newspapers on his way yo jail. All for the single reason they figures they alone were smart enough to cheat the system. Just isn’t worth it to me.
an oldie but goodie
@Rich Pawly (ID 5013): That’s me in a nutshell, Rich
I will stick to renting to the time being. Have not been here long enough to know what I want to do. Look before you leap!
73,
Gary
@Gary Wigle (ID 5025): I really and truly advocate everyone rent for a while, Gary. No matter how sure you may think you are. Took me four years to make up my mind and I know I gained rather than lost by waiting.
Great article! I am going thru a situation where a Philippine distant cousin literally dropped out of the sky and onto facebook to tell me about some land my father had apparently owned in Magdiwang, Romblon. Unfortunately I had friended this person on FB and now some relatives from my dad’s first marraige (foreigners) found out on Facebook (he had contacted them as well) and now they think they are entitled to some of this so-called land. I did some research and treading very carefully. Apparently according to this cousin I need to go to the Philippines (I’m in New York USA) and claim right to the land? There has got to be an easier way if this claim even holds water…should I ask to see a Title of sorts? Am I correct to assume that the more names on that title the more difficult for me to legally claim any right to the land?
I love the Philippines, have been there twice and as a kid, but I find it interesting that lesser fortunate relatives still think that money grows on trees in the US, and that I have my own private jet on the rooftop of my Brooklyn apartment
@Agatha (ID 5184): Hi Agatha, Thanks for contributing here. Sorry I’ve been tardy with the comments, but, as my wife likes to remind me, I do have a life outside of PhilFAQS (and my computer cave
).
That’s an interesting situation you find yourself in regarding the land. Way beyond my knowledge base to offer much advice on. You might want to start with I Heard A Foreigner Can Inherit Land In The Philippines. Make sure you read the comments, especially from Atty. Claudette. If this was indeed your father’s land, you would likely be entitled to share in the estate .. children are “compulsory heirs”. So from that aspect, as we say here, ” ‘sup to you” if it is worth the trip and the potential hassle. (I could not conceive of trying to handle this by mail or phone and fax … property transfers seem arduous even when you are present for the dealings.)
As far as relatives from your dad’s first marriage … foreigners? Seems to me their claim would be tenuous at best .. only his wife (normally) would have any rights. So this would be an interesting junket, if you made it, to be sure.
I will say, based on things I have personally seen in my wife’s family, there’s a huge tendency for OFW and emigrated Filipinos/former Filipinos to vastly undervalue land that has been in the family for many years. How valuable this land might be on far-off Romblon, but in many ways only you can decide what it’s worth to you. Godspeed.