Standard Practice in Sharing of Closing Costs
In real estate closing costs, what is the standard practice in the sharing of expenses for the transfer of title?
The following is the standard practice in the sharing of expenses between the buyer and seller when transferring the real estate property title to a new owner:
ON THE ACCOUNT OF THE SELLER:
- Capital Gains Tax equivalent to 6% of the selling price on the Deed of Sale or the zonal value, whichever is higher. (Withholding Tax if the seller is a corporation)
- Unpaid real estate taxes due (if any).
- Agent / Broker’s commission.
ON THE ACCOUNT OF THE BUYER:
- Documentary Stamp Tax – 1.5% of the selling price or zonal value or fair market value, whichever is higher.
- Transfer Tax equivalent to 1/2% of the selling price, or zonal value or fair market value, whichever is higher.
- Registration Fee. The Register of Deeds has a table of cost and only them can compute this at the time the documents are handed over to their office but by experience, it is equivalent to a little more than 1/2% of the selling price,
- Miscellaneous expenses incurred during the registration process.
Notarization fee is negotiable between buyer and seller but the party who is active in the documentation usually pays for it. At most, it is 1% of the total contract price but it is easy to find one who will notarize it at much lesser cost depending on the amount involved and the notary public.
The above information is applicable to both TCT (Transfer Certificate of Title) for land, and CCT (Condominium Certificate of Title) for condominium units.