February 28, 2023

Can you Lower Your Property Taxes Legally?


Owning a home is lovely, especially if you have a growing family. However, owning a home is likely to be one of the most expensive expenses that taxpayers must bear. You must consider not only the regular maintenance and repair costs, but also the real estate tax levied on it.

Expect to spend significantly more in real property taxes if your home is better and larger than others. Of course, the more properties you own, the higher the annual real property tax bill will be. In actuality, the real property taxes that the majority of taxpayers must pay each year are the highest. The Local Government Code of the Philippines, or Republic Act No. 7160, makes this very explicit. The homeowner is responsible for paying these RPTs, which typically amount to one to two percent of the assessed value of a real estate property.

How is the property tax rate calculated?

Property taxes are calculated using two critical figures: the tax rate and the current market value of your home. The frequency with which taxing authorities reset their tax rates are determined by state law; some do so annually, while others do so in different increments, such as once every five years. Municipalities determine their tax rates, also known as millage or mill rate, based on what they believe is necessary to pay for essential services.

An assessor hired by the local government estimates the fair market value of your personal property, which includes both the land and the structure, and then issues you an assessment. (In some jurisdictions, the assessed value is a percentage of the market value; in others, it is the same as the market value.)

The assessor may visit your property, but in some cases, an assessor may complete property assessments remotely using software and updated tax rolls. Your local tax collector’s office sends you your property tax bill, which is based on this assessment.

How to Reduce Your Property Tax Rates

Don’t construct any structural changes.

Any structural changes made to tangible personal property such as your home will result in an increase in your tax bill. The addition of a deck, a pool, a large shed, or any other permanent fixture to your home is assumed to increase its value.

Before starting construction, property owners should research how much a new addition will increase their real property tax rates. Contact the building and tax departments in your area. They should be able to give you a ballpark figure.

Curb Appeal Should Be Limited

When it comes to the actual evaluation process, tax assessors are given a strict set of guidelines to follow. However, there is still some subjectivity in the assessment. This means that more visually appealing homes often have a higher assessed value than comparable houses that are less visually appealing.

Keep in mind that your property is essentially being compared to your neighbors as well as others in the general vicinity during the evaluation. While it may be difficult, resist the urge to clean up before the assessor arrives. Because the assessor usually schedules a visit in advance, you should be able to plan ahead. If at all possible, postpone any physical or cosmetic changes to the home, such as new countertops or stainless steel appliances, until the assessor has completed the evaluation.

Live outside metropolitan area

If your property is located in Metro Manila’s cities and municipalities, your annual RPT is set at 2% of its assessed value; for the rest of the country’s provinces, the annual RPT is set at 1%. Leaving the metropolitan urban jungle is not only good for your sanity, especially when dealing with the daily traffic chaos, but it’s also good for your wallet. You not only enjoy lower living expenses if you live outside of Metro Manila, but you also save a lot of money with your annual RPT.

Pay your Real Property Taxes in advance.

Although it is not an exemption, if you pay your RPT to the city or municipal treasurer’s office early enough, you may be able to get some discounts on your RPT. Similarly, failing to make your RPT payments on time, which is on January 31st of each year, may result in penalties and even home loss. Property owners who pay their RPT before the scheduled deadline are entitled to some form of indemnity. Better check with your local treasurer’s office to see if there are any discounts for those who pay their RPTs in advance. These discounts differ from one local government unit to the next.

If the annual amount is too much for a homeowner’s budget, they can pay their RPTs in quarterly installments. Local government units may give property owners a discount if they pay their RPT early, even if it is in installments.

Look for Exemptions

Exemptions don’t just apply to religious or government organizations. You may qualify for an exemption if you fall into certain categories such as the following:

  • Government Real Properties
  • Religious, Charitable, and Educational Institutions
  • Machinery and Equipment used for Pollution Control
  • Property Owned by Registered Cooperative

Take Part in Your Assessor’s Walkthrough

Instead of allowing the tax assessor to walk through your house alone, accompany them. In most cases, an appraiser will be drawn to your home’s highlights, such as the recent bathroom renovation. However, they overlook some of the disadvantages.

Point out your home’s positive and negative features as you walk through it with your assessor. Share the highlights of your new bathroom while also pointing out the minor flaws throughout your home. The tax assessor can provide a more accurate estimate of your property’s value if you provide a clear picture of your home.

Final Thoughts

It can be difficult to strike a balance between the desire for a beautiful home and the desire to pay as little tax as possible. However, there are some simple things you can do to reduce your property tax bill without living in squalor. Avoid making any improvements right before your home’s appraisal. Take part in your assessor’s walkthrough or even look for possible exemptions. All you have to do is research or ask.

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