When you think that a condo advertisement is where you need to invest your hard-earned dollars abroad or bounty from the disposal of another property, think again. In the guise of investment, and low upfront payment, plus your genuine desire to own a piece of that dream home in a desirable address, you could easily commit to a tantalizing offer.
Before committing to acquire on, be sure that your computations do include not only the price tag as mentioned in the advertisement and potential earnings but also other related costs that are usually hidden behind the unit price and attractive offers that appear on flyers handed by property agents.
One thing is for sure: buying a condo unit doesn’t come cheap.
Even if purchase by cash isn’t required — but gets perks such as steep discounts and preferential treatment – a fraction of the cost as a down payment may still need mortgage loans to cover cash deficiency on hand.
It’s not unusual for buyers to take the route of availing of housing loans from banks or government pension funds to get that dream fulfilled. Yet the decision often leaves the buyer with higher cash liability as he or she gets to pay more interest for the condo in an installment scheme, but also pay attention to the bank loan. And we’re not yet even in the topic of other extra expenses associated with buying condos!
So what are the other costs expected to pay when I buy a condo unit?
It sounds scary, but if you can’t conquer your fear, you’ll never be able to own your dream home. What’s important is to be aware of what to expect and make calculated decisions before committing.
So get to know how much you are willing to spend for a condo unit without getting cash-strapped for years or decades. How much do I earn a month, or do I have other income streams? How much can I allocate to finance a new house from that income? If I need to take up home mortgage loans, how long can I (or my children) pay for it? What sacrifices do I need to make to get that dream home — a symbol of success and a source of pride to many Filipinos?
Many Filipinos who have dipped their toes into buying a condo unit out of persuasion from agents did not think long and deeply enough. They don’t have enough cash or other income streams, even if the condo unit itself can become an income generator through lease income, Airbnb accommodation, or appreciate its initial value as the location becomes more attractive.
Behind in their amortization payments, they have given up ownership as their long-desired home got swallowed into foreclosure.
So even if the agent says you only need to pay P6,000 every month, don’t fall for such promises — there will always be expenses you can’t avoid paying.
According to Arlyn Santos, national treasurer of the Real Estate Brokers Association of the Philippines, such fees are not hidden as they come directly next to the agenda soon as a buyer commits to buying a condo unit.
Let’s take a look at what you might expect to pay once you agree to purchase your dream home.
Transfer taxes and fees
This is a tax that the buyer pays when transferring the ownership of the property from the seller to the buyer. The amount of the transfer tax varies depending on the property’s location, but it is usually a percentage of the selling price.
Documentary stamps tax
This is a tax on legal documents, including the sale contract and the deed of sale. The tax is usually a percentage of the selling price.
- Documentary stamp – 1.5% of the selling price of the property
These fees are charged by the government agency responsible for registering the property’s ownership transfer.
- Transfer and Registration Tax – 1.5% of the selling price of the property
A notary public charges these fees for notarizing legal documents.
If you are buying a condo unit in a building that has a homeowners association, you may need to pay association dues. These dues are used to cover the cost of maintaining the common areas of the building, such as the lobby, swimming pool, and gym.
- Utility charges – cleaning and collection of trash, power, and water in common areas
- Association fees – vary depending on the cost of repair, maintenance, and upkeep of common areas (elevators, security cameras, etc.)
- Parking fee – varies and usually comes with a slot that needs to be bought separately.
Once you become the condo unit owner, you will be responsible for paying property taxes on the property.
- Real property tax – varies, depending on the amount of property as evaluated by an authorized assessor, paid yearly.
You may need to pay for the cost of moving your belongings from your current residence to your new condo.
- Broker’s fee – 2 to 3% of the gross price of the property
You may need to pay to move your belongings from your current residence to your new condo.
That’s quite the minimum you’ll pay on top of the monthly amortization obligations. Should you decide to sell it, a capital gains tax is worth 6 percent of the selling price on the Deed of Sale or zonal value, plus the broker’s commission. So there’s little relief in getting your hands off that property.
And even when you die, your grieving family will still need to pay the estate tax imposed when transferring ownership of your real property. So entering into the transaction of acquiring a condo unit is littered with fees legally collected from you, the owner.
The purpose of this article is not fearmongering. Instead, it serves as a reminder to all those who wish to avail of properties such as condos, houses and lot, and other real properties to look beyond the advertised price. Consult with a competent, licensed real estate broker while making computations before deciding on any property transaction.