Tag Archives: assets.

BIR hikes zonal values in key cities

April 23, 2015
Manila Bulletin
Jun Ramirez

The Bureau of Internal Revenue (BIR) has increased the zonal value of real estate properties in selected areas in Metro Manila and elsewhere to hike and collect the right amount of capital gains tax (CGT) and documentary stamp tax (DST).

Finance Secretary Cesar Purisima approved the recommendation of BIR Commissioner Kim. S. Jacinto-Henares to adjust the value of properties to a more realistic level.

They included properties located in Quezon City, San Juan, Rizal province as well as those in certain areas in Mindanao.

BIR insiders described the adjustment as timely since the last zonal valuation update was made 10 to 15 years ago, especially those in the provinces.

Revenue regional officials together with local assessors, treasurers, independent appraisers as well as landowners and developers decide on how much the zonal value should be hike.

It takes years to come out with the new schedule because of opposition by land owners and developers who will be required to remit more taxes when they dispose these assets.

Records showed the BIR collected in 2013 more than P3 billion in CGT and DST which rates are 6 percent and 1.5 percent, respectively, based on the selling price of the property.

The Tax Reform Act authorizes the BIR commissioner to divide the country into different zones to determine the fair market value of real properties in each locality.

Property business is also for young and not-so-rich

Philippine Daily Inquirer
By Michelle V. Remo
August 25, 2012

With interest rates at historic lows and supply being abundant, the time is ripe for investing in real properties.
Contrary to common notion that it is fit only for big enterprises and the extremely rich, the property business is also something the young professionals and the not-so-rich can engage in.
“While an individual is young, that is the best time to start building one’s property portfolio,” Carl Dy, Property sales coach and Ayala Land Premier sales director tells SundayBiz.
Ayala Land Premier is the developer of the group’s most expensive projects.
At 34, Carl already has several properties in his portfolio from which he earns extra income, mostly from rent.
The property sector in the Philippines has continually grown over the past three years as evidenced by the growing number of condominium buildings among other real assets.
Because Asia is seen to continue driving global economic growth in the years to come, emerging markets in the region like the Philippines are expected to be keeping a robust growth as well.
Carl says that at a time of economic boom, the property sector is one of those that benefit the most. As incomes rise, he says, demand for properties grows as well.
Given this backdrop, he says, business-minded individuals should easily see the income opportunity over the medium to long term from investing in real properties.
“Stars are aligned right now. Because of the economic boom in Asia, the benefits are trickling down to the Philippines. Almost all sectors are enjoying good business, and the property sector is not exempted,” Carl says.
Carl, who grew up in Binondo in Manila seeing his parents run a hardware, says even a young professional like himself can engage in the property business. The business is actually much easier than other types, he opines, as it requires less management effort compared to, say, running a restaurant.

Medium to long-term return
However, Carl says, running a property business requires patience as far as generating income is concerned. Unlike other businesses that could generate profits within the short term, the property business is meant for those who have the patience to wait over the medium to long term to generate significant income.
For instance, one way to earn from the property business is to buy a piece of land, let its value appreciate over the years, and then sell it. He says the increase in the price of land can be significant over the years. Such a strategy does not entail too much management effort, but requires the skill of waiting, he says.
Another way to earn from the property business is to buy an asset—be it a house and lot, a townhouse, or a condominium—and have it rented.
A young, self-supporting professional may not be able to buy a property in cash, and so what he can do is pay for the property in installment basis.
He may not earn significant income in the initial years, Carl says, especially since monthly amortization is still being paid. The income generated from rental of the property will mostly be used to pay for the amortization, he adds.
But once the years of amortization are over, Carl says, the owner may fully enjoy passive income from his property, the value of which will have already increased significantly over the years.
“One just needs patience. Instead of thinking of not being able to generate profit in the initial years, one should think that he is able to fully pay for a real property at almost no cost (because the one renting is the one effectively paying the amortization),” he says.
Depending on appetite and financial capacity, Carl says, an individual may opt to buy a few properties and rent those out to generate much more income in the years to come.

More tips
Carl says there is an option for property owners to rent their assets as fully furnished ones. Furnishing a residential property gives it much more value and allows owners to impose higher rent and thus generate better income.
The property expert also says owners must learn the value of taking care of tenants. If tenants have requests, say household repairs, the owners should agree as long as those are reasonable. It could be regretful if a tenant, especially one who religiously pays rent, leaves because of dissatisfaction, he says. Having no rental income for a month or two because a tenant has left and because a replacement has yet to be found could be much costlier than having granted the old tenant’s minor request, Carl adds.
The cheapest is not always the one that gives the best value for money
On choice of property to invest in, Carl says one should not solely consider price of an asset. Not all cheap properties give the best value for money. He says a property that is of good quality and is comfortable to stay in could easily attract potential tenants and could give better income opportunity in the future.
“A cheap property is not always the one with good value,” he says. He says this is the reason a buyer should also take into account quality of the property because one that has good quality also appreciates faster in value over the years.
Carl, who is an architect by education, says another important thing to remember in being in the property business is the need to know a product before buying and investing in it. Knowing the product means knowing the developer, the profile of its location and of the people living in the area, and the cost of living in the location of the property, among others. Knowledge of said information helps better determine accurate pricing for a property, he says.

Properties vs Portfolio assets

The beauty of buying properties instead of liquid assets, such as securities, is that real assets are difficult to lose and waste, Carl says. Because selling a property takes much more time than withdrawing cash from a bank or selling a stock, the investor is forced to be engaged in an investment for the long term.
“Unlike in the case of cash or portfolio assets, one does not have the urge to sell a real property just so he could buy stuff he wants but does not really need. Investing in real property forces one to become a long-term investor,” Carl says.
Investing for the long term can generate significant income that could help secure one’s future, he says. Since the property business is a long-term venture, starting out young gives one an edge over the others, the property guru adds.

Pag-IBIG set to double contributions

ManilaStandard Today
by Elaine R. Alanguilan
November 22, 2010

THE state home-financing fund plans to increase its membership dues by as much as 200 percent to boost its services to members, an official said over the weekend.

The fund’s previous board approved the increase in January last year, but it did not implement it because of opposition from some quarters who had described the increase as too high, said Edgardo Lacson, director of the Home Development Mutual Fund or Pag-IBIG Fund.

“Higher dues are necessary as this would allow us to extend more housing loans as we expand the membership of the Fund,” Lacson said.

“There is a substantial backlog, particularly among the overseas Filipino workers and among the uniformed services, and we have to beef up our resources to amply cover a bigger number of members.”

Lacson said there were now 10 million Filipinos working abroad, but not even 1 percent were fund members. The fund aimed to enroll 85,000 new members this year to bring its total membership to 570,000 by the year’s end.

The Pag IBIG fund’s charter says 70 percent of its resources must be used to finance its housing loan program through which members may avail themselves of up to P3 million in housing loans.

Loan takeout has been increasing following the fund’s reduction of its interest costs to provide more housing. But the housing backlog is still over a million units even if the fund’s members pay P40 billion in dues each year.

“A 200-percent increase in membership fees would have been ideal … to address the needs of our members, but higher fees would be a deterrent. We want any increase to be as minimal as possible,” Lacson said.

“We are now looking at liquidating our non-performing loans amounting to billions of pesos to allow for a smaller increase in membership dues.”

Lacson said the fund was still updating its accounts and identifying more assets that could be auctioned off next year.