BIR: No blanket tax hike under property reform act

The implementation of the Real Property Valuation and Assessment Reform Act (RPVARA) will not automatically result in higher property taxes, as any change in payments will still depend on updated property valuations and local government tax policies, the Bureau of Internal Revenue (BIR) said.

The RPVARA, set to be implemented by 2028 to 2029, centralizes how the government determines the market value of real properties based on Philippine Valuation Standards, correcting outdated or inconsistent schedules of market values.

At the same time, it still allows local government units (LGUs) to retain their authority over tax rates and assessment levels.

Asked about the impact of the new law, BIR Commissioner Charlie Mendoza told the Inquirer that it was not designed to raise property taxes, but that changes in property tax obligations should still be expected.

“It aims to create a fairer and more credible valuation system. Any increase or decrease in actual property tax payments will depend on how the updated market values interact with LGU assessment levels, tax rates, classifications, exemptions, and transition measures,” he said in a message.

“For end users, the most practical effect will be a more reliable valuation system for taxation, property transfers, financing, estate settlement, investment, and local government planning,” he added, explaining that the RPVARA will reduce wide disparities between local assessor values, BIR zonal value and other government valuation references.

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Currently, the National Internal Revenue Code imposes fixed rates on the sale or disposition of real property, including 6 percent for capital gains tax and donor’s tax and P15 for documentary stamp tax.

According to Mendoza, these will now have a uniform basis of computation based on updated market values.

“Some properties that are currently undervalued may see higher assessed values. Some may remain within a similar range. Others may even be adjusted differently depending on classification, location, use, and the revised Schedule of Market Values (SMV),” Mendoza noted.