- A national betterment levy with the establishment of an infrastructure fund: Imposition of a national betterment levy to capture increased values of properties benefited by NG projects, such as the Build, Build, Build Program of the Government. The unearned value (increases in land value which otherwise profit private landowners cost-free) may be captured directly by converting them into government revenue.
- Adjustment of the zero-rate assessment level: Adjust the zero (0 percent) assessment level on building and other structures based on inflation rates and current prices.
- Encourage ROW acquisition: Pass a land trust law that allows private landowners on which infrastructure is built to continue owning their property in exchange for an annual income stream equivalent to rent for the landowner.
- Improve enforcement of Idle Land Tax: Regulate land banking and speculation, encourage development, and promote responsible property ownership and management.
For Socialized Housing Program, the possible increase in the valuation will help the local government units in acquiring more funds for socialized housing projects. In effect, more housing projects will be provided to the beneficiaries and in result better welfare to its constituents. On the other hand, the possible increase in valuation may mean that the beneficiary of the socialized housing may need to pay or have a higher real property tax since the valuation of their property may exceed the threshold, however, the LGU may calibrate its assessment levels and tax rate to lessen the impact or possibly offset the increase in valuation.
For CARP, the impact is very minimal in the land value for the CARP covered properties. (It should be noted that the land valuation for CARP properties is included in the departure of Philippine Valuation Standards). The increase in the SMV has a little impact since only 10% of SMV is being contributed in the computation (i.e. Land Value = Capitalized Net Income x 0.6 + Comparable Sales x 0.3 + SMV x 0.10). Moreover, the increase in the land value will benefit the landowners since the value of their properties will be higher, especially during the just compensation which will paid by the government.
At present, there are various agencies doing or requiring property valuation. Each agency uses their own systems and methodologies for valuation. The VRA, through a regularly updated SMV approved by the Secretary of Finance, could support the valuation-related functions of the following agencies:
|Land Management Bureau||Acquisition, disposal, and rentals of public lands||DENR committee|
|Land Management Service||Market, cost, income approaches|
|Forest Management Bureau||Actual FOB market price|
|Department of Agrarian Reform||Acquisition and distribution of land for agrarian reform||Just compensation procedures|
|Bureau of Land Acquisition and Distribution||Land conversion||Market approach|
|Department of Agriculture|
|Department of Public Works and Highways||Expropriation/acquisition of land for right-of-way and expansion or condemnation proceedings||RA 8974|
|Replacement cost method|
|Board of Investments||Project feasibility studies for Industrial estates and export processing zones||Market, cost, reproduction cost|
|Income cap approaches|
|Bureau of Trade Regulation and Consumer Protection||Regulation and licensing of private appraisers||Prescribes USPAP/IVS for use by private appraiser|
|Land Registration Authority||Real property litigation and garnishment proceedings, registration and extraction of fees||–|
|Registry of Deeds|
|Commission on Audit||Government real property transactions||Similar to private appraisers; land rating grid method|
|National Power Corporation||Expropriation/right-of- way acquisition/rentals||RA 8974, just compensation, market value, replacement cost|
|Land Bank of the Philippines||Mortgage lending/ securitization||EO 405, DAR AO No. 5, deeds of sale, sales offering, private appraisers|
|Development Bank of the Philippines|
|National Housing Authority||Acquisition, disposition, and mortgage lending||Market data, economic rent|
|National Home Mortgage Finance Corporation||Cost and market approaches on:|
|(1) Raw land|
|Home Guaranty Corporation||(3) Preliminary appraisals|
|Home Development Mutual Fund||Mortgage lending||Market data or sales comparison, unit-in-place, cost approaches|
|Social Security System||Market date approach with value adjustments|
|Government Service Insurance System||Collateral valuation, sales, reproduction cost, income capitalization, private appraisers|
|Philippine Reclamation Authority||Property development or disposal||Valuation contracted out to private appraisers|
By stimulating the land market, the expected direct long-term positive financial impacts of the reform are: (i) increased land-related-related transactions, capital inflow and investments in the economy at the national level thus resulting in increased revenues for the national government through capital gains and other taxes involving transfer of properties, and (ii) improved collection efficiency on real property taxes, as well as other taxes that involves real property, at the local level.
The national government is expected to benefit from the reform a potential increment of Php18.49 billion. For the LGUs, based on actual 2017 RPT (basic and SEF) collection data of the BLGF, the minimum and maximum actual increase would be Php12.57 billion and Php30.46 billion, respectively.
|1||Impact of SMV Reform Only||61,076||24,610||85,685.94|
|2||Impact of SMV Reform on Optimized
|3||Impact of SMV Reform with Optimized
RPT Collection Efficiency
- Single valuation base: Eliminates wide disparities and therefore achieve consistency in real property valuation. The predictability of valuation will have a positive impact for planners.
- Uniform standards: Lead to the harmonization of the real property valuation among the different government agencies. Improve the integrity of real property appraisal in accordance with the generally accepted valuation standards. Ensure transparency is available at all levels of appraisal and valuation. It will give national and local government, businesses, financial institutions, lenders, and investors greater confidence in valuation reports.
- Comprehensive database: Greater transparency in land transactions translates to confidence in the real estate market. Ready access to a database facilitates property-related policies as it improves decision-making (Sanggunian) and planning by policymakers.
- Increased revenues: The adoption of true market-based values for taxation purposes will increase government revenues without adopting new tax measures. It will lead to an increase in the revenue generating capacity of real property through the RPT, NG Real Property Transfer Taxes*, and other related taxes. The increase in RPT collection could improve the RPT to GDP ratio from 0.36 percent to 0.43 percent. Likewise, its share to local income will grow to 23 percent.
- Improve local autonomy: Enhanced LGU financial self-sufficiency to achieve genuine and meaningful local autonomy as guaranteed by the Constitution and the LGC.
- Higher investor confidence: The adoption of globally benchmarked valuation standards and higher degree of professionalism in real property valuation will inspire greater confidence from investors.
- Guaranteed benefit of education sector: Strengthening the collection of RPT could ensure higher special education fund (SEF) collections and will result in more funds to be available for public education. Currently, there is an average of Php760 allotted per public school student from the SEF and the VRA is expected to increase this by Php280 per student.
- Reduced government costs: Reduce unnecessary expenses due to conflicting appraisals which lead to court litigations, project delays, and cost overruns. The SMVs used as the authoritative benchmark for other valuation purposes by all national government units (NGUs) will also minimize cost.
Any government official who delays, without justifiable cause, the review, approval and implementation of the SMV, the conduct of general revisions, or cause the improper use thereof shall be punished by a fine equivalent to the official’s or employee’s six (6) months basic salary or suspension from the service for a period not exceeding one (1) year, or both, at the discretion of the competent authority.
No. The BIR will no longer prepare the zonal values and will simply adopt the SMV approved by the Secretary of Finance. However, the BIR, together with the BLGF, will still review the proposed SMV of the local assessor.
No. The actual valuation will still be prepared by the local assessors since they know the ground developments, have access to information on the local real property market, and conduct ground work in relation to their regular function of appraisal and assessment of real properties. The DOF will only review and approve the proposed SMV of the LGU, and exercise technical oversight over them. Only the processes and procedures will be rationalized and improved.
The DOF, through the BLGF, shall be the lead agency responsible for the implementation of the reforms. The BLGF shall have the following powers and functions:
- Develop, adopt, and maintain valuation standards consistent with generally accepted international valuation standards, regulations, and specifications for real property appraisal used for tax and other purposes, and ensure compliance therewith by LGUs and other concerned parties.
- In coordination with the BIR, review for compliance with the real property valuation policies and standards and recommend for approval of the Secretary of Finance the SMVs as prepared by the provincial assessors together with municipal assessors, and city assessors, including the municipal assessor in Metropolitan Manila area, for tax, both local and national, and for other purposes.
- Provide technical assistance on real property appraisal matters to government agencies and instrumentalities, and coordinate or conduct the valuation and appraisal of special purpose properties, when requested.
- Provide leadership and policy direction to LGUs on real property valuation and appraisal for taxation and other purposes, including the development and maintenance of valuation standards, the regulation of valuation and appraisal activities and other related matters, and the promotion of valuation and appraisal training and seminars.
- Maintain a roster of licensed local government appraisers and assessors.
- Develop and maintain a comprehensive and up-to-date electronic database of real property transactions and prices of materials for buildings, machinery, and other structures.
- Determine, fix, and collect reasonable amounts to be charged an administration fee, fines, and penalties relative to the implementation of this Act.
- Conduct continuing study and research on valuation and maintain a database of information on global and country trends and developments in real property valuation and appraisal.
- Perform such other functions as are necessary, proper, and incidental to implement the provisions of this Act.
The updating of SMVs and conduct of general revision of property assessments shall not be earlier than three (3) years from the date of last revision, and not later than five (5) years. The range was set since three (3) years may be too soon for LGUs with slow moving property values, such as rural areas outside Metro Manila, and five (5) years may be too long for active markets. Failure to update the SMV shall render an LGU ineligible for any conditional or performance-based grants or to contract any form of credit financing from the national government.