Zonal Value Revision

Here's a list of BIR Revenue District Offices (RDOs) in Metro Manila likely to revise zonal values soon based on the 3-year prescribed schedule of the National Tax Code. Those highlighted in grey are more likely since they're considered major business districts.

Why does this matter?

SELLERS

If the values are revised before you're able to sell, your selling price might be below the new zonal value. If this is the case, the taxes for the sale would be based on the new zonal value instead of the selling price. You may have to recompute the selling price to attain the same target net proceeds.

BUYERS

If you're looking to buy, it would be best to close before the zonal values are revised. As stated above, sellers may have to increase the price to hit their target net proceeds. Moreover, sellers use the zonal value as a price anchor.

For example, in 1Q2017, deals in a particular Makati development were closing at roughly 170,000/sqm. In June that year, zonal values were revised to 200,000/sqm. Sellers quickly adjusted their selling prices to 200,000/sqm (some even higher) since they thought they were selling at a loss if they sold below 200,000/sqm.

BROKERS

Prepare your clients for this event. It's not a question of "if" but "when." Since the government HAS to raise taxes in light of the Comprehensive Tax Reform Program (Package 3 of TRAIN), the BIR has been rushing to raise zonal values. Local government units will adopt the new zonal values as the basis for real property tax.