Property sector seeks reforms as gov't reevaluates approach

The Philippine government has backed away from a controversial plan to raise capital gains, estate, and donor taxes, a move that industry analysts say removes a significant threat to the country's fragile housing market recovery.

- Ehda M. Dagooc Staff Member

Initially designed as a fiscal buffer in case of economic distress, the proposal sought to increase taxes on property transactions from 6 percent to 10 percent.

But with macroeconomic indicators showing improvement, Finance Secretary Ralph Recto confirmed on April 29 that the government has shelved the measure, which included a sunset clause that would have restored current rates by 2030.

The decision was swiftly welcomed by property developers and market analysts, who warned that the tax hike could have derailed the sector's tentative rebound.

According to Colliers Philippines, the now-abandoned proposal would have introduced a costly friction in the secondary housing market, especially at a time when affordability remains a pressing concern.

"Higher capital gains taxes would have added a layer of cost for sellers, which would likely be passed on to buyers," said Joey Roi Bondoc, research director at Colliers.

"This could dampen housing demand and disincentivize property transactions."