Exemption of subdivision, condo common areas from real property taxes pushed in Senate

Senator Francis Escudero has proposed a legislative measure seeking to exempt common areas in residential subdivisions and condominiums from real property taxes (RPT). The measure aims to give financial relief to millions of middle-class citizens.

On October 21, Escudero filed Senate Bill No. 2569 which proposes an amendment to Section 234 of Republic Act 7160 or the Local Government Code of 1991. The amendment aims to remove the RPT that is ultimately passed on to homeowners and condominium unit owners through monthly association dues.

Escudero said taxing shared spaces such as hallways, lobbies, parks, and other non-income generating facilities increases the carrying cost of homeownership for families who already shoulder amortization, utilities, and soaring cost-of-living expenses.

“Hindi naman kumikita ang mga lugar na ito, pero pinapatawan pa rin ng buwis. Sa huli, ang mga pamilyang nakatira ang nagbabayad, hindi ang developer,” he explained.

Under SB 2569, all portions of a residential condominium or subdivision project that are duly designated or recognized as common areas would be exempt from RPT, provided these are not used for commercial activities.

Spaces converted for business purposes would remain taxable, ensuring that the exemption applies strictly to shared residential facilities.

In his explanatory note, Escudero emphasized that homeownership involves not only acquiring a unit but also maintaining the common facilities that serve the entire community.

He wrote that the imposition of RPT on common areas not only adds to the recurring financial burden of homeowners but it may also discourage developers from allocating land or floor space to facilities and community amenities.

The senator said the measure responds to a growing sentiment among middle-income families who feel the government gives them fewer forms of assistance despite being the country’s primary tax base.

“Madalas silang hindi pasok sa ayuda, pero sila rin ang may pinakamabigat na gastusin buwan buwan. Nararapat lang na sila ay makatanggap ng angkop na atensyon at tulong upang maibsan ang kanilang mga dinadala,” Escudero stressed.

Developers typically pass on the RPT on common areas to homeowners’ associations, resulting in higher dues. Condominium corporations likewise source the common areas' RPT from the monthly dues of condominium unit owners.

Housing groups have long argued that these shared spaces do not generate income and should not be treated as taxable property.

Once enacted, the measure is expected to lower monthly dues for condo and subdivision dwellers nationwide.

Escudero currently chairs the Senate Committee on Urban Planning, Housing and Resettlement.