REAL ESTATE FINANCING

Methods of Financing Property Acquisition

1.
2.
3.
4.
5.
6.
7.

Cash payment
Swapping (payment in kind)
Lease to own
Formation of Cooperative (Community Mortgage Program)
Joint Venture
loans
Installment basis

Modes of real estate financing

1. Equity Financing - buyer uses own funds
2. Debt Financing
Banks and other financial institution
In-house financing
Effects of Equity financing
1.
2.
3.
4.

Purchase discounts given by seller to the buyer

No periodic financial obligation
No risk of foreclosure
Fund can be used for other higher profit-yielding ventures compared to
prevailing interest rate to be paid by the borrower
5. Liquidity (availability of cash)
Effects of Debt-Financing
1.
2.
3.
4.
5.

Periodic financial obligations

Risk of foreclosure
Funds can be used for other higher profit-yielding ventures
Liquidity
Property purchased may be used as a collateral of Mortgagor to secure
loan from other financing company
6. Interest rate might soar if there is a surge in inflation rate or if peso
depreciates significantly

RED FLAGS ON REAL ESTATE LOANS

1. Qualification of Mortgagor
a. Residency
b. Age
c. Civil Status
d. Financial Capacity
e. Documents availability (i.e. SPA)
f. Cash Flow
g. Depository bank
h. Government financing membership
2. Qualification of Mortgagee
1. Financial stability
2. Appraisal
3. Timeline
4. Interest rate
5. Financing scheme
3. Qualification of Collateral
a. Location
b. Kind/type
c. Collateral value
d. Developer/Seller
e. Timeline (documentation)
4. Compensation (practitioner)

THE UNIFIED HOME LENDING PROGRAM (UHLP)

A home-borrowers financing program of the government with long-term
funds principally provided by the Social Security System (SSS) and
Government Service Insurance System and Home Development Mutual Fund
(Pag-ibig)
Multi-Window Lending System for the UHLP
A modified system under UHLP, whereby housing loan may be
extended through other conduits like banks and financial institutions, instead
of the former UHLP system utilizing just a single window.
SSS/GSIS
Loan Purpose:
Construction of a new house or dwelling units

Purchase of a lot and construction thereon of a new house or dwelling

unit
Purchase with assumption of mortgage of an existing residential unit
previously finance under UHLP
Purchase of residential unit

Borrowers Eligibility
An active member and in good standing
Has not availed of any housing loan
Does not own residential unit in a capacity as sole owner or co-owner
Loan Package
Loan Amount (house and lot) Interest Rate per annum
Up to 180,000
9%
Over 180,000 to 225,000
12%
Over 225,000 to 375,000
16%
Loan Amount (Lot only)

40% of 180,000

Loanable Amount (whichever is the lowest)

Maximum allowed
Based on Income

Based on capacity to pay

exceed 33.33%

375,000
30 times monthly income based on
Borrowers monthly basic salary plus
Other income
subject to approval
Monthly amortization shall not
of monthly income

Based on Collateral

70% to 90%

Based on Actual Need

Loan Period
Shall not be more than 25 years and in no case shall exceed the
difference between the present age and age 70 of the principal borrower

PAG-IBIG FUND (HOME DEVELOPMENT MUTUAL FUND)

MEMBERSHIP
1. Mandatory Membership
Employers and employees covered by SSS/GSIS
Filipinos employed by foreign-based employers whether they are
deployed here or abroad
2. Voluntary Membership
Open to individuals 18 to 65 years old, provided, they comply
with the set of rules of Pag-Ibig including the amount of
contribution and schedule of payment (includes daily wage
earners)

Eligibility Requirements
To qualify for a Pag-IBIG housing loan, a member shall satisfy the following
requirements:
1.

On Pag-IBIG Membership

Must be a member under the Pag-IBIG I, Pag-IBIG II or Pag-IBIG

Overseas Program (POP) for at least twenty-four (24) months, as
evidenced by the remittance of at least 24 monthly contributions at
the time of loan application.

A member with less than the required number of contributions

applying for a Pag-IBIG housing loan shall be allowed to make lump
sum payment based on the mandatory monthly membership
contribution rates (both EE and ER share) to meet the said requirement at
point of loan application provided he has been a contributing member
of the Fund for at least twelve (12) months. Lump sum payment of
membership contributions shall be considered a single contribution for the
applicable month as of the payment date.

A member whose loan exceeds P500,000.00 shall be

required to pay the upgraded membership contribution rates upon
housing loan approval and onwards.
2 Not more than sixty-five (65) years old at the date of loan
application and must be insurable; provided further that he is not
more than seventy (70) years old at loan maturity;
3 Has the legal capacity to acquire and encumber real property;

4 Has passed satisfactory background/credit and employment/business

checks of the Pag-IBIG Fund;
5 Has no outstanding Pag-IBIG housing loan, either as a principal
borrower
or
co-borrower;
However, should a co-borrower in a tacked loan signify an intention to
avail of a Pag-IBIG housing loan for himself, he shall be allowed to do
so provided the tacked loan is updated and the amount proportionate
to his loan entitlement has been fully paid. Hence, the co-borrower
shall be released from the original obligation and shall be allowed to
avail of his own Pag-IBIG housing loan, subject to standard evaluation
procedures.
6 Had no Pag-IBIG housing loan that was foreclosed, cancelled, bought
back due to default, or subjected to dacion en pago, which shall
include cases where the borrower is no longer interested to pursue the
loan and surrenders the property;
7 Has no outstanding Pag-IBIG multi-purpose loan in arrears at the time of loan
application. A member whose multi-purpose loan is in arrears shall be
required to pay his arrearages over the counter to update his account.
8 Borrower who is a co-borrower in a tacked loan (2nd degree by
consanguinity)
Shall be allowed to avail of loan for himself provided
a. The tacked loan is updated
b. The amount of loan proportionate to his loan entitlement has
been fully paid

HOUSING LOAN AVAILMENT

This housing loan program grants opportunities to Pag-IBIG Fund members to
avail of housing loans to finance any one or a combination of the following:
1. Purchase of a fully developed lot not exceeding 1,000 square meters,
which should be within a residential area;
2. Purchase of a residential house and lot, townhouse or condominium
unit, inclusive of a parking slot, which may be:

Old or brand new;

A property mortgaged with the Fund; or

An acquired asset, which is disposed of through sealed public

bidding, negotiated sale, the Rent-to-Own Program, or the
Magaang Pabahay, Disenteng Buhay Program.

3. Construction or completion of a residential unit on a lot owned by the

member;
4. Home improvement, i.e. any alteration in an existing residential unit
intended by a homeowner to be a permanent integral part thereof,
which will enhance its durability and material value;
5. Refinancing of an existing mortgage with an institution acceptable to
the
Fund,
provided
that:
The loan is not in default within 12 months prior to the date of
application;
The said loan has a repayment history of at least two (2) years with the
original mortgagee
6. Combination of loan purposes, which shall be limited to the following:

Purchase of a fully developed lot not exceeding 1,000 square

meters and construction of a residential unit thereon;

Purchase of a residential unit, whether old or new, with home

improvement;

Refinancing of an existing mortgage with home improvement;

Refinancing of an existing mortgage, specifically a lot loan, with

construction of a residential unit thereon

LOAN PACKAGES (example)

HDMF Circular 310 dated July 1, 2012
Loan Amount
Interest Rate
P 400,000.00
4.5%
P3,000,000 to 6,000,000
7.985
8.985

Loan Period
30
3
5

3 MODES OF APPLYING FOR PAG-IBIG HOUSING LOAN

Window 1 the developer assists the member in the housing loan and offers
buyback guarantee , in case the borrower defaults

Window !! the developer assists the member but does not offer any
buyback guarantee
Window III the member applies directly to the Pag-Ibig Fund
HOUSING LOAN PROCEDURE
1. Attend the Pag-ibig housing loan counseling
2. File Pag-Ibig housing loan application (Form PHLAF) with required
documents and Membership Status Verification Slip (MSVS)
3. Processing fee
P 1,000 upon application (non-refundable)
P2,000 to be deducted from loan proceed
4. Approval of housing loan
5. Release of loan proceeds
(for house construction and home improvement with staggered release
DOCUMENTS REQUIRED UPON LOAN APPLICATION
A. Documentary Requirements
1.

Housing Loan Application with recent ID photos of borrower

2.

Membership Status Verification Slip

3.

Proof of income
3.1 For Locally Employed, any of the following:
a.

Notarized Certificate of Employment and Compensation (PagIBIG format)

b.

Notarized Certificate of Employment and

(Employers format) and latest one (1) month payslip

c.

Income Tax Return/Certificate of Tax Withheld (BIR Form No.

2316) and latest one (1) month payslip

Compensation

3.2 For Self-Employed/Other Sources of Income

d.

ITR, Audited Financial Statements and Official Receipt of tax

payment from bank supported with DTI Registration and Mayors
Permit/Business Permit

e.

Commission Vouchers reflecting the issuers name and contact

details (for the last 12 months)

f.

Bank Statements or passbook for the last 12 months (in case

income is sourced from foreign remittances, pensions, etc.)

g.

Copy of Lease Contract and Tax Declaration (if income is derived

from rental payments)

h.

Certified True Copy of Transport Franchise issued by appropriate

government agency (LGU for tricycles, LTFRB for other Public Utility
Vehicle or PUVs)

i.

Certificate of Engagement issued by owner of business

j.

Other document that would validate source of income

3.3 For Overseas Filipino Workers (OFWs), any of the following:

4.

k.

Employment Contract (with English translation if in foreign

language)

l.

Original Employers Certificate of Income (with English

translation if in foreign language). If document submitted is photocopy,
it shall be duly validated and certified/initialed by HDMF Information
Officer assigned in the country where the member works

m.

Other Proofs of Income, whether original or photocopy, shall be

duly validated and certified/initialed by HDMF Information Officer
assigned in the country where the member works

Photocopy (back-to-back) of one (1) valid ID of Principal Borrower and

Spouse, Co-Borrower and Spouse, and Attorney-In-Fact, if applicable. The
same ID must be presented during the conduct of borrowers validation.

5.
6.

Authorization to Conduct/Credit Background Investigation

For OFW members, Special Power of Attorney notarized prior to date of
departure or duly certified and authenticated by the Philippine Embassy or
Consulate in the country where the member is staying, if abroad

7.

Insurance Coverage
a.

Health Statement Form (Medical Questionnaire)

OFW members over 60 years old

Loans over P2.0 M to P3.0 M and for borrowers aged up to

60 years old

b.

Health Statement Form (Medical Questionnaire) and Full Medical

Examination
Borrowers over 60 years old

8.

Marriage Contract (For all married borrower/s, co-borrower/s, spouse,

family member/s included on the computation of aggregate income)

9.

Birth Certificate or any proof of relationship, if with co-borrower/s or

family member/s included on the computation of aggregate income
The Pro-forma Health Statement Form (Medical Questionnaire) is available at
the Members Services Support Division-Servicing Department for NCR or at
any Pag-IBIG Regional Branch or downloadable from the Pag-IBIG website,
www.pagibigfund.gov.ph.

B. TECHNICAL REQUIREMENTS
a.

Certified true copy of TCT/CCT by the Registry of Deeds (latest

title)

b.

Location Plan and Vicinity Map

c.

Photocopy of Tax Declaration and Real Estate Tax Receipt

C. ADDITIONAL REQUIREMENTS DEPENDING ON LOAN PURPOSE

a.

For Purchase of Residential

Construction of House, Purchase of Lot

Unit,

Purchase

of

Lot

and

1. Contract to Sell or similar agreement between the buyer and the seller
b.

For Refinancing

1. Statement of Account on outstanding loan balance, indicating loan

purpose
2. Any of the following documents:

Official Receipt for the past 12 months

Subsidiary Ledger

Any valid proof of payment for the past 12 months

c.

Purchase of Lot and Construction of House, Construction of

House, Home Improvement

1. Building Plans, Specification and Bill of Materials duly signed by the

Licensed Civil Engineer or Architect
HOUSING PROGRAMS
1. GABAY PABAHAY Program opportunity to restructure loan
Eligible Applicants
(Gabay Pabahay Program)
Delinquent housing loan borrowers or installment buyers, or those who are
in arrears for at least three (3) months in the payment of their housing
loan obligations with the Fund and shall include the following:
a. Those who qualify for penalty condonation under Section 2 of RA 8501,
i.e, borrowers who have not yet availed of any pencon program from
any government financial institution or agency involved in the National
Shelter Program.
b. Those who qualify for penalty condonation under Section 3 of RA 8501,
i.e., borrowers with an annual income of not more than P300,000
whose accounts have been in arrears for at least 2 years, and who
have defaulted on their loans due to justifiable reasons deemed as
such by the Pag-IBIG Board of Trustees.
c. Those who do not qualify for penalty condonation under Sections 2 or 3
of RA 8501.
d. Those whose mortgages have been endorsed for foreclosure, but prior
to registration of the Certificate of Sale (COS); provided that the
borrowers fully pay all the costs and expenses incurred by the Fund
relative to the preparation for foreclosure, sale and custody of the
properties or capitalizes these expenses over the term of the
restructured loan.
e. Those whose loans are secured by a Contract-to-Sell (CTS) subject to
the following conditions: Full or partial settlement of the total
arrearages, which shall not be lower than the minimum downpayment
required; The CTS account is not covered by a buyback agreement;
The CTS account is not yet cancelled by notarial act; The CTS account

shall be subject to a 24-month seasoning period, for purposes of

conversion, reckoned from date of approval of loan restructuring.
f. Delinquent borrowers whose loan terms have expired, provided that
the borrowers are not beyond age 60 at the time of application.
g. Heirs of deceased housing loan borrowers with unpaid loan balance
after application of the proceeds of the Mortgage Redemption
Insurance (MRI).
h. Heirs who have been paying the outstanding balance or have
previously availed of a loan restructuring program.
i. Successors-in-interest of Pag-IBIG housing loan borrowers, herein
defined as individuals who have assumed the original mortgage as
supported by legal documents.
j. Group Land Acquisition and Development
Homeowners Association (HOA) accounts.

(GLAD)

and

other

2. Socialized and low-cost Condonation program opportunity to restructure

loan by condonation of penalties
3. Magaang Pabahay, Disenteng Buhay Program acquired assets
In celebration of the National Shelter Month last October 2006 and in
compliance with Memorandum Circular No. 112 signed by President
Gloria Macapagal Arroyo, the Fund implemented the Magaang
Pabahay,
Disenteng
Buhay
Program.
Under this program, the Funds acquired assets are put up for sale,
initially to government employees, at reduced rates. Discounts of 15%
and 20% are given to interested buyers who will purchase properties
through housing loan and through cash payment, respectively. An
additional discount of 5% is granted to the buyers if the properties they
are acquiring are illegally occupied. Buyers who are opting to pay
through housing loan enjoy 6% interest rate for the entire term of the
loan.
4. ROPOA for joint venture
COMPUTATION OF LOANABLE AMOUNT (housing loan)
1. Actual need

2. Collateral value
buyback

if with buyback guarantee

400,000 and below

Over 400,000 to 750,0000
Over 750,000 to 1,250,000
Over 1,000,0000 to 3,000,000

100%

without

100%

100%
95%
90%

90%
85%

80%
3. Capacity to pay based on gross income
50 x monthly income
4. Capacity to pay based on amortization
Monthly amortization should not exceed 40% of monthly
income
5. Maximum loan 6,000,000
Note: whichever is the lowest from the above
HOUSING PROGRAMS FOR DEVELOPERS
6. Circular 279 Rehabilitation and Disposal of Pag-Ibig Fund Real and
Other Properties Acquired (ROPOA) through Memorandum of
Agreement with developers
7. Circular 259 Pag-ibig take-out mechanism under CTS/REM scheme
8. Circular 258 Housing Receivables Financing Scheme
9. Circular 257 house construction financing line
10.
Circular 255 development of Medium/high rise condominium
building ; up to 60% of project cost or P200,000,000.00
11.
Circular 253 Direct Development Loan Program; up to 40%
project cost per phase or P100,000,000.00

CONTRACT TO SELL FINANCING

The developers sell their receivables, from buyers with Contract to Sell, to
banks and financial institution . This scheme is called Contract to Sell
Financing (CTS Financing). This provides developers to get immediate
funding out of their receivables.

Risks

Non-completion of project or developers default

In the event of buyers default
Bank or financing institution closure
Developers are undertaking quasi-banking functions
Impact on financial market

Market Reference Guidelines on Contract to Sell Financing

Formulated by the Bankers Association of the Phils. (BAP), Rural Bankers
Association of the Philipinnes (RBAP), Chamber of Thrift Banks (CTB) in
coordination with Bangko Sentral ng Pilipinas (BSP)
Objectives:
Prudential thrust of the BSP to strengthen credit underwriting practices
for real estate transactions
Balance between stability and development
Prevent excesses that may lead to financial crisis
Mitigate any potential easing of banks credit standard under global
regime of low interest rate
Key Elements
1. Accreditation of both real estate developers and their specific project
2. Eligibility of homebuyers who can avail of CTS financing
3. Banks risk management system

CAPITAL STRUCTURE
ASSUMPTION : CERTAIN CASH FLOW
ABC Corp. has 100 outstanding shares of stocks with a market price of
P10.00 per share. In this case , the firms value is V=E (Value = Equity) =
P1,000.00. Assuming a perfect certainty, interest is certain and there are no

inflation and taxes, ABC Corp. is certain that its rate of return is 15%. What
is the best capital structure to maximize its rate of return.
Assuming further that ABC Corp. is considering to mix 25% debt and 76%
equity such that the total money raised remains constant at P1,000.00. The
financing mix would change capital structure. Would the change in the
capital structure increase the rate of return on the firms equity?
EVALUATION
Intere
st
Rate

Before the
Change
in
Capital Structure

After the Change

in
Capital Structure

Basic Data
Value of
Equity
Value of Debt

1,000.00

Total Capital

1,000.00

1,000.00

Net Income

150.00

150.00

750.00
250.00

INTEREST
0
0
0

10%
15%
20%

25.00
37.50
50.00

STOCKHOLDERS' INCOME
150.00
125.00
150.00
112.50
150.00
100.00

10%
15%
20%

RATE OF RETURN ON
EQUITY
10%
15%
20%

CMP OVERVIEW AND OBJECTIVES

15%
15%
15%

16.67%
15%
13.33%

The Community Mortgage Program (CMP) aims to improve the living conditions of
homeless and underprivileged citizens by providing them affordable financing with
which they can secure tenure on the land they occupy.
The CMP is a mortgage financing program which assists legally organized
associations of residents of blighted or depressed areas to own the lots they occupy,
providing them security of tenure and eventually improve their neighborhood and
homes to the extent of their affordability.
The maximum loan entitlement of individual members would be as follows:

PURPOSE
1. Lot Acquisition
Undeveloped
Developed
2. Site Development
3. Housing Materials
LOAN PACKAGE

Maximum Loan Amount

Metro Manila/HUA
Other Areas
P 90,000.00
P 45,000.00
P 90,000.00
P 60,000.00
P 15,000.00 per beneficiary
P 60,000.00 per beneficiary
P165,000.00

P120,000.00

HUA - Highly Urbanized Areas

1.
2.
3.
4.
5.

Baguio City
6. Angeles City
11. Olongapo City 15. Puerto Princesa City
Lucena City 7. Bacolod City
12. Iloilo City
16. Metro Manila
Cebu City
8. Mandaue City 13. Zamboanga City
Butuan City 9. Davao City
14. Gen. Santos City
Iligan City 10. Cagayan de Oro City

The CMP loan will bear 6% interest per year based on the outstanding balance and
will be payable over a maximum period of 25 years in equal monthly amortizations.
DUE DILIGENCE
The processing of CMP loan applications will essentially involve due diligence
verification by SHFC on the CMP loan application and the collateral.
Upon acceptance of complete documentary requirements, SHFC shall strive to
devote no more than one hundred twenty (120) working days to complete the due
diligence process from CMP loan application to loan release.
CMP PROJECT CLASSIFICATION
ON-SITE
Members of the Community Association (CA) are already living/residing in the
project site

The community has been in existence for five (5) years; 85% of the total number of
members should have a residency of 5 years;
at least 85% occupancy rate at the time of application and 100% after two (2) years
from loan release
Maximum of 200 beneficiaries
100% appraisal
OFF-SITE
Homogenous group living outside the project area but has to be relocated due to
any of the following reasons:
Beneficiaries living in danger zones/areas;
Beneficiaries affected by government infrastructure project; and
Beneficiaries with threat of eviction or actual ejectment thru a case/court order
Maximum of 200 beneficiaries
100% appraisal
CMP LOAN COLLATERAL
The land to be acquired by the Community Association (CA) shall serve as the CMP
loan collateral, and will be acceptable if the following criteria are met:
1. The title to the land is free from all liens and encumbrances at the time of release
of the CMP loan;
2. The land is not classified as agricultural;
3. The land is not within environmentally-constrained/ hazardous or high-risk areas
as certified by the DENR and the concerned local government unit;
4. The land has a road right of way or an access road lot to a city, municipal or
barangay road; and
5. The landowner should have the legal capacity to sell or transfer the subject
property for loan collateral under the CMP.
BORROWERS
Tenants/beneficiaries shall form and register a CA, which entity shall borrow and
initially own and mortgage the land. Individual beneficiaries right over the land and
eventual ownership of the lot is achieved through a Lease Purchase Agreement
(LPA) with the CA.
ELIGIBILITY OF CMP BORROWERS
1. Filipino citizen, of legal age (18) at the time of the loan application and shall not
be more than 60 years old upon loan release;
2. Certifies under oath that he/she has not been a recipient of any CMP loan or other
govt. housing programs. Does not own or co-own a real property and is not a
professional squatter as defined in RA 7279;
3. Must be a structure owner, a renter or a sharer at the site.
DELINQUENCY / DEFAULT
A CA account is considered in default if it is not up to date with its loan amortization
payments equivalent to three months.

PENALTIES
In case of non-payment of monthly amortizations on the due date (one month after
release of the loan), the CA shall pay a penalty equivalent to delay.
INSURANCE
For the duration of the loan, there shall be a Mortgage Insurance on the lives of
the principal borrowers as identified in the Master List of Members on a yearly
renewable term basis. The insurance premiums shall be included in the monthly
amortizations of the members.
SUBSTITUTION OF BENEFICIARIES / FORECLOSURE
The Master list of members submitted as part of the CMP loan application are
deemed final and may not be subject to substitution during loan application
processing period.
A member may be substituted due to the following:
1. A member is in default in the payment of his/her share in the monthly
amortization of the CA loan; and
2. A member voluntarily waives his/her rights to the allocated lot/property in favor
of the CA.
Renters or sharers in the project sites shall be preferred or prioritized in the
substitution process.
The CA shall be responsible for the substitution of the member without prejudice to
the right of SHFC to disqualify substitute members if they fail to meet the
qualifications of a member or if there is proof of misrepresentation by the CA
officers.
COMMUNITY MOBILIZERS (CMP-M)
Accredited CMP-Ms are tasked to assist informal settlers in organizing
themselves into CAs.
CMP-Ms may either be any government entity, non- government organizations
(NGO) and Peoples Organizations (PO) and must possess the needed skills to
organize communities, document CMP project applications and provide access to
other government agencies involved in the program.
CMP-Ms shall be entitled to a service fee equivalent to two percent (2%) of the
loan amount or P1,000.00, per member, whichever is higher.

SAMPLE COMPUTATION PROBLEMS

1. Mr. So bought a commercial lot with an area of 400 sqm fof

12,000/sqm. He paid a down payment of 40% and the balance is
payable in one (1) year in (12) equal monthly amortizations with an
interest rate of 12% per annum (amort factor is .093113). After paying
four (4) monthly amortaization, he made a killing in the stock market
and thus decided to pay off the remaining principal balance. Compute
the following:
a. The last payment he made to pay off the remaining balance
b. Total interest paid for four (4) monthly amortization
2. Ms Maria bought a property at P800,000 if paid in cash. On instalment,
she paid 20% downpayemnt. She paid 300,000.00 at the end of the
first year and another 300,000 at the end of the 2nd year and a final
payment after 3 years. Compute the final payment if interest is 18%
per annum.
3. Mr. John pays monthly amortization of P54,100 for a parcel of land.
The amortization factor for five (5) years at 21% per annum is .02705.
If he paid a downpayment of 20% of the contract price, compute the
following:
a. Principal obligation on which the month amortization is based.
b. The contract price
c. The amount of downpayment
4. Ms. Joy pays a monthly amortization of P25,228.00 for a piece of land
for 10 years at 18% interest per annum. The amortization factor for 10
years at 18 % is .01802. if Ms. Lagui paid a downpayment of 30% of
the contract price, compute the following:
a. Original principal loan obligation on which the monthly amortization
is based
b. Contract price
c. The downpayment made
5.

Mr. Castro owns a 240 sqm rectangular lot with 12-meter frontage.
He wanted to enclose if with a fence made of hollow blocks, 1.7m. high
above the ground with 0.3m. below the ground. The fence cost is
P250.00/sqm. How much will the fencing cost if a 4-meter wide steel
gate cost P7,500.00 is installed)

6. A commercial building has the following measurements: Ground floor

is 30m x 25m; mezzanine is 30% smaller than the ground floor; 2 nd
floor is 85 sqm smaller that the ground floor; 3 rd floor is bigger than
the mezzanine. Compute the total floor area of the building.
7. ABC Realty Corporation owns two adjoining parcels of land. Lot 1 with
1,000 sqm and Lot 2 with 800 sqm. Recently. It sold Lot 1 at
P3,000.00/sqm with 20% downpayment and the balance payable in 60
months at the P67,689.33 equal monthly amortizations.
If the
company will Lot 2 at the same price and terms as it sold Lot 1,
compute the total amount of interest that will be received by ABC
Corporation after Lot 2 shall have been fully paid after five(5) years.
8. A 4-hectare property with 4 different titles and owners is being bought
by a developer from a consolidator who has a special power of attorney
to sell. The lot is 10,000 sqm each. Lot 1 is adjacent to existing
highway, while Lot 2,3 and 4 are without right-of-way and
approximately 200 meters, 400m and 600m away from the highway ,
respectively. The 4 owners cannot agree on how to divide the
P5,000,000 equitably since their lots are of different distances from the
only existing road. To settle the differences, the consolidator hired the
services of a competent licensed appraiser to recommend the sharing
of the proceeds of sale. The appraiser recommended the depth rule of
4-3-2-1 rule in evaluation of rawland. What is the respective share of
each owner using the said rule?
9. ABC Corporation bought a 3-storey concrete building 10 years ago at a
cost of P5,000,000.
The building is being depreciated by the
companys accountant on a straight line method using 50 years as its
estimated life. The Board of Directors, in the desire to upgrade the
financial report of the company, hired the services of a competent
licensed appraiser to determine the true fair market value of the
building. The appraiser estimated the reproduction cost-new of the
building at P15,000,000.00 and just used or followed the depreciation
rate being used by the company in estimating the building
accumulated depreciation for 10 years.
Based on the above
information, compute the following:
a. Fair market value of the building
b. Unearned increment

10.
A prospective buyer of a house and 300 sqm. Lot consulted his
architect and advised that the present cost to duplicate the house is
P3,000,000. The architect also estimated that the effective age of the
house is 10 years and the economic life for such structure is 50 years.
If the buyer is willing to pay P5,000/sqm for the lot, how much should
he buy the property?
11.
The sale of lots with an area of 100 sqm each is 10 units per
month.
The selling price per lot is P3,000.00/sqm with 15%
downpayment and the balance payable in 5 years with interest at 16%
per annum. If there are only 35 lots in the project and amortization
starts 30 days after the signing of the contract, what is the total
monthly amortization as of the fifth months? Amortization factor is .
0253393 (note: indicated in the actual exam---.025393)
12.
Mr. John wants to sell a parcel of land he inherited from his
parents to invest in the money market. It is a corner lot and has a good
view of Taal lake, but a portion of the land thereof slopes down slightly.
The lot is 600 square meter and the prevailing market price in the area
is P2,500 per sqm. He asked you how much he could sell the property.
What price would you recommend given the following data: A corner
influence at 30%; topography disadvantaged at 10% and a plottage
advantage at 20%
13.
You are asked by Mr. Sy to come up with a budget for fencing and
stalling a steel gate for the property a vacant lot with a street
frontage of 10 meters and lot area of 300 sqm. The concrete fence will
have a height of 6ft above the ground and 2ft below the ground. The
steel gate will have a length of 4meters and height of 6ft above the
ground. The concrete fence will cost P1,000/sqm and the steel gate at
P800/sqm. Compute how much is the total cost of fence and the gate?
14.
A parcel of land has the following features: the area is 700 sqm;
it is a corner lot but normally flooded during rainy season and almost
rectangular in shape. A comparable property which is rectangular lot
and at the same level as the road was sold at P5,000 per sqm recently.

If corner influence is 15%, topographic value is 5% and plottage is

10%, determine the fair market value of the property.
15.
A rectangular lot has an area of 1,000 sqm with 20 meters
frontage. A 4-storey building was constructed on said lot with a 3
meter setback on all sides at a cost of P25,000 per sqm. Compute the
following a)depth of lot b) floor area of building c)Total Cost of building
16.
After paying P100,000 downpayment , Mr. Chan failed to pay 3
consecutive monthly amortization of P5,410 per month. Compute the
3 months penalty if it is 2% per month based on paid amortization
17.
ABC Corporation owns 3 adjacent lots. Lot 2 with an area of 800
sqm, Lot 3 with an area of 750 sqm. Lot 2 and 3 are priced at
P10,000/sqm while corner Lot 1, with an area of 1,200 sqm is being
sold at P12,000/sqm. Mr. So, a businessman wanted to buy the 3 lots
at a discounted price. The corporation agree to sell the 3 lots to Mr. So
at 5% discount, 20% downpayment payable in 5 years with 20%
interest per annum. Amortization factor is .02649
a. How much is the total discount
b. How much is the total contract price after deducting the discount
c. Compute for the monthly amortization
18.
An 800 sqm lot with an improvement was sold for P3,500,000.
Per Tax Declaration, the fair market value of the house is P1,500,000
and the lot is P1,600,000. The zonal value of the lot is P3,500.00. The
sale is subject to capital gain tax.
a. Compute the tax basis
b. How much is the capital gain tax
c. How much is the documentary stamps
19.
A 500 sqm lot with house was sold for P4.5M. Per latest tax
declaration the market value of lot is P1,300,000 while the house is
P2,200,000.
BIR zonal value at the time of sale for the lot is
P5,600/sqm. Based on the foregoing , compute the following:
a. Fair market value of house and lot as determined by BIR
b. Tax Base
c. Capital gain tax
d. Documentary stamps

e. Transfer tax if at 75% of 1%

f. Estimated registration fee if it is 0.5% of selling price
20.
A certain real estate property was valued and assessed by the
assessors office in the following amount and rate
Kind of property

Market value

Assessment

Rate of

SEF
Level

basic tax

Tax rate
Land

5,000,000

50%

2%

1%
Building

5,000,000

70%

2%

80%

2%

1%
Machineries

5,000,000

1%
Based on the above , compute the following:
a. Basic realty tax before discount for one quarter
b. Special education fund (SEF) for one year
c. Total tax (basic plus SEF) for one year net of 10% discount

21.
Mr. Uy, an appraiser, was hired by ABC Corporation to determine
the real value of its land and building in Manila. The building was built
20 years ago, 5 years after the land was acquired at a cost of
P5,000,000 while the land was purchased at P500,000.00 . Compute
the estimated fair market value of the land and building based on the
following assumptions:
a. Building is to be depreciated at 2% fixed per year; land appreciates
at fix rate of 5% per year
b. The cost to reproduce the building at the time of appraisal is
estimated at P30,000,000
22.
Compute the amount paid by a a realty buyer who bought a
subdivision lot priced at P5,600,000 inclusive of VAT if paid in cash with
5% discount
23.
Mr. So died without a will, leaving a conjugal real estate under
TCT 8888 to his wife, two legitimate children and one (1) illegitimate
child. If the property is extra-judicially settled by above heirs, what

would be the fractional share of the heirs that will appear in the new
title?
24.
A Deed of Sale with Mortgage was executed involving a total
price of P3.5M. The sum of P1M was paid in cash and the remainder
was secured by a mortgage on the same property by the buyer.
Compute the documentary stamps on sale and documentary stamps
on mortgage
25.
After 5 years the fair market value of the land owned by Mr. Sy is
P45M. If the appreciation value is 1/8 of the value before adjustment,
compute the following:
a. Value before adjustment
b. Appreciation value
c. Appreciation rate
26.
Mr. Tan bought a lot for P600,000 paying P150,l000 and the
balance by way of mortgage.
He makes a guarantee quarterly
payment of P40,000 plus 24% interest per annum . Assuming that all
his payment were on schedule, how much did he pay for the 1st year?
27.
Mr. Dy sold in June 5, 2005 his lot for P850,000 to Mr Co inclusive
of mortgage to be assumed by Mr. Co amounting to P150,000. Mr. Dy
received a downpayment of P500,000. Both agree that the balance
would be paid in 8 equal monthly instalment beginning July 2005. Mr.
Dy realized a profit of 22% of cost. Compute the following:
a. Selling price
b. Contract price
c. Initial payment for taxable year 2005
d. Capital gain tax on initial payment
e. Documentary stamps on sale
f. Documentary stamps on mortgage
g. Gross profit rate for tax purpose
28.
Mr. Chu, a real estate broker , obtained this net listing, a
residential lot with an area of 400 sqm for sale at 12,000/sqm. He
therefore has to sell the property at a price that would be inclusive of
capital gain tax, documentary stamps on sale and the brokers
commission of 3%. Compute the following

a.
b.
c.
d.
e.

Net selling price

Gross selling price
Capital gain tax
Documentary stamps on sale
Gross commission to be share by brokers

29.
ABC Realty Corporation , a subdivision developer acquired a 5hectare rawland for project development. With the following data and
conditions given:
Rawland cost
1,000 per
sqm
Development cost
1,000/sqm
based on saleable area
Area of subdivision lot
100 square
meters
Selling price per lot
3,000 per
sqm
ABC reallty will give 5% commission , assume payment of 1.5%
creditable withholding tax and documentary stamps of 1.5% per sale.
Compute the following:
a. How many lots are to be sold
b. How much is the total commission
c. How much is the total expenses of the developer
30.
After paying 3% commission, the seller realized a net proceed of
P776,000. How much is the selling price of the property?
31.
Mr.Lim buys a house and lot worth 1,500,000 if paid in cash. On
instalment basis, he pays P500,000 downpayment; P300,000 at the
end of the 1st year; 400,000 at the end of 2 nd year ; did not pay on the
3rd year and a final payment on the 4rth year. How much is the final
payment if the interest is 14% per annum?
32.
A vacant lot was sold for P1,900,000 subject to the following
conditions
a. Buyer pays a downpayment of P500,000
and assume the
mortgage of 1,400,000
b. Seller will continue to occupy the house for four (4) months at a
monthly rental of P10,000 payable in advance

c. Insurance premium of P9,000 for one year will be pro-rated and

the premium of eight (8) months will be refunded to the seller
d. Seller will pay a 5% brokers commission on the sale
Compute the net amount received by the seller from the sale
33.
A corporation is developing a 10-hectare rawland purchased at
P400/sqm. Development cost is estimated at 300/sqm based on gross
area. Marketing inclusive of advertising and brokers commission is
15% of selling price. If the company desires a net profit of 30% of
selling price, what would be the minimum selling price per square
meter of the subdivision lots assuming that the saleable area is 70% of
gross area
34.
Mr. Kim,bought a 200 sqm subdivision lot at P3,000. He paid
25% downpayment and the balance payable in 120 equal monthly
amortization at 21% interest per annum.
He paid 84 monthly
amortization totalling P737,612.20 inclusive of penalty interest of
P32,000. Compute his cash surrender value under Maceda Law.
35.
ABC Corporation decided to go into a small scale townhouse
development and sales business. It bought 1000 square meter vacant
residential lot for P2,500/sqm and constructed 6 townhouses on it.
Each unit has floor area of 150 sqm and cost 8,000/sqm of floor area to
construct. Other expenses were P600,000 for common driveway,
200,000 for drainage system, 150,000 for water supply system,
400,000 for fencing and gate with guardhouse and 100,000 for
landscaping. The townhouse were sold at P2.5M each. Compute the
following:
a. Gross profit from the project
b. The rate of return on investment based on cost
c. Gross profit ratio
36.
Mr. Chen has been paying on instalment a subdivision lot since
May 1992 at the rate of P3,000 a month after downpayment of P10,000
to a subdivision developer. In May 2000, due to some financial
difficulties, he failed to pay the instalment as a result of which the
company decided to cancel the contract after giving due notarial
notice

a. How many months grace period is Mr. Chen entitled?

b. How much is his cash surrender value
37.
Mr. Go upon due notice, stopped payment of his regular monthly
amortization because the subdivision owners failure to develop the
subdivision. His payments already amount to P500,000, P50,000 of
which as penalty and P200,000 as interest. If Mr. Go will demand a
refund and the owner would agree with an 8& interest, how much will
he received as provided by PD 957?
38.
At how much shall Mr. Kim sells his residential unit acquired at a
cost of P6,300,000 if he desires a gross profit of
a. 30% of cost?
b. 30% of selling price?
39.
What is the total land area of a four-sided parcel of land given
the following description N.1 deg oE., 20m to point 2; thence N.89
deg. 0W, 15m to point 3; thence S. 1 deg 0W 40m to point 4
a. 300 square meters
b. 345 square meters
c. 450 square meters
d. 500 square meters
40.
What is the length of the side delineated by point 4 to point 1 in
a four-sided parcel of land given the following description. N. 1 deg 0E
20 meters to point 2; thence N. 89 deg 0W 15m to point 3; thence S.
1deg 0W 40m to point 4?
a. 23 meters
b. 25 meters
c. 26 meters
d. 27 meters
41.
A seller who bought a property for P5,500,000 wants to sell same
property with a 30% gross profit. He is willing to pay a 5% brokers
commission without affecting his 30% gross profit
a. How much is the gross selling price
b. How much is the gross selling price inclusive of commission

42.
A borrower mortgaged his real estate property for P1,500,000.
He made quarterly payments of 100,000 plus interest at 16% per
annum
a. How much did he pay for the principal for the first year?
b. How much is the total payment of interest for the first year?
43.
price
a.
b.
c.
d.
e.

If the value added tax is P720,000.00, what would be the selling

before VAT?
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000

44.
price
a.
b.
c.
d.
e.

If the valued added tax is P720,000, what would be the selling

inclusive of VAT?
5,720,000
6,720,000
7,720,000
8,720,000
9,250,000

45.
A 10-hectare raw land was purchased at P400.00 per sqm and
was developed based on the cost estimated at P300 per sqm based on
the gross area. The marketing , inclusive of advertising and brokers
commission is 15% of the selling price. If the company desires a net
profit of 30% of the selling price, what would be the minimum selling
price per sqm of the subdivision lots assuming that the saleable area is
based on PD 957 requirement.
a. 1,818.18
b. 1,700.oo
c. 1,800.00
d. 1,900.00
46.
Two listing and selling brokers sold a property. The brokers
commission is five (5) percent and agreed to a 50-50 percent
commission sharing. Each of them received P62,500. What is the
selling price?
a. 2,000,000
b. 2,500,000

c. 3,000,000
d. 3,500,000
47.
Mr. Cruz was the lessor of 25 units of residential apartments with
equal rental payments and made a total annual gross receipt of
2,700,000 for the year 2012. How much is the value added tax for the
year
a. 245,454.55
b. 289,285.71
c. 270,000
d. 378,000
e. None of the above
48.
Mr. Johnny bought a 2-hectare raw land at P20.00 per square
meter. If cost of money is compounded 100% every 5 years, what will
be his cost per square meter after 20 years? What will be his gross
profit per square meter if he sell the land at P500 per square meter
after 20 years?
a. 200/sqm
b. 250/sqm
c. 300/sqm
d. 320/sqm
49.
A broker sold a subdivision lot priced at 5,500,000 inclusive of
VAT. How much the 5% commission of the broker net of creditable
withholding tax?
50.
Mr and Mrs. Enkantada sold their personal property for
P4,000,000. At the time of the sale the fair market value of the
property as determined by BIR is P5M. Three months later, they
bought a residential house for P3M. Compute the capital gain tax on
the unutilized portion of the proceeds of the sale?
51.
Compute the fair market rent per square meter per month of a
500-square meter land with a fair market value of P12,000 per sqm if
interest rate per annum is 12%.

52.
During the year 2012 , the total receipt from the lease of 30
residential units is P2,000,000. How much is the output tax for the
year 2012?
a. 220,000
b. 200,000
c. 600,000
d. 900,000
e. None of the above
53.
The following data are shown on the tax declaration of a piece of
land and the structure on it located in a residential area being used as
a mini grocery
Lot area
275 sqm
Market value of land
4,525.00 per sqm
Market value of structure
2,400,000
Assessment level
Residential
20%
Commercial
50%
Property tax rate
1.5% of assessed value
SEF
1% of assessed value
Compute the following
a. The total combined market value of land and improvement
b. The total combined assessed value of land and its
improvement
c. The total combined property tax payable
54.
Philand is a major property developer in the country and sells
house & lot packages in major cities in the country. It is registered with
HLURB as habitually engaged in the realty business. Compute for
the following creditable withholding tax to be paid by the company
based on the following sales considering that sales over 2,500,000 are
subject to VAT
a. Batangas
50 units socialized housing units at 225,000 per unit
b. Cagayan de Oro 30 units at 480,000 per unit
c. Cebu City
25 units at 3,000,000 per unit
55.
A woman died intestate leaving behind a husband, three
children, 6,000,000 in gross estate but no will. Before she died, she
was hospitalized and P350,000 was spent. Actual funeral expense was
P225,000 while P25,000 was spent for the intestate proceedings. The

fair market value of the family home is P2,500,000.00. Compute the

following:
a. Net taxable estate
b. Estate tax to be paid given the following estate tax rate table
Over
of excess over
P 200,000
P200,000
500,000
500,000
2,000,000
2,000,000

but not over

P

basic

500,000

2,000,00
5,000,000

plus
5%

15,000

8%

135,000

11%

56.
In 2010, the gross sales receipts of Rizal Properties Inc a VAT
registered company were P2,640,000 for July, P3,520,000 for August
and P5,060,000 for September.
Purchases from VAT registered
suppliers were P1,870,000 for July, 3,190,000 for August and 4,620,000
for September. Compute
a. Output vat
b. Input vat
c. Vat payable
57.
Mr. Kim Orosa is celebrating his 5oth birthday next week. His
monthly gross income is P9,600 and is qualified to borrow via his PagIbig membership through UHLP. He has been offered by Broker A to
buy a house and lot package priced at P420,000. The appraised value
of the house is P400,000. However, Mr. Orosa is willing to pay all his
savings amount to P200,000 as his equity, excluding other
miscellaneous expense. Compute the following:
a. Loan value based on collateral , regular or without warranty
b. Loan value based on income
c. Loan value based on affordability
d. Loan value based on actual need
Monthly amortization factors
9% interest
25 years
.0155899
20 years
.0146780
15 years
.0146780

12% interest
.0083919

16% interest
.0105322

.008973

.0120170

.0101427

.0120170