4. I have to pay building management fees and certain other out of pocket expenses for the property. Are they deductible? Should I deduct them from the rental income and report the net amount of the income?

4. I have to pay building management fees and certain other out of pocket expenses for the property. Are they deductible? Should I deduct them from the rental income and report the net amount of the income?

Only the following items can be claimed as deductions for Property Tax purposes:

1. rates (only if paid or payable by the owner);
2. irrecoverable rent (irrecoverable rent that was previously deducted but later recovered should be included in the assessable value in the year of recovery);
3. 20% statutory allowance on the property's assessable value for repair and outgoings (if payable by the owner) given after deduction of rates and irrecoverable rent. This is a flat rate deduction irrespective of the actual amount spent.

Additional claims should not be made for government rent, decoration fees, rent-collection expenses, building management fees, insurance and mortgage interest, or any other non-deductible expenses.  Nevertheless, you may deduct the mortgage interest from your taxes in Part 8 of your Tax Return-Individual (BIR 60) if you are qualified and have opted for Personal Assessment.

How do property owners apply for Personal Assessment?

Property owners may indicate their wish to elect “Personal Assessment” in Part 1 of the Property Tax Return (B.I.R.57). The individual owner might need to file a Tax Return - Individuals (BIR60), which may be sent to him/her later, in order to complete the election process.