RPVARA RA 12001 Real Property Valuation and Assessment Reform Act of 2024 - Initial Information

The Real Property Valuation and Assessment Reform Act (RA 12001), also known as RPVARA, was signed by President Ferdinand Romualdez Marcos Jr. on June 13, 2024. The Implementing Rules and Regulations (IRR) were recently published on December 27, 2024. After a 15-day period without objections following its publication, the law will be deemed approved and implementable. This act aims to institute reforms in real property valuation and assessment in the Philippines, reorganize the Bureau of Local Government Finance (BLGF), grant tax amnesty on real property and special levies, and appropriate funds.

The current property valuation system in the Philippines suffers from several issues. There are multiple valuations from various agencies, leading to wide disparities in property values. Valuations are often outdated, affecting national and local taxation, and leading to lost government revenues. The system lacks a single agency responsible for ensuring consistent and standardized valuations, and there is no comprehensive electronic database to track transactions and support regular property evaluations. This often results in prolonged disputes over property values, especially in cases of government expropriation, leading to project delays.

RPVARA aims to establish a just, equitable, impartial, and nationally consistent real property valuation system based on international valuation standards. This standardization will ensure that property values are accurate and reliable, reducing discrepancies and disputes. The act also seeks to promote fiscal autonomy for Local Government Units (LGUs) by separating property valuation from tax policy, providing a comprehensive electronic database for property transactions, and promoting technology in reporting real property taxes. This will enable LGUs to better provide basic services and improve financial management.

Under RPVARA, all city and municipal assessors will be required to be licensed real estate appraisers. This ensures that valuations are conducted professionally, ethically, and in accordance with established standards. The law clarifies that while the market value will be determined by licensed appraisers based on technical standards, the local sanggunian (council) will have the power to adjust the assessment level and tax rate to influence the final tax amount, rather than compromising the property's market value. This separation of valuation and taxation aims to remove political interference from property valuation.

A significant benefit of RPVARA is the provision of a two-year tax amnesty on real property taxes from its implementation date (estimated to be mid-January 2025). This amnesty allows property owners to pay delinquent real property taxes without penalties or surcharges, provided their property has not yet been auctioned off or they haven't already entered into an agreement with the assessor. Furthermore, RPVARA will eventually replace the Bureau of Internal Revenue's (BIR) zonal values, with capital gains tax being determined by the higher of the assessed value (by a licensed appraiser) or the deed of absolute sale. This will streamline the valuation process for all transactions.

RPVARA will have a significant impact on real estate professionals, opening up opportunities for licensed real estate appraisers in government positions and ensuring consistent and transparent valuations across the country. The act emphasizes the importance of a single, standardized valuation system to prevent prolonged disputes, as seen in past cases like the Batangas Port Development Project. The BLGF will oversee the implementation, including data updating, training LGUs, and approving valuations from assessors. This move aims to professionalize the real estate industry, attract international investors, and bring the Philippines' valuation standards in line with global practices.