Real Property Valuation and Assessment Reform Act (RPVARA): What You Need to Know

Introduction

The Real Property Valuation and Assessment Reform Act (Republic Act No. 12001) was signed into law on June 13, 2024, and took effect on July 5, 2024. This law aims to standardize real property valuation across the Philippines, ensuring transparency and consistency in real estate taxation and transactions.

Under this law, all Local Government Units (LGUs) are required to update their Schedule of Market Values (SMVs) within two years, with a deadline set for July 5, 2026.

Key Objectives of the RPVARA

The RPVARA seeks to address inconsistencies in real estate valuation by implementing a unified standard for property assessments. The main objectives include:

• Standardizing Real Property Valuation – The law mandates the adoption of the Philippine Valuation Standards (PVS) to ensure fair and transparent property valuation.
• Market-Based Valuation – All property valuations will be based on market value, eliminating multiple and inconsistent valuation methods.
• Improving Revenue Collection – LGUs will generate more accurate tax assessments, leading to better public funding.
• Separating Valuation from Tax Administration – The law removes conflicts of interest by distinguishing property valuation functions from tax collection.
• Developing a Real Property Database – A national real estate database will be established to improve transparency and access to valuation records.

How Will Property Valuation Be Computed?

Until the new Schedule of Market Values (SMVs) is fully implemented, the Bureau of Internal Revenue (BIR) will continue using the highest value among:

• Zonal Value (ZV) – BIR’s prescribed valuation for specific locations.
• Schedule of Market Values (SMV) – LGU’s official property valuation.
• Actual Selling Price – The declared price in the transaction.

Once LGUs finalize their SMVs, real estate tax calculations will primarily be based on the updated market values.

Implementation Timeline

• June 13, 2024: RA 12001 signed into law.
• July 5, 2024: Law became effective.
• December 10, 2024: Implementing Rules and Regulations (IRR) released.
• By July 5, 2026: LGUs must complete SMV updates.

Tax Amnesty for Real Estate Owners

As part of the reform, a two-year tax amnesty is available, covering:

• Penalties, surcharges, and interest on unpaid real property taxes before July 5, 2024.
• Opportunities for property owners to settle tax obligations without additional fees until July 5, 2026.

Implications for Buyers and Sellers

With the new valuation system, property buyers and sellers should take note of the following:

• Expect Higher Property Taxes – Once SMVs are updated, property taxes will likely increase.
• Take Advantage of the Tax Amnesty – Settle outstanding taxes before July 5, 2026 to avoid penalties.
• Verify Zonal and Market Values Before Buying – Ensure proper tax planning by checking current property valuations.

Final Thoughts

The RPVARA is a major shift in the Philippine real estate taxation system. By 2026, property taxes will be based on updated SMVs, ensuring fair and transparent real estate transactions. Property owners, buyers, and sellers should stay informed to avoid unexpected tax liabilities.

For more information, visit the official sources:

• Republic Act No. 12001 (Supreme Court E-Library)
• Baker McKenzie: RPVARA Tax Amnesty
• SRMO Law: Understanding RA 12001