Can Foreigners Rent Out or Sublet Property in the Philippines?

Can Foreigners Rent Out or Sublet Property in the Philippines?

Yes, but with limitations and tax obligations.
While foreigners may not own land, they can rent, lease, and sublet property under certain conditions:

Allowed:

Subletting a property you legally rent, with owner’s consent

Leasing out property owned by a corporation (you’re a shareholder)

Renting a condo unit or house and subletting to cover costs or profit

Not Allowed / Risky:

Subletting without written consent from the owner/landlord

Acting as a “silent landlord” for property not in your name without a corporate/legal structure

Receiving income without declaring it for tax purposes

Income Tax Obligations

Any rental or sublet income earned in the Philippines by a foreigner is subject to Philippine income tax, regardless of visa status.

Tax Types Depending on Residency:

1. Non-Resident Alien Not Engaged in Trade or Business (NRANETB)

E.g. tourist visa, no registered business

Flat tax rate: 25% on gross income

No deductions allowed

Must file via BIR Form 1702Q / 1702-RT

2. Resident Alien or Registered Business (with Mayor’s Permit, BIR)

E.g. SRRV, AEP, or through a domestic corporation

Graduated tax system (20–35%) or optional 8% flat rate on gross

Can deduct expenses (e.g. repairs, utilities) if properly documented

Must register with BIR, issue official receipts

Legal Requirements to Sublet Properly

Written Sublease Agreement

Must state term, rent, conditions

Ideally notarized

Consent from Property Owner

Required to avoid eviction or legal dispute

BIR Registration if Regular Activity

Register for income tax

File quarterly & annual returns

If income exceeds ₱250,000/year, taxes apply

LGU Clearance (optional)

If operating on a larger scale or via platform (Airbnb), get barangay & mayor’s permit

Example Calculation (NRANETB Subletter)

Monthly rental income: ₱25,000

Annual gross: ₱300,000

Tax: 25% = ₱75,000 (no deductions allowed)

Net income: ₱225,000

Penalties for Non-Declaration

20% interest + up to 50% surcharge

Risk of blacklisting or visa refusal

Forced closure if done via platform (Airbnb, Booking) without permits

Conclusion: Yes, You Can — But Declare It Right

Subletting as a foreigner in the Philippines is legal if done transparently.
But the Bureau of Internal Revenue (BIR) expects full compliance, especially as online platforms increasingly report earnings.

To avoid legal trouble and keep your investment secure, make sure to:

Get written permissions

Register income sources

File taxes properly

Consider operating through a corporation or registered resident status for better flexibility

Autor: Nils Deden