BIR Form 2307 for Property Management and Condominium Administration Companies: Management Fee vs Rental Collection

A property owner, condominium corporation, or homeowners’ association that engages a property management or building administration company withholds 2% expanded withholding tax (EWT) on the management fee, under Section 2.57.2(E) of Revenue Regulations (RR) No. 2-98, as amended by RR No. 11-2018 — the same general contractor/business-services bracket this series covers for elevator maintenance and CCTV and security monitoring contracts. This is a different rate and ATC than the 5% rental withholding that applies when an owner itself leases out space.

This guide is part of the BIR Form 2307 series. It covers why a management fee is a 2% contracted service rather than rent, the ATC codes, how rent collection on the owner’s behalf is treated separately, and a worked monthly management-fee example.

Is a property management fee a service payment or rent? #

A property management or condo administration company’s fee is a payment for a contracted business service — day-to-day building operations, maintenance coordination, tenant relations, and administration — not rent, so it falls under the general 2% contractor/business-services item rather than the 5% rental rate. RR No. 2-98 defines the withholding-agent duty broadly enough to cover this engagement regardless of the payor’s own structure:

“(A) In general, any juridical person, whether or not engaged in trade or business; (B) An individual, with respect to payments made in connection with his trade or business…”

— RR No. 2-98, Section 2.57.3(A)–(B)

A condominium corporation paying a professional management firm a fixed monthly fee to run the building, or a commercial building owner retaining a property management company to handle leasing administration and facilities upkeep, is paying for a service under this general bracket — distinct from the 5% rate that applies specifically to rent itself, covered in Withholding Tax on Rent.

What ATC code and rate apply to a property management fee? #

The management fee is withheld at 2%, using the same general contractor/business-services codes this series applies to other contracted building services, depending on whether the management company is individually owned or a corporation.

This is the identical bracket this series documents for elevator and escalator maintenance contractors and other recurring building-service providers — a property manager’s fee is simply another category of contracted service billed on a recurring basis.

Management fee vs rent collected on the owner’s behalf #

When a management company collects rent from tenants and remits it to the building owner, that rent is the owner’s own rental income from the tenant, not a payment the owner makes to the management company — only the management company’s own fee gets the 2% treatment covered above. This distinction matters because mixing the two can lead to under- or over-withholding:

A building owner should not withhold on rent the management company merely passes through on the owner’s behalf — the withholding obligation on that rent, if any, runs between the actual tenant (as payor) and the owner (as payee). The owner withholds only on what it itself pays the management company for its own management services.

Who has to withhold on a property management engagement? #

Any owner, condominium corporation, or homeowners’ association that engages a property management company is a withholding agent on the management fee, including:

• A commercial building owner retaining a management firm to run day-to-day leasing and facilities operations
• A condominium corporation engaging a professional administrator to handle common-area upkeep and dues collection
• A residential subdivision homeowners’ association contracting a property management company for grounds and facility administration

A condo corporation or homeowners’ association remains a withholding agent under RR No. 2-98 Section 2.57.3(A) even if it is itself non-stock, non-profit, or VAT-exempt — its own exempt status does not excuse the duty to withhold on payments it makes to service providers.

Worked example: a condominium’s monthly management fee #

Skyview Residences Condominium Corporation engages Prime Building Management Services, Inc., a property management company organized as a corporation, for a fixed monthly management fee of ₱180,000 covering day-to-day building operations, tenant coordination, and administrative support.

Skyview Residences withholds ₱3,600 — 2% of the ₱180,000 management fee — and remits it through BIR Form 0619-E monthly and BIR Form 1601-EQ quarterly, listing Prime Building Management Services on its Quarterly Alphalist of Payees. If tenants in the building pay rent directly to Skyview Residences through Prime as a collection agent, that rent is Skyview’s own rental income from the tenants and is not part of the ₱180,000 management-fee computation above.

Frequently asked questions #

Does a condo corporation or building owner withhold tax on a property management company’s fee? #

Yes. A property owner, condominium corporation, or homeowners’ association that engages a property management or building administration company for day-to-day management services withholds 2% expanded withholding tax (EWT) on the management fee under Section 2.57.2(E) of Revenue Regulations No. 2-98, as amended by RR No. 11-2018, and issues BIR Form 2307.

What ATC code applies to a property management fee? #

The general contractor/business-services codes apply: ATC WI120 for an individually owned property management business or WC120 for one organized as a corporation, both at 2%, the same codes used throughout this series for other contracted business services.

Is the withholding rate different if the management company also collects rent from tenants on the owner’s behalf? #

Yes, for that separate portion. If the owner itself is the lessor and the management company is merely collecting rent and remitting it to the owner as a pass-through agent, the rent itself is the owner’s own rental income from the actual tenant, not a payment to the management company — the 2% management-fee withholding applies only to the company’s own administration or management fee, not to rent collected and remitted on the owner’s behalf.

Does a homeowners’ association withhold tax even though it may be VAT-exempt or non-stock? #

Yes. A condominium corporation or homeowners’ association is a juridical person and a withholding agent under RR No. 2-98 Section 2.57.3(A) regardless of its own VAT-exempt or non-stock, non-profit status — its own tax-exempt status does not exempt it from the duty to withhold on payments it makes to service providers.

Summary #

A property management or condo administration company’s fee is withheld at 2% (ATC WI120/WC120) as a general contracted business service under RR No. 2-98 — a different rate and code than the 5% rate that applies to rent itself. The distinction that matters is what is actually being paid: the manager’s own administration fee gets the 2% treatment, while rent the manager merely collects and remits on the owner’s behalf stays inside the owner-to-tenant rental relationship. For the rental side of this distinction, see Withholding Tax on Rent: How to Complete BIR Form 2307 for Lessors, and for the broader contractor bracket this management fee draws from, see BIR Form 2307 for Contractors and Subcontractors.