Documentary Stamp Tax on Real Estate Mortgages: NIRC Section 195 Rates — and Why CMEPA Didn't Change Them
A real estate mortgage is a taxable instrument under NIRC Section 195, not Section 179 or the CMEPA-revised debt-instrument rules. DST on a mortgage, pledge, or deed of trust is ₱40.00 for the first ₱5,000 of the amount secured, plus ₱20.00 for each additional ₱5,000 or fraction in excess of that first bracket — a graduated rate untouched by the 2025 CMEPA reform that cut DST on bonds, shares, and other debt instruments.
Explore BIR Online Tools FREE →Section 195: the rate that governs a mortgage, not Section 179 #
A mortgage, pledge, or deed of trust securing a loan on real property is taxed under NIRC Section 195, a graduated per-bracket rate distinct from the percentage-of-issue-price rates used for bonds and debt instruments under Section 179. The mechanics matter because a mortgage isn’t priced as a percentage of the loan the way a bond’s DST is priced as a percentage of issue price — it’s priced in ₱5,000 brackets, which produces a much smaller tax bill relative to the amount secured on larger loans.
The National Internal Revenue Code’s original 1997 wording of Section 195 (before the TRAIN Law doubled the peso figures in 2018) reads:
“On every mortgage or pledge of lands, estate, or property made as security for payment of money… there shall be collected a documentary stamp tax at the following rates: when the amount secured does not exceed five thousand pesos (P5,000), twenty pesos (P20.00). For each five thousand pesos (P5,000), or fractional part thereof in excess of five thousand pesos (P5,000.00), an additional tax of ten pesos (P10.00) is imposed.”
Republic Act No. 10963 (the TRAIN Law), implemented through Revenue Regulations No. 4-2018 effective January 2018, doubled both figures in this same bracket structure: ₱20.00 became ₱40.00 on the first ₱5,000, and the ₱10.00 additional-bracket tax became ₱20.00 per additional ₱5,000 or fraction. That doubled structure — ₱40.00 plus ₱20.00 per additional ₱5,000 bracket — is the rate in effect today.
| Period | Governing rule | First ₱5,000 bracket | Each additional ₱5,000 (or fraction) |
|---|---|---|---|
| 1997 NIRC codal text (RA No. 8424) | Original Section 195 | ₱20.00 | ₱10.00 |
| January 2018 onward | TRAIN Law (RA No. 10963), RR No. 4-2018 | ₱40.00 | ₱20.00 |
Why CMEPA’s DST changes skipped Section 195 #
Republic Act No. 12214, the Capital Markets Efficiency Promotion Act (CMEPA), took effect July 1, 2025 and cut DST on several instrument types — but the BIR’s own implementing regulation lists which sections it touched, and Section 195 is not one of them. RR No. 19-2025, issued August 5, 2025, describes itself as implementing “rate adjustments for DST under Sections 174, 176, and 179” of the Tax Code — original issuance of shares of stock, bonds and certificates issued in a foreign country, and debt instruments generally — plus expanded exemptions under Section 199. It does not list Section 195 among the provisions whose rates changed.
That distinction matters for anyone assuming CMEPA lowered DST across the board. It reduced the debt-instrument rate under Section 179 from 1% to 0.75% of issue price, and made comparable cuts under Sections 174 and 176 — see Documentary Stamp Tax on Bonds, Debt Securities, and Certificates of Deposit for that side of the reform. But a mortgage, pledge, or deed of trust is priced under the separate, bracket-based Section 195, which CMEPA’s rate cuts did not reach — the ₱40.00/₱20.00 structure set by the TRAIN Law in 2018 remains the operative rate for real estate mortgages in 2026.
RR No. 19-2025 does mention Section 195 once, but for a different purpose: Section 6 of the regulation clarifies which provision applies — and how many times DST is owed — when a loan and its mortgage security are documented together, not to change the rate itself. That clarification is covered next.
One instrument, one tax: a loan and its mortgage security #
Where a loan agreement and its mortgage security are combined into a single document, RR No. 19-2025 confirms that instrument is taxed once, under Section 195, on the full amount of the loan or credit granted — not once as a loan agreement and again as a mortgage. This “one instrument, one tax” principle prevents DST from stacking simply because a transaction happens to touch more than one taxable category.
Two scenarios come up in practice:
- A single combined instrument. If the loan agreement, promissory note, and mortgage are executed as one document, RR No. 19-2025 treats it as covering one taxable transaction, with DST computed under Section 195’s graduated rate on the full loan amount.
- Separate but simultaneously executed documents. If the loan agreement and the mortgage are prepared as separate instruments but signed at the same time to secure the same obligation, only one documentary stamp tax applies to the transaction — whichever provision (the loan-agreement rate under Section 179 or the mortgage rate under Section 195) yields the higher tax governs.
This rule protects a borrower and lender from being assessed DST twice on what is economically a single financing transaction, while still making sure the higher of the two applicable rates is the one actually collected.
Worked example: DST on a ₱3,000,000 mortgage loan #
A homebuyer or SME securing a ₱3,000,000 loan against real property owes ₱12,020 in documentary stamp tax under Section 195’s graduated structure — a small fraction of the loan amount because the tax is bracketed, not a flat percentage. Working through the computation step by step shows how the ₱5,000 brackets add up on a real-world loan size.
| Step | Calculation | Amount |
|---|---|---|
| Loan (amount secured) | — | ₱3,000,000 |
| Tax on first ₱5,000 | Fixed | ₱40.00 |
| Remaining amount subject to additional tax | ₱3,000,000 − ₱5,000 | ₱2,995,000 |
| Number of additional ₱5,000 brackets | ₱2,995,000 ÷ ₱5,000 | 599 brackets |
| Additional tax | 599 × ₱20.00 | ₱11,980.00 |
| Total DST due | ₱40.00 + ₱11,980.00 | ₱12,020.00 |
At ₱12,020 on a ₱3,000,000 mortgage, the effective DST rate works out to roughly 0.4% of the loan amount — well below the 0.75% CMEPA rate that now applies to bonds and debt instruments under Section 179, underscoring why it matters which section actually governs a given instrument. A borrower or loan officer who mistakenly applies the 0.75% debt-instrument rate to a straight real estate mortgage would overstate the DST due by nearly double.
Filing: BIR Form 2000-OT, five-day deadline #
DST on a mortgage, pledge, or deed of trust is filed and paid using BIR Form 2000-OT, the return for one-time DST transactions, within five days after the close of the month the instrument was made, signed, issued, or accepted. Under NIRC Section 173, liability for the tax falls on whoever makes, signs, issues, accepts, or transfers the taxable document, and that liability is joint and several between the parties — though loan and mortgage contracts commonly assign the cost to the borrower as a condition of the loan. For the mechanics of completing BIR Form 2000-OT itself, see Documentary Stamp Tax and BIR Form 2000.
A real estate mortgage is a distinct instrument from a deed of sale transferring the property outright — DST on an actual sale or transfer of real property follows a different set of rules under NIRC Section 196, covered in Documentary Stamp Tax on a Deed of Sale of Real Property. A mortgage taken out to finance a purchase and the deed of sale transferring title on that same property are two separate taxable transactions, each computed under its own section of the Tax Code. Buyers weighing the full tax cost of a property purchase — DST, capital gains tax, and local transfer taxes together — may also find Capital Gains Tax vs. Real Property Tax useful for the property-holding side of that picture.
Frequently Asked Questions #
What is the DST rate on a real estate mortgage under NIRC Section 195? #
Documentary stamp tax on a mortgage, pledge, or deed of trust is ₱40.00 for the first ₱5,000 of the amount secured, plus ₱20.00 for each additional ₱5,000, or fractional part thereof, in excess of the first ₱5,000. This graduated rate has applied since the TRAIN Law (Republic Act No. 10963) doubled the previous ₱20.00/₱10.00 figures effective January 2018, and it remains the current rate.
Did CMEPA (RA 12214) change the DST rate on mortgages? #
No. Based on Revenue Regulations No. 19-2025’s own list of amended provisions, the Capital Markets Efficiency Promotion Act adjusted DST rates under NIRC Sections 174, 176, and 179 (shares of stock, foreign-issued bonds and certificates, and debt instruments) and expanded exemptions under Section 199 — Section 195 on mortgages, pledges, and deeds of trust is not among the sections CMEPA’s rate cuts touched, so the ₱40.00/₱20.00 graduated rate stands.
Who is liable to pay DST on a mortgage — the borrower or the lender? #
Under NIRC Section 173, liability for documentary stamp tax falls on whoever makes, signs, issues, accepts, or transfers the taxable instrument, and that liability is joint and several between the parties to it. In practice, loan and mortgage contracts commonly assign the cost to the borrower, but the BIR can pursue either party if the tax goes unpaid.
If a loan agreement and a real estate mortgage are in separate documents, is DST paid twice? #
Not on the full amount twice. Revenue Regulations No. 19-2025 clarifies that where a loan agreement, promissory note, and mortgage or pledge covering the same obligation are simultaneously issued and executed, only one documentary stamp tax applies to the transaction, computed on whichever provision yields the higher tax. Where a single instrument covers the loan and its mortgage security together, Section 195’s graduated rate applies to the full amount of the loan or credit granted.
When and how is DST on a real estate mortgage filed and paid? #
DST on a mortgage, pledge, or deed of trust is filed and paid using BIR Form 2000-OT, within five days after the close of the month in which the instrument was made, signed, issued, or accepted. The form and payment are typically filed at the Revenue District Office that has jurisdiction over the property or the transaction.
Summary #
A real estate mortgage is taxed under NIRC Section 195’s graduated bracket rate — ₱40.00 on the first ₱5,000 of the amount secured, plus ₱20.00 per additional ₱5,000 or fraction — a rate the TRAIN Law doubled in 2018 and that CMEPA’s 2025 DST reform, per RR No. 19-2025’s own list of amended sections, left unchanged. On a ₱3,000,000 mortgage loan that works out to ₱12,020 in DST, filed on BIR Form 2000-OT within five days after month-end. Where a loan and its mortgage security are documented as one instrument, or executed simultaneously as separate documents, only one DST applies to the transaction — not one for each document.