Why You Can't Just Buy a House Here
The 1987 Philippine Constitution restricts land ownership to Filipino citizens (or corporations at least 60% Filipino-owned), full stop, regardless of your visa status, years of residence, marriage to a Filipino citizen, or investment amount. Republic Act No. 4726, the Condominium Act, created the one meaningful exception: foreigners can own condominium units, provided the building as a whole doesn't exceed 40% foreign ownership.
How the 40% Rule Actually Works
The cap is measured at the project level, not the unit level: across an entire condominium development, foreigners collectively may own at most 40% of total floor area, with Filipino citizens holding at least 60%. Once a project hits that ceiling, no further units can legally be sold to foreign buyers, regardless of how much money is on the table. Ownership is recorded via a Condominium Certificate of Title (CCT), the land itself remains under the condominium corporation, which must maintain the 60-40 ratio.
Confirm the Ratio Before You Sign
Reputable developers disclose current foreign ownership percentage on request, and it's standard practice to verify this before signing a reservation agreement, not after. A project marketed heavily to foreign buyers (common in resort areas and Manila's business districts) can approach its cap faster than expected.
Alternatives: Long-Term Lease and Corporate Structures
Foreigners can lease land for up to 50 years (renewable for another 25) as an alternative to ownership, common for those building a custom home rather than buying a condo unit. Marrying a Filipino citizen doesn't grant the foreign spouse land ownership rights either, land purchased during the marriage is typically titled solely in the Filipino spouse's name, a distinction worth planning around carefully with a local attorney, not assumed.
US Reporting on the Purchase and Any Rental Income
A condo purchase itself isn't a US reportable event, but the foreign bank account used to fund and hold proceeds from it is, factor it into your FBAR and FATCA calculations. If you rent the unit out, that income is reportable on Schedule E of your US return regardless of Philippine tax treatment, with US depreciation rules applying rather than Philippine ones.
Worked Example: A Manila Condo Investment
An American SRRV retiree buys a $150,000 condo unit in a Makati development, confirming beforehand that the project's foreign ownership sits at 32%, leaving room under the 40% cap. He rents it out for $900/month while living elsewhere in the Philippines. The rental income is reportable on Schedule E on his US return, and the purchase itself required no FIRB-equivalent approval since the Philippines doesn't operate an approval-board system like Australia's, just the structural 40% building-wide cap that his lawyer verified before he signed.