Capital Gains Tax on Philippine Real Properties

Natural and juridical sellers/ transferors, whether residents or not, including Estates and Trusts, who sell, dispose or exchange real property classified as capital asset, are required to file Capital Gains Tax (CGT) Return and pay a 6 percent tax within 30 days following the transaction.

- HENRY L. YAP, UAP, FPIEP, EAROPH

On the other hand, real properties that are considered ordinary assets (held primarily for sale or used in trade or business, including those acquired by banks through foreclosure sales) are not subject to CGT.

EXEMPTIONS

Entities with existing investment incentives or under special laws; individual or non-individual exchanging real property solely for shares of stocks resulting in corporate control; government entities or government-owned or controlled corporations selling real properties; and those disposing of real property that are gratuitous in nature or pursuant to the CARP law are exempted from paying CGT.

Natural persons who dispose of their principal residence, provided they comply with existing laws, rules, and regulations are conditionally exempted, provided that in case the proceeds are not fully utilized, that portion of the gain presumed to have been realized will be taxed.

HOW CGT IS COMPUTED