In this guide
- What is Capital Gains Tax?
- How it's computed
- When it's due
- Principal residence exemption
What is Capital Gains Tax?
CGT is a 6% tax on the gross selling price or fair market value (whichever is higher) of capital assets — including residential properties not used in business.
How it's computed
CGT = 6% × (higher of selling price, zonal value, or assessor's FMV). For example, if you sell a property for ₱5M but the zonal value is ₱5.5M, the CGT is computed on ₱5.5M = ₱330,000.
When it's due
CGT must be paid within 30 days of the sale. File at the BIR Revenue District Office (RDO) where the property is located. Late filing attracts a 25% surcharge plus interest.
Principal residence exemption
If the property is your principal residence and you reinvest the proceeds in a new principal residence within 18 months, you can apply for CGT exemption. You must notify the BIR within 30 days of the sale.
Quick Tips
- ★ CGT is typically paid by the seller — but this is negotiable.
- ★ Always include CGT computation in your initial sale negotiations.
- ★ Consult a tax professional for the principal residence exemption.
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