Capital Gains Tax is one of the major taxes involved with real estate, and we’ll cover the essentials below.
Introduction
Taxes are indeed inescapable and the real estate industry is no exception. I am sure a lot of real estate investors are very much interested to know the taxes involved in investing as they significantly impact the total cost of acquiring a property.
What may seem like a good deal may turn out to be a bad one, if all the taxes are factored in. So before you go ahead and plunge into the world of real estate investing, I suggest you take the time to study taxes. For this post, I will be discussing capital gains tax on real estate.
I’ll try to discuss capital gains tax on real estate in layman’s terms, based on what I have learned, for purposes of information-sharing. A disclaimer is in order of course: While great effort has been taken to ensure the accuracy of the discussion here as of its writing, this is not intended to replace seeking professional services. Do read up on the relevant laws and regulations also.
Capital Gains Tax vs. Income Tax
When there is a sale of real estate, automatically people think that they have to pay Capital Gains Tax (CGT). This is not necessarily the case. CGT is a tax on the gain from the sale of capital assets. Regular corporate income tax (RCIT) [for corporations] and regular income tax [for individuals] apply to the sale of ordinary assets while CGT applies to the sale of capital assets.
Thus, we first have to determine whether the asset being sold is a capital or an ordinary asset so as to know the proper tax rate to be used and the BIR form to be used, among others.
Capital assets vs. Ordinary assets
The term “capital assets” is defined negatively in Section 39(A)(1) of the Tax Code as follows:
“(1) Capital Assets. – the term ‘capital assets’ means property held by the taxpayer (whether or not connected with his trade or business), but does not include
• stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or
• property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business, or
• property used in the trade or business, of a character which is subject to the allowance for depreciation provided in Subsection (F) of Section 34;
• or real property used in trade or business of the taxpayer.”
As applied to the real estate industry, the terms “capital assets” and “ordinary assets” are defined in Section 2(c) of Revenue Regulations (RR) No. 7-2003 dated December 27, 2002. It’s essentially the same as the above definition.
It has an additional provision, though, on real properties acquired by banks through foreclosure sales – the same are considered as their ordinary assets but banks shall not be considered as habitually engaged in the real estate business for purposes of determining the applicable rate of expanded withholding tax.
Since we are talking about the sale of real property here, we need to know the definition of “real property”. Section 2(c) of RR No. 7-2003 states that “Real property shall have the same meaning attributed to that term under Article 415 of Republic Act No. 386, otherwise known as the “Civil Code of the Philippines.” Article 415 of the Civil Code provides:
“Art. 415. The following are immovable property:
(1) Land, buildings, roads and constructions of all kinds adhered to the soil;
(2) Trees, plants, and growing fruits, while they are attached to the land or form an integral part of an immovable;
(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object;
(4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on lands by the owner of the immovable in such a manner that it reveals the intention to attach them permanently to the tenements;
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works;
(6) Animal houses, pigeon-houses, beehives, fish ponds or breeding places of similar nature, in case their owner has placed them or preserves them with the intention to have them permanently attached to the land, and forming a permanent part of it; the animals in these places are included;
(7) Fertilizer actually used on a piece of land;
(8) Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters either running or stagnant;
(9) Docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast;
(10) Contracts for public works, and servitudes and other real rights over immovable property.”
Thus, it appears that it is not only the sale of land and buildings or houses which we should be focusing on, but also the sale of the above.
As RR No. 7-2003 is a very important rule on real estate, I have included the said regulations in this post for your reference. Read it in its entirety. You may download a copy here. Answers to frequently asked questions can be found in this document.
In simple terms, if the property is not ordinarily held for sale (as inventory) or used in business and subject to depreciation, then the property is a capital asset. Now, if a seller is engaged in the real estate business, and the property is one he holds out for sale to the public, then the property may be considered as an ordinary asset.
[Note that there may be instances when a seller is engaged in the real estate business but the property is not held for sale or used in business or was idle for a long time – this is one of the instances when the property may be considered a capital asset.]
Conversely, if a seller is not engaged in the real estate business, and the property is not used in business and subject to depreciation, the property may be considered as a capital asset, the sale of which is subject to CGT.
Section 3 of RR No. 7-2003 provides the Guidelines in Determining Whether a Particular Real Property is a Capital Asset or Ordinary Asset.
Tax Rate to be Used
When the real property which is a capital asset to the seller is sold, the gross selling price or fair market value (FMV) [zonal value], whichever is higher, will be subject to 6% CGT. Please refer to the BIR website http://www.bir.gov.ph/index.php/zonal-values.html for the zonal values.
Technically, it’s not really only the gain (selling price less cost) which is taxed, because even if the seller suffered a loss (that is, the selling price is lower than the original acquisition cost of the property), there will still be CGT, because a gain is always presumed.
On the other hand, if the seller is engaged in the real estate business, and the real property sold is an ordinary asset, the sale will be subject to RCIT [or minimum corporate income tax (MCIT), when applicable] if the taxpayer is a corporation and income tax if the seller is an individual.
The proceeds from the sale of the real property will be included in the seller’s global income (meaning income from all sources – note that domestic corporations and resident citizens are taxed on all sources of income, whether from within or outside the country) and only the net income, after allowable deductions such as depreciation, losses, etc. will be subjected to RCIT, MCIT, or regular income tax, whichever is applicable.
Under Republic Act No. 9337, the RCIT is now 30% on net taxable income (beginning on January 1, 2009, down from 35%). The regular income tax for individuals remains at 32%.
Please note that there is an exception to the application of the CGT, and that is the sale of a principal residence (your own home). This deserves a separate discussion as I intend to take advantage of this when we purchase our next residence.
BIR procedure
Assuming that you are interested in buying a property from a seller who is an individual and who is not engaged in the real estate business, the seller needs to pay CGT on the sale of his real property, unless you have made an agreement that you as the buyer will shoulder this.
The seller needs to file BIR Form No. 1706 within thirty (30) days after each sale, exchange, transfer or other disposition of real property. You can download BIR Form No. 1706 here.
Documentary Requirements
1 ) One original copy and one photocopy of the Notarized Deed of Sale or Exchange
2 ) Photocopy of the Transfer Certificate of Title; Original Certificate of Title; or Condominium Certificate of Title
3 ) Certified True Copy of the tax declaration on the lot and/or improvement during nearest time of sale
4 ) “Certificate of No Improvement” issued by the Assessor’s office where the property has no declared improvement, if applicable or Sworn Declaration/Affidavit of No Improvement by at least one (1) of the transferees
5 ) Copy of BIR Ruling for tax exemption confirmed by BIR, if applicable
6 ) Duly approved Tax Debit Memo, if applicable
7 ) “Sworn Declaration of Interest” as prescribed under Revenue Regulations 13-99, if the transaction is tax-exempt
8 ) Documents supporting the exemption
Additional requirements may be requested for presentation during audit of the tax case depending upon existing audit procedures.
How to Pay and File the Capital Gains Tax Return
You just have to file the Capital Gains Tax return in triplicate (two copies for the BIR and one copy for the taxpayer) with the Authorized Agent Bank (AAB) in the Revenue District where the property is located, along with the documentary requirements and the tax due.
In places where there are no AAB, the return will be filed directly with the Revenue Collection Officer or Authorized City or Municipal Treasurer. You can view the Revenue District Offices (RDO) here: http://www.bir.gov.ph/directory/rdo.htm. Click on the concerned RDO.
For example, if you click on RDO 48 – West Makati, you will get to http://www.bir.gov.ph/directory/rdoinner.htm#48. The names of the Revenue District Officer and Assistant Revenue District Officer as well as their contact numbers and e-mail addresses, and the address of the Revenue District Office and the AAB’s within the said RDO may be found there.
Sample CGT computation
A residential condominium in Makati City with a floor area of 50sqm has a Selling Price (SP) of 1.0M. The existing zonal value per square meter for that condo in Makati is currently Php50,000/sqm. You have called the owner and found out that he is not engaged in the real estate business.
He also told you that as part of the deal, the buyer shall shoulder the CGT. As the buyer, how much is the CGT which you will have to pay the seller on top of the selling price?
First let’s compute for the Fair market Value (FMV):
FMV=Zonal Value x Floor Area
=50,000 pesos/sqm x 50sqm
=2,500,000 pesos
Since FMV is higher than SP, we shall use FMV to compute the CGT:
CGT=6% x FMV
=0.06 x 2,500,000 pesos
=150,000 pesos
Therefore, the buyer shall have to shell out an additional 150,000 pesos.
Note that while technically, the CGT is always the responsibility of the seller, and that if the buyer shoulders the CGT, it is in effect part of the selling price to be compared to FMV for purposes of computing the 6% CGT, I noted that the practice of banks is to compute the CGT this way.
Now, what if you called up the seller and told him that you are willing to buy the property but he should shoulder the capital gains tax as the seller, then he counters your offer and says he is willing to shoulder the CGT up to his selling price and the buyer shall shoulder the CGT for the excess or the difference between the SP and FMV, how do you compute for the CGT?
First, let’s compute for the excess or difference between the SP and the FMV:
Excess=FMV-SP
=2,500,000pesos – 1,000,000pesos
=1,500,000 pesos
Now, let’s compute for the CGT to be shouldered by the buyer:
CGT for the buyer =6% x Excess
=0.06 x 1,500,000 pesos
=90,000 pesos
The CGT to be shouldered by the seller is as follows:
CGT=6% x SP
=0.06 x 1,000,000 pesos
=60,000 pesos
Take note that the total CGT is 90,000 pesos + 60,000 pesos = 150,000 pesos, which is consistent with our first computation. The CGT was just split between the buyer and the seller.
As investors, we should always try to negotiate for the best terms and in relation to this particular example, always try to have the other party shoulder the CGT.
The seller will still be the one to file the CGT and he shall have to file the return in an Authorized Agent Bank within the Revenue District where the property is located in Makati, within 30 days the deed of sale was executed.
Capital Gains Tax Calculator
Conclusion
The BIR website (http://www.bir.gov.ph) has a wealth of information on taxes. Refer to it from time to time. The BIR also has a 24-hour contact center (Telephone number 981-8888) and you can call them if you have any questions.
You may also e-mail them at [email protected]. You can also ask me through the comments section and I will do my best to research the answer.
In my next posts, I will be discussing Value-Added Tax (VAT), expanded withholding taxes (EWT) a.k.a. creditable withholding taxes (CWT)**, Real Property Taxes (RPT), Transfer Taxes (TT), CGT on the sale of a principal residence, and estate taxes (as I am sure many of you are also interested in transferring your properties to your heirs in the future – remember, aside from taxes, death is certain too).
Let me know, through the comments section , if you have any other taxes you would like to know about, or if there’s anything you would like to have any clarification on.
In closing, please remember that as an investor, one should always consider the capital gains tax in real estate transactions. Failure to do so could mean your real estate capital gains will just get eaten up by the corresponding capital gains tax and turn what looked like a good deal into a bad one.
Till then, happy investing!
*This article was originally authored by Jay Castillo but was written mostly by his wife Cherry Vi Castillo, who is a certified public accountant, lawyer, licensed real estate broker/appraiser. Authorship has been turned-over to Cherry so she can update this article as needed. 🙂
Hi Jay,
Can you please enlighten me, my wife is the land owner and went into mutual agreement with a developer, there is no registered joint venture agreement filed. The land being developed are for sale in term payments. There is a mutual agreement of sharing of sales between my wife & the developer out from the project. The titles of the lots being sold are under my wife’s name though my wife is not engage as developer nor licensed real property dealer. There are lot buyers who completed the their terms of payments and wanted the titles transferred to their names and some of the buyers are still on terms. What kind of tax applicable to my wife. Is it Capital Gains tax for full paid buyers and VAT for lot buyers still on terms. Thank you…
May portion ng aming property na tinamaan ng road widening. Exempted po ba ito sa Capital Gains Tax since government ang gumamit at magbabayad? Meron kasing nagsasabi na di na daw dapat magbayad ng CGT pero ang DPWH mismo ang sabi ay dapat magbayad ng CGT.
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Good day!
I would like to know if the 25% rule on the CWT is applicable on the capital gains (CGT) to individual not engaged in trade or business on real estate.
The nature of transaction, the property will be sold at 20% down payment and the balance will be payable in 36 monthly installments. However before the year ends the total expected amount to be paid will reach to 42%. May I know how and when are we going to pay the capital gains tax?
Hope to learn from your advice.
Thank you and regards.
Thank you and regards.
Hello Jay!
Just a question. Am purchasing a residential unit worth P425,000, is 6% fixed for CGT in all parts of the PH? I was informed by my mom that when she bought our lot, she used to pay a 14% CGT that’s around 12 years ago. And let’s say I, the buyer shoulders the CGT instead of the seller, then the Selling Price that I should enter in the Deed of Absolute Sale (DoAS) is:
P425,000.00 x 6% = P25,500.00
P425,000.00 + P25,000.00 = P450,000.00
Also, let’s say that I will purchase this residential unit via PAGIBIG/Bank Financing, are they the one shoulder all these expenses (CGT, DST, etc.)?
Am I right? Thanks again for your site. It’s very informative! =) God Bless and may you continue helping us.
Hi Jay thank you for the informations here on your link. I would like to ask if CGT is applicable for selling house and lot that is not fully paid yet under pagibig? what are the other charges ?if theres any. Thanks and God Bless
Hi jay, Thanks for the informations … I would like to know if the CGT is still applicable if your selling the house and lot which is not fully paid under pagibig, and what other charges is applicable for this situation. Thanks God Bless
hi sir,
i sold 2 parcels of lot in the province in 3 years installment. i sold it @ 1.7M, and the buyer told me to pay the CGT. was it fair enough for me to pay for it. pls, im looking forward for the answer of my querries because i have no knowledge at all about the selling process. thank you
it is usually the seller’s obligation to pay the capital gains tax (cgt). i say ‘usually’ because there are also cases where the buyer pays for cgt, but this only happens upon tacit agreement by both parties.
hope that helps.
Hi Jay,
I was wondering if you ever found out the answer one of the question way back by the name Susan .Bec.I am exactly on the same situation right now.Your responded will be greatly appreciated.Below is Susan question:
Hi Jay,
I have a question regarding conditional exemption of Final Capital Gains Tax when it is used to acquire another principal residence within 180 days.
My question is whether you can still avail the exemption if the sequence is reversed – when you “Buy First, then Sell Later”?
SITUATION:
==========
A “Contract to Sell” has been signed for a pre-sell condominium. Payment has been made through monthly amortization. Upon close to turnover, a decision was made to sell the primary residence. Let us assume the “Contract of Sale” for the new residence was done *after* the disposition of the primary residence, however both “Contract to Sell” and amortization payments for the new residence have occurred prior to the sell of the old property.
In this situation, can you still avail of Final Capital Gains exemption? Is there any special watchout &/or procedure given the reverse order of the transaction? Thanks!
Your perspective much appreciated!
Hi Ed, I’ll refer this to my wife Cherry and we’ll get back to you as soon as possible…
Thanks Jay!
Hi Jay
If I buy a pre-sale condominium that turns over only in 2015, current payment scheme is 20 percent amortised from now till 2015, if I sell the property before the turnover, will there be CGT?
Thanks!
how can I compute for RCIT?
Good day,
Ask ko lng po how much po i pay to bir if the lot is 4799sq.m. And the deed of sale is 150,000. I need the computation. Pls. Help me.
Gusto ko sana malaman ang total cost. Marami pong salamat at sana matulungan ninyo po ako
capital gains tax is 6% of the amount stated in the deed of sale. therefore:
150,000 * .06 = 9,000
hope that helps.
Jay,
I am a Fil-American living in California and doing business in California. I have been retired and drawing pension and I am planning on buying a house and lot in the Philippines after I close my business in some 2-3 years. I understand a foreigner are not allowed to own properties in the Philippines, but I am planning to register it in someone’s else name. I would like your opinion on the matter and the best property to invest on, a house and lot or a condo. Your suggestions will be much appreciated.
G N Arrivas
Hi G N. I’m concerned that if you buy a property and have it registered with someone else, you have no protection whatsoever, unless you treat this as a loan and the property is mortgaged to you. Condo’s would be a good alternative as foreigners can own up to 40% of the units in a condo project.
sir Jay, hope you can clarify a few things for me regarding CGT:
1) let’s assume that the seller wants a net amount of 3M for his property, and adds the CGT in his selling price, should the amount on the deed of sale be 3,180,000 or still 3M?
1a) if 3,180,000, wouldn’t the BIR use that as the tax base instead and the CGT to be due will now become 190,800 instead of 180,000?
1b) if 3M on the deed of sale, would it be okay to inform the buyer that the additional 180,000 will be paid as CGT but will not reflect on the deed of sale?
2) I just want to make sure: the seller will still have to file and pay the CGT with the BIR even if the buyer agrees to shoulder the CGT? are you saying the buyer gives the 180,000 to the seller outside of the 3M so the seller will still pay to the BIR?
thanks!
Hi Jon, thanks for the question!
To get the gross selling price, it should be PHP3,000,000/0.94 which would be equal to Php3,191,489.36
CGT would then be 6% of Php3,191,489.36 and would be equal to Php191,489.36
The resulting net selling price would then be Php3,191,489.36 less Php191,489.36 which is equal to Php3,000,000.00 🙂
The gross selling price which is equal to Php3,191,489.36 should appear on the Deed Of Sale and this will be the tax base used and is the actual total amount the buyer will pay the seller. Just let me know if you need further clarifications.
thanks very much sir Jay!
Hi! Jay, Thanks a lot for that info. Please,do post the BIR Memo if ever u find it. My Tito wanted me to ask u, if this is a New Law? And if since when daw po naging epektibo? Jay, this will help Us a lot. Thank u So Much Jay. More Power to ur Blog and Blessed Day ahead.
Hi Kols, you’re welcome! I also found the memo (Revenue Regulations 9-2012) in the 2012 Revenue Memorandum Circulars page at BIR’s website(http://www.bir.gov.ph/iss_rul/cir2012.htm). Based on that page, it took effect last March 14, 2012. Revenue Regulations (RR) 9-2012 states the taxability (CGT/CWT/DST/VAT) of involuntary sales (ex. tax delinquent properties sold through a tax foreclosure sale). Here’s a direct link to RR 9-2012: ftp://ftp.bir.gov.ph/webadmin1/pdf/63972RR%20No%20%209-2012.pdf
If ever it will be subjected to CGT, which one to be use? Will it be the FMV or the Bidding Price? Thanks again Jay! God Bless!
Hi Kols, whichever taxbase would be higher should be used. 🙂
Hi! Jay, ask ko lang po kung yun po bang Tax Deliquent Properties that was Auctioned by the Municipal Treasurer, will still be Subjected to Capital Gain Tax?? I talked to One BIR employee kasi and he told me yes. And yet another BIR employee of different Branched told me No. Same with the employee of Treasury. And also with both Attys. That i consulted has a very conflicting yes and No advised. So it was confusing on my part already. Hope you can enlighten me on this. Thank you Jay! More Power and God Bless!
Hi Kols, a friend of mine recently found a “memo” from the BIR that says Tax Delinquent Properties are now subjected to CGT. I’ll look for that “memo” and post it here, if I find it.
Hi Sir Jay,
I am newbie in real estate industry and I would like to ask if CGT applies when a client who is fully paid in his condo unit would like transfer his right to another buyer? This unit is not yet turn-over to him.
*turn over date is dec 2012
Thank you.
Hi J.I., as far as I know, if it is a transfer or assignment of rights, it is not really a sale, as they will most likely use a Deed Of Assignment (NOT a deed of sale), so it is not covered by CGT. I believe however that there will be applicable transfer fees and also income tax if the transfer has a mark-up. When in doubt, a visit at the ONETT or the officer of the day at the nearest BIR office should clear this up. 🙂
Hello
Paano kung senior citizen yung seller? May discount ba or tax exemption sa CGT?
Hi Jay,
My parents in law executed a Deed of Absolute Sale in favor of me and my husband. We did not have the title transferred to our name as we planned to sell it eventually; and that moment came now.
Had this transaction been a cash sale, there would be no problem. However, the buyer will enter into an Contract to Sell with us. Question— Can a Deed of Assignment by my in laws cover us for the CTS we plan to enter into with our buyer?
I’m also contemplating on making my in laws be the party to the CTS and we’ll just open a joint account with them to access the payment of our buyer but I’m worried about the complications in case of death. Obviously, the idea is to avoid paying the CGT more than once.
Hope you can enlighte me. Thank you so much and more power!
Hi sir Jay,
I have a question of our current situation,
Our company buy a Land from FILINVEST LAND INC. by installment basis and we are belong to the top 20,000 corporation, are we required to withheld 1% withholding tax from this transaction? Please help me..
Thank you..
sir jay its me hanz, question lang po
a friend of mine is selling his own residencial house, would it be subjectable to cgt? ako kasi kinuha nya broker, prc na din po me, yet nd lang clear sakin etong part na ito pag sarili mo nang residencial house binebenta mo ty hope for a quick reply
Hi Hanz, congrats for passing the brokers exam!
Yes, the sale of a residential house is subject to CGT, which is 6% of the selling price, or zonal value, whichever is higher.
Good luck!
What are the taxes payable to BIR in case of gain on sale sale of rental property (an 8 door apartment). The building is almost fully depreciated so does that mean the whole selling price is treated as gain?.
If so is the gain from sale subject to income tax and the sale price subject to capital gain tax too?.
Your prompt response is greatly appreciated.
Only one tax will apply. For the case you mentioned, since it’s used for rental, it is an ordinary asset and therefore subject to income tax.
Very interesting!
Have a question. I own a 248 sq.m. lot. Right next to my lot is my brother’s 250 sq.m. lot. We decided to exchange lots: he gets my 248 sq.m. lot and I get his 250 sq.m. lot and we executed a deed of exchange of real properties. No money or purchase price was paid to one another. Is the exchange subject to payment of CGT or is it exempt?
I really appreciate your very informative site. God Bless you !!!
I just have a quick question . . . . If I am an individual who is about to buy a real estate property from a corporation and the said property is considered as their ordinary asset, the corporation will have to pay 12% VAT for the sale, right?
Upon transfer of the property to me, can is still become my capital asset. (im not involved in any real estate business, etc) I am just buying the property for my future use as residence or office.
Please advise.
Jay,
This is very helpful sa mga taong may tanong about sa CGT like me. I learned a lot already medyo late nga lang kasi na buy ko na yung property ko. paid ko na sya last year pa pero ngayon pa lang nila na release ang mga papers na kailangan ko and isa pa ako pinag babayad nila ng CGT. may habol pa ba ko na sila pag bayarin ko kasi wala naman silang sinabi sakin noon. Alam mo ba Sycamore Venture? sila ang may ari ng property pero nagtataka lang ako wala silang website at gmail ang email ng secretary nila na contact ko. nayari yata ako.
than’x,
mel
hello jay,
i bought a house and lot in dasmarinas cavite 10 years ago for 750kphp and was not able to pay the CGT up to now. what is the consequence? and how much will i have to pay now?
thanks
worried guy
Jay, i would like to thank you for giving a very us a informative information. Regarding ‘TAX’.
Hi Jay, thanks a lot, this was been very helpful in my real estate review., hope you can site more computation example. and post topics on creditable withholding tax and expanded withholding tax.
Hi:
As for the mistake in paying CGT instead of creditable withholding tax, you can request the BIR to simply amend your return to treat the CGT as CWT. Instead of refunding which takes a long time. CGT is a final tax, meaning you do not have to include your gain in the sale of the real estate in as income for income tax purposes whereas, CWT can be applied for payment of income tax. Unused or the excess of partly used CWT can be refunded.
For free real estate tax advice, please email me at [email protected]. Thanks.
how to compute for the penalty of CGT? the sale was notarized April 2006. it’s only now that we are filing
Hi:
I would like to add that if the buyer agreed to shoulder the capital gains tax. The tax will be added as part of the price. In your example, if the 50 sqm condo is sold at P50K/sqm or P2.5 million. The CGT of P150k will be added to the selling price because the tax is considered part of the price and the tax would be 6% (2.5M + p150k) or P159K = CGT. (But then this will become endless computation because you have to add the P159k to the SP and the CGT ad infitum)
If I sell my house and use the funds buy another property for personal dwelling, do I still have to pay CGT in 30 days?
I have a friend who now holds German passport. She bought a condo unit a year ago, (still under construction) from a previous buyer who left the Philippines. My friend and husband while they were the buyer, want to have the title made in the name of a daughter whom they really intend to own the property. The condo unit will be delivered already in the first qtr of coming year, during which time, they want the title already made in the daughter’s name, not theirs.
Do they have to pay CGT granting they paid Php8M as 80% of the cost, leaving the 20% still to be paid. Ler us assume the surface area of the unit is 200sqm. How much would they have to pay? She is asking for my help about this info but I am also not that well-informed on the subject matter. I would really appreciate your help
Hello, just want to ask for help, I have this condo unit which I already paid in full. But I want to transfer the name of the unit to my mother. Should I pay for the Capital Gains Tax since the developer told me that I will be the one to pay for that tax even if the CCT is not yet on my name it is under the developer name up to now.
hoping for your answer. thanks
Hi..nkabili ako ng land 600 sqm 1 yr ago. ung mom ko ang nkipag deal sa seller and i ended up paying the CGT. question, until now in process prin ung pag pptitle ko sa land. may tax p b ako na bbyaran?
thanks
Very well said. The information of the post is very essential especially to first time real estate investors.
Hi Jay,
I was hoping to buy foreclosed properties from banks. My contacts in BIR claim these are still vatable transactions. Could you please supply me the ruling DA-216-07?
I purchase and a condo unit recently, then sold it to a friend after 28 days under Transfer of Rights. then he also sold it another friend after 25 days to his cousin and so forth>>>How many times can it be done without the CGT to be paid as it must be done only once for the condo.>>>>>>
Purchase of condo ” is it better under personal name or company name for taxes purposes, resale purpose, loan purpose etc>>>>
Hi, thanks for the very helpful info. I’ve a question regarding the computation of Capital gain. In the example above the, the FMV is higher than the SP, how about if the SP is higher than the FMV? the figures are shown below:
4,200 /sqm (ZV) x 179sqm (Lot) + 400,500 (building price)
=1,152,300 – 2,000,000 SP
SP is higher than FMV?
how do we compute for the capital gain of this? thank you in advance…. :p
JAY,
GOOD DAY, MAY HOUSE & LOT KASI AKONG BIBILHIN SA TAO LOCATED SA IMUS PUMAYAG SIYANG IPINASOK NAMIN SA PAG-IBIG,
APPROVED NA SIYA KAYA LANG ANG ADVICE NILA IS TO HAVE AN ESTIMATE SA LAHAT NG BABAYARAN. SINUBUKAN NA NAMIN MAGPA-ESTIMATE KAYA LANG DI ACCOMODATING YUNG MGA TAO SA REGISTRY OF DEEDS, BAKA KAKO ALAM MO YUNG MAARING GAGASTUSIN NAMIN.
630K YUNG NAPAGKASUNDUAN NAMIN PRICE NG PROPERTY,
BIGYAN MO NAMAN KAMI NG ESTIMATE NG CAPITAL GAIN TAX, DOCUMENTATY STAMP, TRANSFER TAX AT ANNOTATION FEE
THANKS IN ADVANCE!
MARY ANN
hi jay, please educate me regarding assume balance scheme. i am a newbie in real estate investing and i am trying to learn more about it. i have a question regarding “assume balance” scheme. what taxes are involved when a buyer simply assumes the monthly amortization? is it only the doc stamps? how about transfer fees?
please advise.
thanks!
hi, jay.
i’m going to purchase a property from a seller. the seller would apply for the capital gains tax exemption since he’s using the proceeds to buy a new property. i was advised to pay for the doc stamp and the rest and to transfer the title to my name on our own. my question is that, with deed of absolute sale on hand, can i process the transfer of title to my name even if he didnt pay the capital gains tax and apply for the exemption on his own. can i proceed with the transfer? or should i wait for any document from him after he applied for the exemption before i can apply for CAR from BIR in order to continue processing the transfer of title. can you please advise. thanks.
Hi jay, tons of helpful info here..keep it up…
Q. Can I still negotiate w/ the seller about CGT payment (e.g 50-50) eventhough I’ve already signed the “contract to sell” that says that I have to pay the CGT because of not knowing before that I can enter into a negotiation on CGT payment w/ the seller.
Benny,
The CGT will now be based on the current FMV, (no penalties) while the DST will be subject to 22 years penalty and also based on the current FMV according to our local BIR. this is what I got from them or maybe close to this. Is this accurate?
However, while going through their documents, I discovered a DST Official Receipt paid 22 years ago. Is this still valid?
I have not informed the BIR that the seller died 3 years ago. Definitely, we will have to declare the sale with the estate of the vendor as one of the parties to the sale. I think we still have to go through the process of settling the estate of the seller.
Hi Jay,
Thank God may ganito kang site!
Anyway, I bought a land from a developer and tapos ko na bayaran. Now they are asking me to pay the CGT. After reading yung real property tax code and your site, sabi seller pala dapat ang mag babayad ng CGT. Sabi naman nun developer, hindi daw, buyer daw. So now I’m confused. Why am I going to pay for it eh hindi naman ako ang kumita at balak ko lang ito tayuan ng bahay na titirahan ng pamilya ko. Or pwede ba na sharing? sila mag bayad nun CGT kung magkano ko binili yun then yung excess dahil sa zonal or FMV sa akin na lang?
TIA!
This is very informative especially for a person like me who is a first time buyer of a property. More power to you Jay!!!
Hi Im currently dealing with a seller who has already fully paid the condo unit (2003) but has not yet transferred the title to his name to save on CGT. he is suggesting that he will just execute a deed of assignment instead of transfer to his name and then to my name so that there is no need to pay CGT twice. Is this setup ok?
Jay,
My concern over CGT’s refers to an agricultural property sold about 22 yrs. ago without paying the CGT. The Deed was notarized on the day the said property was sold. The seller has been dead for more than ten years and at present the property is now classified as residential land. There was also no settlement of estate on the part of the heirs of the seller either. Right now the buyer is trying to transfer the property to his name as per the Deed of Sale executed by the seller 22 years ago. Can you give me an idea on the process and penalties? Thanks.
In my experience, it is advisable and less expensive if you register the sale executed 22 yrs.ago provided the deed of sale is perfect, rather than declare that the seller is dead wherein you will pay estate tax and CGT and secure all of the heirs to sign the extrajudicial settlement.