Capital Gains Tax When You Sell Property

Selling a house or lot usually triggers a capital gains tax, and the amount it is based on is not always the price you agreed on. Knowing which figure the BIR uses keeps the bill from being a surprise at closing.

The 6 percent rate

The capital gains tax on selling real property held as a capital asset, meaning a personal home or lot rather than business inventory, is 6 percent. It is a final tax, so it is settled on the sale itself and not folded into your annual income tax.

The value it is charged on

The 6 percent is not simply 6 percent of the selling price. It is charged on whichever is highest of three figures: the gross selling price, the BIR zonal value for the area, and the fair market value in the assessor's schedule. If the zonal value is higher than what you sold for, the tax is figured on the zonal value. This is why a below-market family sale can still carry a tax based on a higher official value.

The documentary stamp tax

A separate documentary stamp tax applies to the transfer, at ₱15 for every ₱1,000, which works out to 1.5 percent of the same highest-of-three value. It is smaller than the capital gains tax but part of the same closing, so it belongs in your estimate.

Who pays, and the timing

By default the seller shoulders the capital gains tax, though the parties sometimes agree otherwise in the deed of sale. The tax is due within 30 days of the sale, so it is not something to leave until tax season. Getting the zonal value from the BIR before you price the property helps you plan for the real cost.

To estimate the tax, use the capital gains tax calculator.