Capital Gains Tax (CGT) in the Philippines: What Every Property Seller Should Know
Selling a property in the Philippines? Before sealing the deal, make sure you’re aware of a crucial cost: the Capital Gains Tax or CGT.
đź’ˇ What is Capital Gains Tax?
Capital Gains Tax is a government fee charged on the profit you make from selling real estate. In short: if you’re selling a house, lot, or condo, and you’re making a gain, you owe 6% of that value to the BIR.
Here’s the important part — the 6% is computed based on the higher amount between the selling price and the fair market value.
Example:
Let’s say your property was sold for ₱2,000,000, but its fair market value is only ₱1,800,000. The BIR will still base the tax on the ₱2M.
₱2,000,000 × 6% = ₱120,000
👤 Who Pays CGT?
Most of the time, it’s the seller who shoulders the Capital Gains Tax. But in some private deals, the buyer and seller can agree otherwise. Just make sure this arrangement is clearly written in the Deed of Sale.
⏳ When Should It Be Paid?
CGT must be paid within 30 days after the Deed of Sale is notarized. Late payments come with penalties, so don’t delay!
🧾 Developer vs Private Seller
If you’re buying from a developer, CGT doesn’t usually apply since their properties are treated as “ordinary assets.” But if it’s a private sale, the CGT will be part of the closing costs.
