Capital Gains Tax Philippines: Seller's Guide

If you're selling property in the Philippines, one of the first questions you'll ask is: how much will I owe in taxes? Capital gains tax is the single largest tax obligation for most property sellers — and getting it wrong can delay your title transfer, trigger penalties, and significantly eat into your proceeds.

This guide breaks down everything you need to know about capital gains tax on property in the Philippines: what it is, how to compute it, how to file and pay it, whether you qualify for an exemption, and how it fits into the full picture of selling costs — including documentary stamp tax, transfer tax, and registration fees.

What Is Capital Gains Tax in the Philippines?

Capital gains tax (CGT) is a final tax imposed on the presumed gain from selling real property classified as a capital asset in the Philippines. The rate is a flat 6% of the gross selling price or the property's fair market value — whichever is higher.

A few important points about how this works:

It's based on presumed gain, not actual profit. Unlike in some countries, the Philippines does not calculate CGT on the difference between what you paid and what you sold it for. The BIR presumes a gain regardless of your actual profit — or even if you sold at a loss.

It applies to capital assets. A capital asset is property not used in trade or business. Your personal home, a vacant lot, or an investment condo you hold are all capital assets. If you're a real estate developer or regularly sell properties as a business, the rules are different (your gains are subject to regular income tax and creditable withholding tax instead).

The seller pays it. CGT is technically the seller's obligation. However, in some transactions — particularly developer sales or negotiated deals — the buyer may agree to shoulder it. Always specify this in your Deed of Sale.

How to Compute Capital Gains Tax: Formula and Examples

The formula is straightforward:

CGT = 6% × (Higher of: Gross Selling Price OR BIR Zonal Value OR Assessor's Fair Market Value)

The BIR uses whichever value is highest — your negotiated selling price, the BIR's zonal valuation for the property's location, or the local government assessor's declared fair market value. You cannot use a price lower than the zonal value to reduce your CGT.

Worked Examples at Different Price Points

Selling Price	BIR Zonal Value	Tax Base (Higher)	CGT Due
PHP 500,000	PHP 450,000	PHP 500,000	PHP 30,000
PHP 1,000,000	PHP 1,200,000	PHP 1,200,000	PHP 72,000
PHP 2,500,000	PHP 2,300,000	PHP 2,500,000	PHP 150,000
PHP 5,000,000	PHP 4,800,000	PHP 5,000,000	PHP 300,000
PHP 10,000,000	PHP 9,500,000	PHP 10,000,000	PHP 600,000

Important: Always verify the current BIR zonal value for your specific barangay and property type before signing the Deed of Sale. Zonal values are updated periodically and vary significantly by location. A condo in BGC will have a very different zonal rate than a lot in Cavite.

The Full Cost of Selling: CGT Is Just One Part

This is where most sellers get surprised. Capital gains tax is the biggest line item, but there are four additional taxes and fees you need to budget for when selling property in the Philippines:

Cost	Rate	Who Pays	When Due
Capital Gains Tax (CGT)	6% of higher of selling price or zonal value	Seller (by law)	Within 30 days of deed notarization
Documentary Stamp Tax (DST)	1.5% of higher of selling price or zonal value	Transferor (often negotiated to buyer)	By the 5th of the month after notarization
Transfer Tax	0.5%–0.75% of selling price or zonal value (varies by LGU)	Buyer (typically)	Before Registry of Deeds processes title
Registration Fee	~PHP 8,000–PHP 30,000+ depending on property value	Buyer (typically)	At Registry of Deeds
Notarial Fee	~1%–2% of selling price (negotiated)	Split or seller	At signing

Combined seller cost example (PHP 3,000,000 property with zonal value of PHP 2,800,000):

CGT: 6% × PHP 3,000,000 = PHP 180,000
DST: 1.5% × PHP 3,000,000 = PHP 45,000 (if seller pays)
Notarial fee: ~PHP 15,000–30,000
Total seller tax burden: PHP 225,000–255,000 (7.5%–8.5% of proceeds)

Always factor this into your net proceeds calculation before agreeing on a sale price.

Step-by-Step: How to File and Pay Capital Gains Tax

Step 1: Have the Deed of Sale Notarized

The 30-day CGT deadline begins from the date of notarization. Do not delay filing after this.

Step 2: Get the BIR Zonal Value for Your Property

Visit the BIR Revenue District Office (RDO) where the property is located and request a zonal value print-out. You can also check the BIR website, though visiting in person ensures you have the latest rates. Get the tax declaration from the local LGU assessor as well to confirm the assessed value.

Step 3: Prepare Your Documents

Notarized Deed of Absolute Sale (original and photocopies)
Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) — certified true copy
Tax Declaration for land and/or improvement
Latest real property tax receipts (Amilyar)
TIN of both buyer and seller
Two valid government-issued IDs
BIR Form 1706 (Capital Gains Tax Return) — completed and signed

Step 4: File at the Correct BIR RDO

CGT must be filed at the RDO that has jurisdiction over the location of the property — not where you live or your TIN is registered. If the property is in Pasig, file at the Pasig RDO.

Step 5: Pay at an Authorized Agent Bank (AAB)

Present your BIR Form 1706 and pay at an Authorized Agent Bank within the RDO's area. Keep the bank-validated tax return — you'll need it to secure the eCAR.

Step 6: Secure the Electronic Certificate Authorizing Registration (eCAR)

After payment, submit all documents to the BIR for processing of the eCAR. This document is required by the Registry of Deeds to process the title transfer. Processing typically takes 10–25 business days depending on the RDO.

Step 7: Proceed with Title Transfer at the Registry of Deeds

With the eCAR in hand, the buyer (and/or their lawyer) can proceed to the Registry of Deeds to register the title transfer under the new owner's name.

Are You Exempt from Capital Gains Tax?

There is one significant exemption available to individual Filipino sellers: the principal residence exemption.

You can avoid paying CGT on the sale of your family home if all of the following conditions are met:

The property is your principal residence — where you and your family actually live
You have not used this exemption in the last 10 years
The full proceeds of the sale are reinvested in acquiring or constructing a new principal residence within 18 months of the sale
You notify the BIR within 30 days of the sale by filing BIR Form 1706 with a sworn declaration of intent to reinvest

If you spend only part of the proceeds on the new residence, CGT will apply proportionately to the portion not reinvested.

How to claim it: File BIR Form 1706 on time (even if no tax is due), attach a Sworn Statement of Intent to Reinvest, and submit a copy of the Deed of Sale. After reinvestment, submit proof to the BIR within 30 days of completing the purchase.

Special Considerations for OFW Sellers

If you are an Overseas Filipino Worker (OFW) selling property while abroad, the same CGT rules apply — but you'll need to manage the process remotely:

Special Power of Attorney (SPA): You must execute an SPA authorizing a trusted representative in the Philippines (a family member, lawyer, or licensed broker) to sign the Deed of Sale and all BIR/Registry of Deeds documents on your behalf. The SPA must be notarized by a Philippine consular officer in your country of deployment.

BIR filing proceeds the same: Your representative files BIR Form 1706 and pays CGT at the correct RDO within 30 days of notarization. Make sure they have all required documents.

Timeline: Factor in the time it takes to get your SPA authenticated abroad and shipped to the Philippines. Start this process well before your target sale date.

Common Mistakes That Lead to Penalties

Filing after the 30-day deadline. Even one day late triggers a 25% surcharge plus 6% annual interest on the amount due. A PHP 300,000 CGT obligation delayed by a year can balloon to over PHP 390,000.

Using the selling price when zonal value is higher. The BIR will correct this during eCAR processing and assess you the deficiency, plus penalties.

Confusing CGT with creditable withholding tax. If you sell a property that you've been renting out or using in a business, the BIR may classify it as an ordinary asset. In that case, CGT does not apply — instead, the buyer withholds a percentage (typically 6% for individuals, but this depends on the situation) and remits it to the BIR. Getting this classification wrong can result in deficiency assessments.

Not filing even when you qualify for the exemption. You must still file BIR Form 1706 even if you owe zero CGT under the principal residence exemption. Failure to file triggers penalties separately from the tax itself.

Ready to Find Your Next Property?

Whether you're selling to upgrade, right-size, or cash in on an investment — once you've settled your CGT obligations and the title is transferred, the next step is finding your new home.

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