Home › Buyer Guides › Capital Gains Tax on Property in the Philippines
When CGT applies, and when it doesn't
| Transaction | Tax treatment |
|---|---|
| Individual sells a family home, inherited lot, or other property not used in business | 6% CGT (capital asset) |
| Developer or real estate dealer sells a house and lot | Ordinary asset: regular income tax with creditable withholding tax, plus 12% VAT if above the VAT-exempt threshold and the seller is VAT-registered. No CGT. |
| Property used in the seller's business, such as a rented-out building of a habitually engaged lessor | Often treated as an ordinary asset. Classification follows BIR RR 7-2003. |
| Donation or inheritance | Donor's tax or estate tax (each 6%), not CGT |
So if you buy directly from a developer, CGT isn't your concern. It matters when you buy resale property from an individual.
How the tax base is set
The BIR applies 6% to the highest of:
- the gross selling price in the deed of sale
- the BIR zonal value for that location and classification
- the fair market value in the city or municipal assessor's tax declaration
Under the Real Property Valuation and Assessment Reform Act (RA 12001 of 2024), the BIR will use the new Schedule of Market Values or the actual selling price, whichever is higher, once each LGU's SMV is approved. Until then, existing zonal values remain in use.
Worked example
A resale house and lot is sold for ₱3,000,000. The BIR zonal value of the land plus the assessor's value of the house totals ₱2,600,000.
- Tax base: ₱3,000,000 (the selling price is highest)
- CGT: ₱3,000,000 × 6% = ₱180,000, due within 30 days of notarization
- Documentary stamp tax, also due: ₱3,000,000 × 1.5% = ₱45,000
Declaring a lower price in the deed doesn't reduce the tax below the zonal value. It also exposes both parties to penalties and weakens the buyer's evidence of what was actually paid. Use the true price.
Deadlines and penalties
- CGT (BIR Form 1706): within 30 days after notarization, at the Revenue District Office (RDO) where the property is located
- DST (BIR Form 2000-OT): on or before the 5th day of the month after notarization
- Late payment: 25% surcharge, interest at 12% a year, and compromise penalties. Late payment also delays the eCAR, and without it the Registry of Deeds won't transfer the title.
Principal residence exemption
An individual selling their principal residence can be exempt from CGT if the full proceeds are used to buy or build a new principal residence within 18 months. The seller must notify the BIR within 30 days of the sale and place the CGT amount in escrow until the new purchase is shown. The exemption can be used only once every 10 years, and the unused portion of the proceeds is taxed proportionally.
Why buyers should care
- The title can't move to your name until CGT and DST are paid and the BIR issues the eCAR (electronic Certificate Authorizing Registration).
- If the seller delays paying, your transfer stalls. Set in the contract who pays and the deadline.
- Some sellers quote a "net of taxes" price, which means the buyer shoulders CGT. Compare offers on the same basis.
- Ask for proof of payment (BIR forms with bank or e-payment receipts) before releasing the final balance, or pay through escrow.
Frequently asked questions
How much is capital gains tax on property in the Philippines?
6% of the highest of the selling price, the BIR zonal value, or the assessor's fair market value. On a ₱3,000,000 sale with a lower zonal value, that is ₱180,000.
Who pays capital gains tax, the buyer or the seller?
The law imposes it on the seller, but the parties can agree otherwise in the contract. Sellers sometimes ask the buyer to shoulder it in a "net" price deal, so put it in writing.
When is the deadline to pay capital gains tax on a property sale?
Within 30 days after the deed of sale is notarized, filed with BIR Form 1706 at the RDO with jurisdiction over the property.
Do I pay capital gains tax when buying from a developer?
No. Developers sell property as ordinary assets, taxed through income tax and creditable withholding tax, plus VAT above the threshold. Your miscellaneous fees usually cover your share of DST, transfer tax, and registration.
Is there a capital gains tax exemption for selling my home?
Yes. The principal residence exemption applies if the full proceeds buy or build a new principal residence within 18 months. You must notify the BIR, use escrow, and you can claim it only once every 10 years.
Related buyer guides
- Capital Gains Tax vs Documentary Stamp Tax vs Transfer Tax
- Zonal Value vs Market Value vs Assessed Value
- How Land Title Transfer Works in the Philippines (Buyer's Plain-English Guide)
- The Real Cost of Buying a House in the Philippines: Reservation to Turnover
Official sources and further reading
Reviewed for accuracy on October 4, 2026. Rates, fees, thresholds, and agency procedures change. Confirm transaction-specific details with the issuing agency, your lender, or a lawyer before you pay or sign.
About the author: Jeremiah Villagomez is a PRC-accredited and DHSUD-accredited Real Estate Salesperson based in San Pablo City, Laguna. He helps first-time buyers, OFWs, and relocating families buy house and lot homes with Pag-IBIG, bank, or cash financing. More about Jeremiah · Call 0976 302 6551
Have a specific situation? Call or text 0976 302 6551 and I will run the numbers for your exact unit, budget, and financing route for free.
