In the Philippines, capital gains tax (CGT) is a tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or other disposition of real property located in the Philippines. The current rate of CGT for the sale of real property is 6% based on the gross selling price or fair market value, whichever is higher.
Here’s an example computation of capital gains tax in the Philippines:
Let’s say you sell a piece of land for PHP 1,000,000. The higher of the gross selling price or the fair market value is PHP 1,000,000.
Step 1: Calculate the Capital Gains Tax
Capital Gains Tax = 6% of PHP 1,000,000
Capital Gains Tax = 0.06 × PHP 1,000,000
Capital Gains Tax = PHP 60,000
In this example, the capital gains tax payable on the sale of the property would be PHP 60,000.
It’s important to note that there might be other applicable taxes and fees associated with real estate transactions in the Philippines, such as documentary stamp tax, transfer tax, and registration fees. These additional costs can vary based on the local government unit where the property is located and the specific circumstances of the transaction. Therefore, it’s advisable to consult with a tax professional or the Bureau of Internal Revenue (BIR) in the Philippines for accurate and up-to-date information on capital gains tax and other related taxes.