The 6% capital gains tax on the higher of the selling price or fair market value.
Capital gains tax
—
Tax base
—
Documentary stamp tax
—
It taxes the price, not your profit
The phrase capital gains tax misleads a lot of Philippine sellers. In most countries that name means a tax on the gain, the difference between what you sold for and what you originally paid. The Philippine version of the tax on real property held as a capital asset works differently. It is a flat charge on the gross selling price or the zonal and fair market value, whichever is higher, with no deduction for what the property cost you. You could sell at a loss and still owe it. That is the single most important thing to understand before you read the number this tool produces.
The rate this calculator applies is 6 percent, the figure the Bureau of Internal Revenue (BIR) has long used for capital assets such as a family home or a parcel of land not used in a trade or business. Because rates and the zonal value schedules behind them are revised from time to time, treat the 6 percent here as the calculator's working assumption and verify the current rate, and the zonal value for the property's location, with the BIR before you file.
Walking a PHP 5.5 million zonal value through the tool
The default scenario makes the higher-of rule concrete. Suppose you agree to sell for PHP 5,000,000, but the BIR zonal value for the area, multiplied across the lot, comes to PHP 5,500,000. The tax does not care that you only collected PHP 5,000,000. It uses the larger figure. Here is the calculation using the rates this calculator applies.
| Step | Figure | Result |
|---|
The seller owes PHP 330,000 in capital gains tax, computed on the zonal value rather than the agreed price. Had the contract price been the higher number, the base would simply have followed it. The documentary stamp tax of PHP 82,500 sits on top of the deed, bringing the national taxes on this sale to PHP 412,500. The chart shows how the PHP 5,500,000 base splits into the two national taxes and the portion the seller keeps.
The 30-day clock and who is liable
The seller is the party liable for the capital gains tax, and the return and payment are generally due within thirty days of the sale. Miss that window and the BIR adds surcharges and interest, which compound the cost of an already sizeable bill. The documentary stamp tax has its own deadline tied to the month of execution. A practical sequence most sellers follow: get the zonal valuation confirmed first, compute the tax on the correct base, then file and pay early rather than waiting for the buyer to chase the title transfer. The certificate authorizing registration from the BIR is what unlocks the rest of the process.
Capital asset or ordinary asset
This 6 percent regime applies only to real property classified as a capital asset, meaning property not used in a trade or business. If you are a developer, a dealer in real estate, or you used the property in your business, it is an ordinary asset, and the sale is taxed under the regular income tax rules with creditable withholding tax instead, and possibly value added tax. Misclassifying the asset is a common and expensive mistake. If there is any doubt about which category your property falls into, confirm it with the BIR before assuming the flat 6 percent applies.
Do I still owe the tax if I sold the property for less than I paid for it?
Yes. Because the tax is charged on the gross selling price or the zonal and fair market value, whichever is higher, and not on your actual gain, a loss does not exempt you. The base is the sale value, so even a money-losing sale of a capital asset can carry the 6 percent charge.
Is selling my own home always taxed at this rate?
Not necessarily. The BIR allows an exemption when you sell your principal residence and use the full proceeds to buy or build a new principal residence within a set period, subject to conditions and a notice to the BIR. The exemption is not automatic, so check the current requirements with the BIR before relying on it.
What if the property is an ordinary asset rather than a capital asset?
Then the 6 percent capital gains tax does not apply. The sale is instead subject to the regular income tax and creditable withholding tax, and value added tax may come into play. This is the typical treatment for developers and dealers, so the classification of the property drives which tax regime you fall under.