If you are selling a house, condominium unit, lot, or unlisted shares in the Philippines, Capital Gains Tax is usually one of the first BIR requirements that can delay the transfer if handled late or incorrectly. The tax itself may look simple—often 6% for real property or 15% for certain share transfers—but the practical work involves deadlines, valuation rules, notarized documents, TIN verification, eONETT processing, payment proof, and the electronic Certificate Authorizing Registration or eCAR, which the Register of Deeds or corporate secretary will usually require before ownership is transferred.

What Capital Gains Tax Means in the Philippines

Capital Gains Tax, commonly called CGT, is a tax imposed on gains presumed or realized from the sale, exchange, or other disposition of certain capital assets.

In ordinary terms, a capital asset is property you hold as an investment or personal asset, not inventory or property used in your regular business. For example:

Asset or transaction	Usually subject to CGT?	Usual tax treatment
Sale of a family home, residential lot, or condominium unit not used in business	Yes, if classified as a capital asset	6% CGT on the higher tax base
Sale of land by a real estate developer or dealer	Usually no CGT	Ordinary income tax and creditable withholding tax may apply
Sale of shares in a private domestic corporation	Yes	15% CGT on net capital gains
Sale of listed shares through the Philippine Stock Exchange	No CGT	Stock Transaction Tax applies instead
Donation of property	No CGT	Donor’s tax may apply
Inheritance of property	No CGT on inheritance itself	Estate tax may apply

The most common mistake is assuming that CGT is always based on the actual profit. For Philippine real property, the 6% CGT is generally imposed on a presumed gain, not on the seller’s actual net income. This means you may still owe CGT even if you sold at a loss.

Legal Basis for Capital Gains Tax

The main legal basis is the National Internal Revenue Code of 1997, or NIRC, originally enacted through Republic Act No. 8424 (1997) and amended by later laws, including Republic Act No. 10963 (TRAIN Law, 2017) and Republic Act No. 12214 (Capital Markets Efficiency Promotion Act, 2025).

For real property, BIR Form 1706 explains that the return is used for the onerous transfer of Philippine real property classified as a capital asset, whether taxable or exempt, and that the buyer/transferee and seller/transferor file it jointly in triplicate. It also states that the 6% tax is based on the selling price, BIR zonal value, or fair market value per tax declaration, whichever is higher. (Bir CDN)

For shares of stock, Republic Act No. 12214 amended the Tax Code so that the 15% final tax applies to net capital gains from the sale, exchange, or disposition of shares of stock in a domestic or foreign corporation not traded in a local or foreign stock exchange, while shares subject to stock transaction tax are excluded from CGT. (Lawphil)

When CGT Applies to Sale of Real Property

CGT on real property usually applies when all of these are present:

There is a sale, exchange, foreclosure, pacto de retro sale, conditional sale, or similar transfer.
The property is located in the Philippines.
The property is classified as a capital asset.
The transfer is not covered by a valid exemption.

For individual sellers, estates, and trusts, the usual CGT rate is 6%. For domestic corporations, the 6% CGT applies to gains presumed to have been realized from the sale, exchange, or disposition of land and/or buildings classified as capital assets. BIR Revenue Regulations No. 7-2003 also distinguishes capital assets from ordinary assets and explains that ordinary-asset sales are generally subject to different tax treatment. (Supreme Court E-Library)

Capital Asset vs. Ordinary Asset

This classification matters because the wrong classification can lead to the wrong BIR form, wrong tax, and delays in eCAR issuance.

A real property is usually a capital asset if it is not:

Stock in trade or inventory;
Property held primarily for sale to customers in the ordinary course of business;
Property used in business and subject to depreciation; or
Real property used in trade or business.

A family home, inherited residential lot, or personal condominium unit is commonly treated as a capital asset. Land held by a developer, subdivider, real estate dealer, or corporation using the property in business may be treated as an ordinary asset.

How to Compute CGT on Real Property

For real property classified as a capital asset, the 6% CGT is computed on the highest of:

Selling price stated in the deed;
BIR zonal value;
Fair market value shown in the local assessor’s tax declaration.

BIR Form 1706 guidelines identify these same bases: zonal value, assessor’s fair market value, or selling price/fair market value of property received in an exchange, whichever is higher. (Bir CDN)

Example

Suppose a condominium unit is sold for ₱5,000,000.

Valuation basis	Amount
Selling price in Deed of Sale	₱5,000,000
BIR zonal value	₱5,800,000
Assessor’s fair market value	₱4,500,000

The CGT base is ₱5,800,000 because it is the highest value.

CGT: ₱5,800,000 × 6% = ₱348,000

Even if the seller actually bought the unit years ago for ₱6,000,000 and is selling at a loss, the CGT is still based on the highest applicable value.

Other Taxes and Fees Usually Involved

CGT is not the only payment in a real property transfer. A typical sale may also involve:

Item	Usual rate or basis	Paid to
Capital Gains Tax	6% of highest applicable value	BIR
Documentary Stamp Tax	Usually ₱15 per ₱1,000, or 1.5%, of the applicable tax base	BIR
Local Transfer Tax	Usually up to 0.5% in provinces; rates may differ in cities and Metro Manila	City or municipal treasurer
Registration fees	Based on Land Registration Authority schedule	Register of Deeds
Real property tax clearance	Must be settled before transfer	LGU treasurer/assessor

For Documentary Stamp Tax on real property, BIR Form 2000-OT guidelines state that the tax base is the higher of zonal value, assessor’s fair market value, or selling price/fair market value of property received in an exchange. (Bir CDN)

Local transfer tax comes from Section 135 of Republic Act No. 7160, the Local Government Code of 1991. It authorizes the province to impose tax on transfers of real property ownership and requires proof of payment before the Register of Deeds registers the deed. The same provision states that the seller, donor, transferor, executor, or administrator pays the tax within 60 days from execution of the deed or from death in estate cases. (Supreme Court E-Library)

Step-by-Step Process for CGT on Sale of Real Property

1. Check the title, tax declaration, and tax classification before signing

Before notarizing the Deed of Absolute Sale, verify:

The title number and registered owner;
Whether the title has liens, mortgages, adverse claims, or notices of lis pendens;
The latest tax declaration for land and improvements;
Whether the property has declared improvements;
BIR zonal value for the exact location and classification;
Whether the seller and buyer have valid TINs;
Whether the seller is married and spouse consent/signature is needed.

For married sellers, BIR commonly asks for a PSA-certified marriage certificate. This is especially important where the property may be conjugal or community property under the Family Code.

2. Prepare and notarize the Deed of Sale

The date of notarization is critical because it usually starts the BIR deadline. Do not notarize too early if the parties are not ready to file and pay within the required period.

The deed should correctly state:

Full names, citizenship, civil status, addresses, and TINs of the parties;
Complete technical description of the property;
Title number and tax declaration number;
Purchase price and payment terms;
Who will shoulder CGT, DST, transfer tax, registration fees, and other expenses;
Authority of representatives, if signed through SPA or board resolution.

In practice, many deeds say the seller pays CGT and the buyer pays DST, transfer tax, and registration expenses. However, parties may agree otherwise. What matters to the BIR is that the required tax is paid before the eCAR is issued.

3. Submit the transaction to the proper RDO or through eONETT

For real property, the relevant BIR office is usually the Revenue District Office (RDO) having jurisdiction over the place where the property is located. BIR Form 1706 guidelines state that filing and payment are made with the Authorized Agent Bank of the RDO having jurisdiction over the property. (Bir CDN)

BIR also has the Electronic One-Time Transaction System, or eONETT, for transactions involving sale and/or donation of real or personal properties. The eONETT user guide explains that taxpayers encode the required information, upload mandatory documents, and submit the application for RDO evaluation. (eONETT) (eONETT)

4. Wait for the ONETT Computation Sheet

After submission, the BIR evaluates the documents and issues or approves the ONETT Computation Sheet, often called the OCS. In eONETT, the status may show as “Pending” while the OCS is being approved and “For Payment” once the tax due can be paid. (eONETT)

This is where many delays happen. Common reasons for return or correction include:

Wrong RDO;
Incomplete TIN details;
Name mismatch between title, deed, IDs, and tax declaration;
Missing tax declaration for improvements;
No certificate of no improvement;
Wrong zonal classification;
Unclear SPA or unauthenticated foreign document;
Missing corporate secretary’s certificate or board resolution;
Old or antedated deed requiring notarization verification.

5. File and pay BIR Form 1706 within 30 days

The CGT return for real property is BIR Form 1706. It must generally be filed and paid within 30 days following the sale, exchange, or disposition of the real property. For installment sales where installment tax treatment is legally allowed, the return is filed and paid within 30 days from receipt of the first down payment and each later installment payment. (Bir CDN)

If payment is late, penalties may include surcharge, interest, and compromise penalty. BIR Form 1706 guidelines list a 25% surcharge for failure to file and pay on time, a 50% surcharge in cases involving willful neglect or fraudulent return, interest, and compromise penalty where applicable. (Bir CDN)

6. File and pay Documentary Stamp Tax

For one-time real property transfers, Documentary Stamp Tax is commonly filed using BIR Form 2000-OT. The return is generally filed within five days after the close of the month when the taxable document was made, signed, issued, accepted, or transferred. (Bureau of Internal Revenue)

7. Apply for the eCAR

The eCAR is the BIR document that authorizes the Register of Deeds to transfer the title. Without it, title transfer usually cannot proceed.

For eCAR processing, the BIR checklist requires proof of tax returns filed and payment, approved OCS, transfer document, and proper authority documents such as SPA, secretary’s certificate, board resolution, or consular certification/apostille if executed abroad. (Bir CDN)

Under BIR Revenue Memorandum Order No. 12-2025, eCAR processing time should not exceed seven working days from receipt of complete documentary requirements for the eCAR application. In practice, the clock effectively depends on completeness and correctness of the documents.

8. Pay local transfer tax and register with the Register of Deeds

After BIR requirements, the parties usually proceed to:

Pay local transfer tax at the city or municipal treasurer’s office;
Submit the eCAR, deed, tax clearance, transfer tax receipt, title, and other requirements to the Register of Deeds;
Pay registration fees;
Wait for issuance of the new title;
Update the tax declaration with the local assessor.

The Register of Deeds and local assessor may have their own documentary requirements, so delays can still happen even after the BIR has issued the eCAR.

Required Documents for CGT on Real Property

BIR’s ONETT documentary checklist for real property classified as a capital asset requires, among others, TINs, notarized deed, certified true copies of tax declarations, certified true copies of title, certificate of no improvement where applicable, and authority documents if a representative signs or transacts. (Bir CDN)

Document	Practical notes
TINs of seller and buyer	TIN mismatch is a common cause of delay.
Notarized Deed of Absolute Sale or Deed of Transfer	The notarization date usually controls the filing deadline.
Certified true copy of title, such as OCT, TCT, or CCT	Secure from the Register of Deeds.
Certified true copy of tax declaration for land and improvements	Secure from the local assessor.
Certificate of No Improvement	Needed if land has no declared building or improvement.
Valid government IDs	Copies should show photo, birth date, and signature.
SPA, if represented by another person	Must be notarized; if executed abroad, it usually needs apostille or consular authentication.
Secretary’s Certificate or Board Resolution	Needed for corporate sellers or buyers.
PSA marriage certificate	Commonly required if seller is married.
Location plan or vicinity map	Useful when zonal value cannot be determined from submitted documents.
Certificate of exemption or BIR ruling	Needed if claiming exemption.
Proof of tax payment and approved OCS	Needed for eCAR issuance.

CGT on Sale of Principal Residence

A special exemption may apply when a natural person sells a principal residence and uses the proceeds to buy or build a new principal residence.

The key requirements are:

The seller must be a natural person.
The property sold must be the seller’s principal residence.
The proceeds must be fully used to acquire or construct a new principal residence within 18 calendar months from the sale or disposition.
The BIR must be notified within 30 days through the required return and sworn declaration or letter of intent.
The exemption can be used only once every 10 years.
If the proceeds are not fully used, the unused portion becomes subject to CGT.

BIR’s checklist for sale of principal residence specifically requires a sworn letter of intent stating that the exemption has not been availed of during the immediately preceding 10 years, a certificate of residency, and proof of purchase or utilization for the new residence when applicable. (Bir CDN)

BIR Form 1706 guidelines also explain that if the seller claims this exemption, the CGT return must still be filed and the tax supposed to be paid is deposited in escrow under the relevant revenue regulations. (Bir CDN)

CGT on Shares of Stock Not Traded Through an Exchange

For shares of stock not traded in a local or foreign stock exchange, the CGT rate is generally 15% of net capital gains.

For individuals, Republic Act No. 12214 provides that a return must be filed within 30 days after each transaction, and a final consolidated return must be filed on or before April 15 covering all stock transactions of the preceding taxable year. For corporations, the law requires filing within 30 days after each transaction and a final consolidated return on or before the 15th day of the fourth month following the close of the taxable year. (Lawphil)

BIR Form 1707 guidelines state that the return is filed by every natural or juridical person, resident or non-resident, for the sale, barter, exchange, or other onerous disposition of shares of stock in a domestic corporation classified as capital assets and not traded through the local stock exchange. The buyer/transferee withholds the tax due from the seller and deducts it from the agreed selling price or consideration.

Common requirements for private share transfers

BIR’s ONETT checklist for shares of stock not traded through the local stock exchange includes:

Document	Practical notes
TINs of seller and buyer	Required for TIN verification.
Notarized Deed of Assignment, Sale, or Transfer	Should match the stock certificate and corporate records.
Stock certificate	The certificate number and shares must match the deed.
Proof of acquisition cost	Prior deed, previous eCAR, SEC documents, or subscription agreement may be used.
Proof of share valuation	Latest audited financial statements and book value computation are commonly required for unlisted shares.
SPA or Secretary’s Certificate	Needed if a representative or corporation signs.
Proof of claimed deductions	Needed if claiming expenses or deductions.
Apostille or consular certification	Needed if transfer documents or SPA were executed abroad.

These requirements appear in the BIR checklist for onerous transfer of shares of stock not traded through the local stock exchange. (Bir CDN)

Listed Shares: Stock Transaction Tax Instead of CGT

Shares listed and traded through a local stock exchange are generally not subject to CGT. Under Republic Act No. 12214 and BIR Revenue Regulations No. 20-2025, the Stock Transaction Tax is 0.1% of the gross selling price or gross value in money for covered listed shares and securities, effective July 1, 2025.

The practical effect is simple:

Private or unlisted share sale: check CGT rules.
Listed shares sold through an exchange: check Stock Transaction Tax rules.
Dealer in securities: gains may be ordinary income, not ordinary investor CGT treatment.

Special Notes for Foreigners and Filipinos Abroad

Foreigners and Filipinos abroad often encounter additional documentary issues, even when the tax rate is the same.

Foreigners selling Philippine property

If a foreigner legally owns Philippine property, such as a condominium unit or land acquired by hereditary succession, the sale may still be subject to Philippine CGT because the property is located in the Philippines.

The foreign seller will usually need:

Philippine TIN;
Passport or valid ID;
Notarized deed or SPA;
Apostille or Philippine consular authentication if documents are signed abroad;
Proof of authority if acting through a representative.

Foreigners buying Philippine real property

The CGT issue is separate from the buyer’s capacity to own property. Under Article XII, Section 7 of the 1987 Constitution, private lands may not be transferred except to persons or entities qualified to acquire or hold lands of the public domain, except in cases of hereditary succession. (Lawphil)

In practical terms:

A foreigner generally cannot buy land in the Philippines.
A foreigner may buy a condominium unit, subject to condominium foreign ownership limits.
A foreigner may inherit land through hereditary succession, but later transfers must still comply with Philippine law.
A former Filipino may have special land acquisition rights subject to statutory limits.

OFWs and Filipinos abroad

For Filipinos abroad, the most common bottleneck is the SPA. If the seller or buyer cannot appear personally, the SPA should clearly authorize the representative to sign, process BIR requirements, pay taxes, receive eCAR, pay transfer tax, and register the title. If executed abroad, BIR checklists recognize certification from the Philippine Consulate or an apostille, depending on the country where the document was signed. (Bir CDN)

Common Pitfalls That Delay CGT Processing

Notarizing the deed before the parties are ready

Once the deed is notarized, the 30-day CGT period usually starts. If the buyer is still arranging payment, the seller has no TIN, or the tax declaration is not ready, penalties can accumulate quickly.

Declaring a very low selling price

A low contract price does not necessarily reduce CGT because BIR uses the highest of selling price, zonal value, or assessor’s fair market value. For private share transfers, selling far below fair market value can also raise donor’s tax questions if the transaction is not at arm’s length.

Ignoring improvements

If the land has a house or building, BIR may require the tax declaration for the improvement. If there is no improvement, BIR may require a certificate of no improvement from the assessor.

Using the wrong form

Use BIR Form 1706 for real property capital assets. Use BIR Form 1707 for CGT on shares of stock not traded through an exchange. Use BIR Form 2000-OT for Documentary Stamp Tax in one-time transactions.

Treating ordinary assets as capital assets

If the seller is a real estate dealer, developer, or business using the property as part of operations, the sale may be an ordinary-asset transaction. This can mean expanded withholding tax, VAT issues, and ordinary income tax instead of CGT.

Missing spouse or corporate authority

A sale can be delayed or rejected if the spouse did not sign when required, or if a corporation lacks a secretary’s certificate or board resolution approving the sale.

Old or antedated deeds

For old sales, BIR may require verification of notarization from the court, executive judge, clerk of court, or National Archives. BIR’s checklist specifically mentions supporting documents for antedated sales. (Bir CDN)

Frequently Asked Questions

How much is Capital Gains Tax on real property in the Philippines?

For real property classified as a capital asset, the usual CGT is 6% of the highest among the selling price, BIR zonal value, or fair market value per tax declaration.

Is Capital Gains Tax based on actual profit?

For Philippine real property, usually no. The 6% CGT is based on presumed gain using the highest applicable value, not on actual net profit. For private shares, CGT is generally based on net capital gains.

Who pays CGT, the buyer or the seller?

The seller is generally the party taxed on the gain, but BIR Form 1706 states that the buyer/transferee withholds and deducts the 6% CGT from the selling price or consideration. In practice, the deed usually states who shoulders each tax, but BIR will require payment before eCAR issuance.

What is the deadline for filing CGT on real property?

BIR Form 1706 must generally be filed and paid within 30 days following the sale, exchange, or disposition of the real property.

Do I need to pay CGT if I inherited the property?

The inheritance itself is generally subject to estate tax, not CGT. But if the heirs later sell the inherited property, that later sale may be subject to CGT if the property is a capital asset.

Can I avoid CGT if I sell my home and buy another house?

Possibly, but only if you meet the principal residence exemption requirements: full use of proceeds for a new principal residence within 18 months, BIR notice within 30 days, and no use of the exemption in the previous 10 years.

Does a foreigner pay CGT when selling Philippine property?

Yes, if the foreigner legally owns and sells Philippine real property classified as a capital asset, Philippine CGT may apply because the property is located in the Philippines.

What is eCAR and why is it important?

The eCAR is the BIR’s electronic Certificate Authorizing Registration. It tells the Register of Deeds or other recording office that the required BIR taxes have been processed so the transfer can proceed.

How long does eCAR processing take?

BIR Revenue Memorandum Order No. 12-2025 states that eCAR processing should not exceed seven working days from receipt of complete documentary requirements. In real life, incomplete documents, TIN issues, valuation questions, or returned applications can extend the timeline.

Is the sale of listed shares subject to CGT?

Generally, no. Covered listed shares traded through a local or foreign stock exchange are subject to Stock Transaction Tax instead of CGT, while private or unlisted share transfers may be subject to 15% CGT on net capital gains.

Key Takeaways

Real property CGT is usually 6% of the highest among selling price, BIR zonal value, or assessor’s fair market value.
Private share transfers are generally subject to 15% CGT on net capital gains.
Listed shares are generally subject to Stock Transaction Tax, not CGT.
BIR Form 1706 is used for real property capital assets; BIR Form 1707 is used for certain share transfers; BIR Form 2000-OT is used for Documentary Stamp Tax.
The usual CGT filing deadline is 30 days from the sale or disposition.
The BIR will usually require complete documents, approved ONETT computation, proof of payment, and eCAR before title or share transfer can be completed.
Foreigners and Filipinos abroad should pay special attention to TINs, SPAs, apostille or consular authentication, and Philippine property ownership restrictions.
Do not notarize the deed until the parties are ready to complete BIR filing and payment within the deadline.