In the Philippines, the transfer of real property is a highly regulated process governed by the National Internal Revenue Code (NIRC), the Local Government Code of 1991, and the recently enacted Real Property Valuation and Assessment Reform Act (RA 12001). Understanding the computation of taxes and fees is essential for both sellers and buyers to ensure compliance and avoid the heavy surcharges associated with late filings.

The following discourse outlines the specific taxes, fees, and the modern valuation framework currently in effect.

I. Capital Gains Tax (CGT)

The Capital Gains Tax is a final tax imposed on the presumed gain realized by a seller from the sale, exchange, or disposition of real property located in the Philippines, provided the property is classified as a capital asset.

Tax Base: The tax is computed based on the gross selling price or the fair market value at the time of sale, whichever is higher.
Valuation Standards: Under RA 12001, the "fair market value" is increasingly being unified. However, for tax purposes, the Bureau of Internal Revenue (BIR) traditionally compares the selling price against the Zonal Value (determined by the BIR) and the Fair Market Value (appearing in the Tax Declaration issued by the Provincial or City Assessor).
Rate: The rate is fixed at 6%.
Formula: $$CGT = \max(\text{Selling Price, Zonal Value, Assessed FMV}) \times 0.06$$
Deadline: The return (BIR Form 1706) must be filed and the tax paid within 30 days following the date of notarization of the Deed of Absolute Sale.

Note on Ordinary Assets: If the seller is habitually engaged in the real estate business (e.g., a developer or a person who has closed at least six real estate transactions in the previous year), the property is considered an "ordinary asset." In such cases, the transaction is subject to Creditable Withholding Tax (CWT) ranging from 1.5% to 6% and potentially a 12% Value Added Tax (VAT), rather than the 6% CGT.

II. Documentary Stamp Tax (DST)

The Documentary Stamp Tax is an excise tax on the documents, instruments, and papers evidencing the sale or transfer of a property.

Rate: The rate is 1.5% of the tax base. Statutorily, this is defined as P15.00 for every P1,000.00 (or a fractional part thereof) of the consideration or value.
Tax Base: Similar to CGT, it uses the higher value between the selling price and the property’s fair market value (zonal value).
Formula: $$DST = \max(\text{Selling Price, Zonal Value}) \times 0.015$$
Deadline: Following the Ease of Paying Taxes Act (RA 11976), the DST return (BIR Form 2000-OT) must be filed and paid within five (5) days after the close of the month when the taxable document was signed and notarized.

III. Local Transfer Tax (LTT)

Imposed under Section 135 of the Local Government Code, the Transfer Tax is collected by the local treasurer where the property is located.

Rate: This varies by Local Government Unit (LGU).
- Provinces: Not exceeding 0.50% (1/2 of 1%).
- Cities and Metro Manila: Not exceeding 0.75% (3/4 of 1%).
Tax Base: The higher of the total consideration or the fair market value.
Deadline: Usually within 60 days from the date of notarization of the deed.

IV. Registration Fees and IT Fees

Once the BIR has issued the Electronic Certificate Authorizing Registration (eCAR), the transfer must be registered with the Land Registration Authority (LRA) through the Registry of Deeds.

Computation: Registration fees follow a graduated table (Schedule of Fees) provided by the LRA. As a rule of thumb, it is approximately 0.25% of the property value, though it increases in increments.
IT Service Fees: There are fixed administrative charges for the "E-Title" system and computerization, typically ranging from P300 to P600 depending on the complexity of the transaction.

V. Recent Reforms: RA 12001 (RPVARA)

Signed into law in 2024, the Real Property Valuation and Assessment Reform Act (RPVARA) has significantly changed the landscape of property taxation. Its primary goal is to establish a Single Valuation Base.

Uniformity: The law mandates that the Schedule of Market Values (SMVs) prepared by local assessors, once reviewed by the Bureau of Local Government Finance (BLGF) and certified by the Secretary of Finance, shall be the sole basis for real property-related taxes.
Amnesty: A crucial provision currently in effect is the Real Property Tax Amnesty. Property owners with unpaid real property taxes (including interests and penalties) as of the law's effectivity can avail of an amnesty, which is available until July 5, 2026.

VI. Illustrative Computation

Suppose a residential lot in Quezon City is sold with the following data:

Gross Selling Price (GSP): P5,000,000
BIR Zonal Value: P5,500,000
Assessed FMV: P4,000,000

The tax base for all computations will be P5,500,000 (the highest value).

Tax/Fee	Computation	Amount
Capital Gains Tax (6%)	$5,500,000 \times 0.06$	P330,000
Documentary Stamp Tax (1.5%)	$5,500,000 \times 0.015$	P82,500
Transfer Tax (0.75%)	$5,500,000 \times 0.0075$	P41,250
Registration Fees	LRA Graduated Table	~P15,000
Total Estimated Fees		P468,750

VII. Statutory Exemptions

Certain transactions may be exempt from the 6% CGT, most notably the Sale of a Principal Residence. Under Section 24(D)(2) of the NIRC:

The seller must be an individual citizen or resident alien.
The proceeds must be fully utilized in acquiring or constructing a new principal residence within 18 calendar months.
The BIR must be notified within 30 days of the sale.
This exemption can only be availed of once every ten (10) years.

Failure to use the full amount will result in a pro-rated CGT on the unused portion of the sale proceeds.