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Capital Gains Tax


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Here is a question for you real estate gurus out there.

 

How much is the capital gains tax when you sell a property? What is the percentage, and is it the same percentage in all locations?

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I was rightly corrected about this in another post.  The % is 6% of SELLING PRICE due to be paid by the seller.  Thus it's not really a capital gain tax, it's more of a sales tax.

 

Often the buyer offers to pay the tax after a compensating adjustment in the monies paid.  It is to the buyer's advantage to ensure the tax is paid since non payment can come back and haunt the buyer.

 

Often the 'declared' price is less than the actual price to reduce the tax burden.  This is of course fraud.

 

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Davaoeno

 Just so people who arent familiar with things in the Philippines dont get the wrong impression - what we in the west know as capital gains tax is NOT the same thing in the Phil

 

In the west if you sell realty at a profit the profit is taxed as a capital gain. If you sell realty at a loss you get a write off on your taxes as a capital loss. [ sometimes can not be applied against income]

 

In the Philippines, altho they use the term capital gains tax, it in fact has nothing to do with any gain [ or loss] and is strictly a fee assessed against any sale

 

The fee is 6% of the selling price [ or the assessed price whichever is higher].  So even if you sell at a loss you still have to pay 6% of the selling price .

 

[ of course underdeclaring is the norm ]

 

Same 6% everywhere

 

The capital gains tax is paid by whoever the contract says it is paid by !! 

 

In the Philippines, the law provides that capital gains tax and all other real estate taxes against the property shall be for the account of the SELLER up to the date of the execution of the Deed of Absolute Sale. On the other hand, the documentary stamps tax, registration fees and expenses for the transfer of title in name of the BUYER shall be for the account of the BUYER.. However, there are instances, that the SELLER would offer a lower price of the property in condition that the BUYER will shoulder all obligations for and in behalf of the Seller

 

My contracts for sale all say ALL transfer costs [ including capital gains tax] will be paid equally by seller  and buyer

Edited by Davaoeno
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Skywalker

 

 

In the west if you sell realty at a profit the profit is taxed as a capital gain.

 

In the UK, if the property is your principle private residence, any gain you make is tax free.

 

In fact, if you own a number of properties, you have to nominate one of the properties as your PPR, but you don't have to actually live in it.

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My contracts for sale all say ALL transfer costs [ including capital gains tax] will be paid equally by seller and buyer

 

Not exactly on topic but it may be important to note that if the sales price is above P3,199,200, the buyer must pay an additional 12% VAT !

 

Crazy!

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Davaoeno

Not exactly on topic but it may be important to note that if the sales price is above P3,199,200, the buyer must pay an additional 12% VAT !

 

Crazy!

 

 

On houses ?  I have sold/bought several houses worth more than 3.2M [ some much more ] and have never heard of that tax 

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Alfred E. Neuman

Here it is very rare for the seller to pay for the capital"gains"tax.

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On houses ?  I have sold/bought several houses worth more than 3.2M [ some much more ] and have never heard of that tax 

 

I'm no expert on the subject as it has all kinds of lawyerly words.  However, when I did some research awhile back that was one of the big gotchas I remembered.

 

Here's a site I found with a quick google: http://www.sgv.ph/how-vat-affects-real-property-sales-by-maricris-u-see-january-14-2013/

 

Maybe you can take a look and put it into easy to understand words :D

 

Edit: Woolf beat me to it!

Edited by Ronin
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 so the seller pays 6% capital gains tax and buyer pay 12% e-vat according to threshold limits

Edited by spooks
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http://www.bir.gov.ph/taxinfo/tax_capgin.htm

 

or if Zonal Value is higher it will be based on that!

 

Inside city it can be VERY high...

 

 Just so people who arent familiar with things in the Philippines dont get the wrong impression - what we in the west know as capital gains tax is NOT the same thing in the Phil

 

In the west if you sell realty at a profit the profit is taxed as a capital gain. If you sell realty at a loss you get a write off on your taxes as a capital loss. [ sometimes can not be applied against income]

 

In the Philippines, altho they use the term capital gains tax, it in fact has nothing to do with any gain [ or loss] and is strictly a fee assessed against any sale

 

The fee is 6% of the selling price [ or the assessed price whichever is higher].  So even if you sell at a loss you still have to pay 6% of the selling price .

 

[ of course underdeclaring is the norm ]

 

Same 6% everywhere

 

The capital gains tax is paid by whoever the contract says it is paid by !! 

 

In the Philippines, the law provides that capital gains tax and all other real estate taxes against the property shall be for the account of the SELLER up to the date of the execution of the Deed of Absolute Sale. On the other hand, the documentary stamps tax, registration fees and expenses for the transfer of title in name of the BUYER shall be for the account of the BUYER.. However, there are instances, that the SELLER would offer a lower price of the property in condition that the BUYER will shoulder all obligations for and in behalf of the Seller

 

My contracts for sale all say ALL transfer costs [ including capital gains tax] will be paid equally by seller  and buyer

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Davaoeno

Thanks for the references guys. I will consult with my CPA re Vat.   I believe all the info re capital gains tax as provided is current 

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Looks like I got fleeced by the buyer and agent when I bought my condo in 2006. I was advised by the agent I would have around 10% of expenses on top of the purchase price. I think the declared sales price was 4.5 Mil, but ended up paying 291k to the sellers (6½%) to cover their CGT, which I was told was standard practise in the Philippines. There was no adjustment in the buying price. Also Doc stamp 73k, transfer tax 24k, reg fee 23k and notary fee 66k paid,

 

My Attorney never went through the fees with me or pointed out the CGT situation. she even managed to spell our names wrong in the paperwork, which we subsequently had to sort out.

 

Only plus was at least the GBP to peso was 91 at the time

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