Complete Tax Guide for Real Estate Sellers

You may be exempt from the 6% CGT if you sell your principal residence and use the entire proceeds to acquire or construct a new principal residence within 18 months of the sale. You must notify the BIR of your intent to avail the exemption within 30 days of the sale, and the exemption can be used only once every ten years. Any portion of the proceeds not reinvested is taxed at 6%. Documentary stamp tax still applies on the sale. (Source: National Internal Revenue Code Section 24(D)(2), as implemented by Revenue Regulations No. 13-99 and 14-2000)

It is based on neither your profit alone nor the selling price alone. Under NIRC Section 24(D)(1), the 6% CGT on real property classified as a capital asset is computed on the higher of the gross selling price or the current fair market value, where fair market value is the higher of the BIR zonal value or the assessor's schedule of fair market values. There is no "net gain" option for capital assets: your acquisition cost and improvements do not reduce the CGT. For example, on a property sold for ₱5,000,000 with a zonal value of ₱4,200,000, the CGT is ₱5,000,000 × 6% = ₱300,000. (Source: NIRC Section 24(D)(1) and Revenue Regulations No. 7-2003)

You must file BIR Form 1706 within 30 days from the date of the deed of sale. Late filing results in penalties and interest charges. File at your BIR office of jurisdiction or through an authorized BIR agent. Attach the original or certified copy of the deed of sale, property tax declaration, and proof of capital improvements. (Source: BIR Revenue Memorandum Order and Form 1706 Instructions)

Documentary stamp tax is technically a tax on the deed of sale document. The buyer and seller may agree on who shoulders it, but by default it is the seller's cost. The DST rate under NIRC Section 196 is ₱15 per ₱1,000 (1.5%) of the higher of the consideration or fair market value. It is filed on BIR Form 2000-OT and paid to an Authorized Agent Bank or the BIR on or before the 5th day of the month following notarization of the deed, before the Register of Deeds will transfer the title. (Source: National Internal Revenue Code Section 196, as amended by RA 10963)

Keep the original deed of purchase, property tax declarations from the year of acquisition, bank statements or proof of payment for the purchase, and receipts or invoices for any capital improvements (renovations, additions, repairs that add value). Utility bills, property insurance documents, and contractor invoices are also helpful. The BIR may request these documents during an audit. Maintain all records for at least five years after the sale. (Source: BIR Record Retention Requirements and Form 1706 Instructions)

No. For real property held as a capital asset, the 6% CGT on Form 1706 is a final tax. You do not re-report that same capital gain as ordinary income on your annual income tax return, and it is not added to your salary or business income. You still file your annual return (Form 1700 for purely compensation income, or Form 1701/1701A if you have business or professional income) for your other income, but the CGT transaction is settled separately on Form 1706. (Source: NIRC Section 24(D)(1); BIR Form 1706 Guidelines)

Yes. When you sell an inherited property, your cost basis is the fair market value of the property on the date of the decedent's death (stepped-up basis), not the original purchase price paid by the deceased. This stepped-up basis can significantly reduce your capital gain and CGT liability. For example, if the property was purchased for ₱2,000,000 but was worth ₱4,500,000 at the decedent's death, and you sell it for ₱5,000,000, your capital gain is only ₱500,000 (not ₱3,000,000). You must provide the death certificate and a certified appraisal or property valuation as of the date of death. (Source: BIR Inheritance Tax Rules and Form 1706 Instructions for inherited property)

Yes. Under NIRC Section 49(B), if the initial payments in the year of sale do not exceed 25% of the selling price, the 6% CGT may be paid in installments in proportion to the payments actually received. Each installment of CGT is reported on Form 1706. Note that the 6% rate and its tax base (the higher of selling price or fair market value) do not change; installment treatment only spreads the timing of the tax, it does not reduce the amount. Consult a tax professional to confirm eligibility and the schedule. (Source: NIRC Section 49(B); Revenue Regulations No. 7-2003)