Requirements and procedures in paying Capital Gain Tax

For Final Capital Gains Tax for Transfer of Real Property Classified as Capital
Assets (Taxable and Exempt)

TaxForm
BIR Form 1706 Final Capital Gains Tax Return (For Onerous Transfer of Real
Property Classified as Capital Assets -Taxable and Exempt)

Documentary Requirements

1) An original copy and one photocopy of the Notarized Deed of Sale or Exchange

2) Photocopy of the Transfer Certificate of Title; Original Certificate of Title; or

Condominium Certificate of Title

3) Certified True Copy of the tax declaration on the lot and/or improvement during
nearest time of sale

4) Certificate of No Improvement issued by the Assessors office where the property

has no declared improvement, if applicable or Sworn Declaration/Affidavit of No
Improvement by at least one (1) of the transferees

5) Copy of BIR Ruling for tax exemption confirmed by BIR, if applicable

6) Duly approved Tax Debit Memo, if applicable

7) Sworn Declaration of Interest as prescribed under Revenue Regulations 13-99, if

the transaction is tax-exempt

8) Documents supporting the exemption

Additional requirements may be requested for presentation during audit of the tax case
depending upon existing audit procedures.

Procedures

File the Capital Gains Tax return in triplicate (two copies for the BIR and one copy for
the taxpayer) with the Authorized Agent Bank (AAB) in the Revenue District where the
property is located. In places where there are no AAB, the return will be filed directly
with the Revenue Collection Officer or Authorized City or Municipal Treasurer.

If not stated in the contract, the seller is usually the one who shoulders the Capital Gain
Tax, but in some cases, it is dependent on the terms or the buyer and seller.

Tax Rates

For real property - 6%.

Deadline

Within 30 days after each sale, exchange, transfer or other disposition of real property.

Where and when to pay for a Capital Gain Tax

GENERAL RULE

WHERE TO PAY

In the BIR Revenue District Office (through the authorized agent bank (AAB)) where the
property is located

WHEN TO PAY

Within thirty (30) days from date of notarization of the deed of sale

BASIC PENALTIES FOR LATE FILING AND PAYMENT OF TAXES

PENALTY

25% surcharge on basic tax due

50% surcharge in case of fraud or intent to evade tax

INTEREST

20% per annum based on basic tax due

COMPROMISE PENALTY

Subject to type and amount of tax due